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Friday 24 May 2024

Totalmobile win at Babergh & Mid Suffolk District Council

TotalmobileField service management software specialist Totalmobile has extended its partnership with Babergh & Mid Suffolk District Councils to streamline the councils’ building services department operations with a view to improving council house repairs and maintenance services across their 7,500-property portfolio, whilst reducing both building costs and tenant waiting times.

With a backlog of repairs, the councils placed a heavy emphasis on customer satisfaction (enabling appointment booking at first point of contact, increasing first time fix rates, etc.) in the tender process (two other suppliers were evaluated in detail: ROCC and Propeller). It’s a similar focus that saw Totalmobile win at Gloucester City Homes a year ago (see Gloucester City Homes to enhance services with Totalmobile) and with Flagship Group (see Totalmobile supporting digital transformation at Flagship Group).

The councils are already using Totalmobile’s Lone Worker Project solution; this further collaboration will enable them to take advantage of dynamic scheduling of repair visits and automated materials management.

Implementation will be in three phases, with “responsive repairs” due to go live within three months of project kick-off.

Posted by: Craig Wentworth at 10:18

Tags: contract   housing  

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Friday 24 May 2024

Parliament passes Digital Markets Bill

Parliament logoThe General Election has provided the final nudge required for the Digital Markets, Competition & Consumers Bill (DMCC) to be passed by Parliament.

As we discussed in yesterday's UKHotViews (see UK tech market faces slowdown as general election announced), with Parliament being dissolved on 30 May, there is insufficient time for most of the Bills currently active to progress. The DMCC was one of a small number of Bills included for discussion yesterday as part of the election wash-up period.

The Bill covers two main topics: digital markets and competition law (Competition Act 1998 and the Enterprise Act 2002) reforms; and reforms of consumer law enforcement and new consumer rights. It will give the Competition & Markets Authority (CMA) the power to impose tailored conduct requirements on firms that are found to have "substantial and entrenched market powers in a digital activity". Those companies will be given Strategic Market Status or SMS (see View from the Chief Analyst: CMA and the perceived power of GAMMA(N) for further discussion).

It will also place the Digital Markets Unit (DMU), which has been established within the CMA to oversee the new regulatory regime for the most powerful digital firms, on statutory footing. The DMU has been operating in shadow form ahead of the Bill being approved. There are already around 70 people in the unit, and it intends to expand to c.200 employees. It already has an investigation underway into competition in the cloud services market (see Ofcom refers UK cloud market to CMA) and expects to conduct three or four SMS investigations in its first year after the Bill achieves Royal Assent.

Time will tell how much impact the new regime will have on the global tech giants' UK operations, but the overall aims of the Bill, which are to prevent harmful practices that hold back innovation and growth, should be welcomed.

Posted by: Dale Peters at 10:09

Tags: acquisition   cloud   merger   government   digital   competition  

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Friday 24 May 2024

Capgemini wins big at HMRC

LogoFollowing on from its success in being selected as one of the six suppliers on Lot 2a of HMRC’s Digital & Legacy Application Services (DALAS) framework (see here), Capgemini been named as the sole provider for DALAS Lot 3. Worth up to £245m over the next five years, the contract encompasses run and change professional services supporting the Multi-Channel Digital Tax Platform, Customer Insight Platform and Government Gateway.

This latest award marks another significant continuation of Capgemini’s involvement with HMRC which began in 2004 with the ground-breaking Aspire megadeal. Although scale of relationship has been progressively pared back by the client over last two decades, the new nine-figure contract is still a very substantial win.

Growth has been slowing for Capgemini UK over the last twelve months (see here). Demand for the company’s services in the Public Sector, however, remains resilient. The firm’s sales to this vertical saw a double-digit increase last year. As we noted in our recent UK Public Sector Supplier Prospects report, “Capgemini is in a strong position in its key accounts…supporting critical public services”. The latest success with HMRC is a very sizeable manifestation of the value and importance of these relationships.

Posted by: Duncan Aitchison at 09:40

Tags: contract   application+services   public sector  

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Friday 24 May 2024

A solid start to Workday’s FY25

LogoWorkday Inc backed up its impressive FY24 results (see here) with and above expectations Q125 performance. Turnover for the three months ended 30th April increased by 18.1% yoy to $1.99 bn and subscription revenues grew by 18.8% yoy to $1.815b n. The company’s focus on the bottom line continued to bear fruit during the first quarter.  A 437 bps improvement in Q1 operating margin saw the prior year’s loss of $20m turned into a $64m profit. Non-GAAP operating income for the first quarter was $514.4m which lifted the corresponding margin to 25.9% up from 23.5% in the same period last year.

No specific update was provided on the company’s fortunes in Europe. Workday’s recent announcement of its intention to invest more than £550m in the UK over the next three years (see here), however, suggests that there is no shortage of confidence in the prospect of sustained growth in this country.

Despite the strength of the Q1 progress, Workday has trimmed its subscription revenue guidance for the fiscal 2025 full year. This is now expected to land somewhere between $7.700 bn to $7.725 bn, down from the $7.725 bn to $7.775 bn view provided in February. The statement from CFO, Zane Rowe that the updated projection “reflects the elevated sales scrutiny and lower customer headcount growth we experienced during the quarter” appears to have concerned investors. Workday’s share price dropped by more than 11% in after hours trading following the publication of the first quarter results.

Posted by: Duncan Aitchison at 09:29

Tags: results   saas   software   hr   Finance  

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Friday 24 May 2024

Endava anticipates a return to growth

LogoAfter five consecutive quarters of top line decline, Endava now expects to deliver both sequential and yoy increases in revenue for the last three months of its current financial year. As for the recently completed Q324, however, company turnover for the January to March period fell by 11.8% yoy at constant currency to a within guidance £174.4m (Q224: £183.6m).

The softness in demand cost Endava dear on the bottom line. Third quarter adjusted profit before tax slumped by almost two thirds to just £15.5m (Q323: £43.4m) with the associated margin shrinking by 1240 bps yoy to 8.9%. Company headcount at the end of the quarter was 11,025 equating to a 6% reduction to the staffing level twelve months ago.

None of the company’s primary geographic markets and target industry verticals achieved revenue growth during Q3. From a regional perspective, Endava’s European operations fared best with a flat yoy sales performance. The firm’s turnover in North America shrank by nearly a fifth, while the UK top line decreased by 21% yoy to £77.3m. The continuing squeeze on IT investment in the financial services sector, which generates approaching a half of Endava’s global revenue, hit the company hard in the third quarter. Sales in this vertical were down by nearly a quarter to c.£82m (Q323: £108m).

Commenting on the outlook, Endava CEO John Cotterell observed that “The overall demand environment remains challenging but stable and we are seeing signs of increasing discretionary spending”. Looking forward to the end of the current fiscal, the firm expects that fourth quarter revenue will be up significantly qoq to land in the range of £195m to £197m. If achieved, this will equate to a yoy constant currency growth of 3.5 - 4.5%. The projected uptick bodes well for the company’s prospects for the coming twelve months. It does however, still mean that the digital SI will shrink during current fiscal and finish FY24 somewhere between 4.0% and 4.5% smaller than it was in the prior year.

Posted by: Duncan Aitchison at 09:19

Tags: results   systemsintegration   digital  

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Friday 24 May 2024

Tribal’s contract dispute with NTU – a conclusion

TribalWe reported in February that education software and services provider Tribal Group had announced it was entering into a mediation process with Singapore’s Nanyang Technological University (NTU) over the latter’s claim for damages (see Tribal's contract dispute with NTU – an update), in a dispute which had cast a shadow over Tribal for some time now (see Tribal performance overshadowed by NTU uncertainty).

At the time, Tribal declared that it intended to “vigorously defend” NTU’s claim. However, today comes news that the two have “reached a settlement resolving all outstanding issues” relating to March 2023’s contract termination. “Without admission of liability”, Tribal has agreed to pay NTU £3.1m in full and final settlement out of the company’s cash flow over the next 18 months.

The potential for payout has been a feature of Tribal’s financial statements since the dispute kicked off, and so the company will keen to draw a line under the episode and move on (FY23’s annual report declared that a resolution was a “key area of focus for 2024”). As it has also attempted to do after Ellucian’s aborted attempt to acquire the company in the Autumn of last year (which resulted in £1.4m of “takeover costs” on the balance sheet). On the plus side, although growth was muted, Tribal did see strong profit performance in FY23 (despite the disruption and charges), with Cloud revenue up 23% to £10.4m and Adjusted EBITDA almost doubling (+99%) to £14.4m – see Tribal posts strong cloud growth, but NTU dispute still casts a shadow.

Posted by: Craig Wentworth at 08:28

Tags: MIS   contract dispute  

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Thursday 23 May 2024

Bytes drives full-year profits

bytesFTSE 250 listed, and Leatherhead-headquartered, Bytes Technology Group (BTG) saw Gross Invoiced Income leap 26.7% to £1.82bn in the year to end February 2024.

Gross Invoiced Income (GII) is an important measure for resale firms, which put much less focus on revenue growth. Gross Profit (GP) is also a key metric for resellers and in the year Bytes saw that increase 12.5% to £145.8m. Notably, 90% of GP comes from Software sales, with 50% of that derived from Microsoft software and associated services sales. About 2.6% of GP currently comes external services sales.

Bytes' strategy is focused on growing business with existing and new customers, increasing its AI business (e.g., Copilot), and broadening vendor partnerships.

The firm’s acquisition of Cloud Bridge Technologies in April 2023 gave Bytes more AWS resources and multicloud capability. Furthermore, Bytes says it is open to more acquisitions where appropriate.

It’s been a difficult period of the firm following the resignation of former CEO, Neil Murphy. In February, Murphy made a shock exit from the company following four years at the top. He resigned with immediate effect after revealing previously undisclosed share trades (totalling c.£3m in 100+ transactions across near three-year period) to the Board. The firm is now drawing a line under this and the appointment of Sam Mudd earlier this month as the new CEO is a positive step forward. On a call to analysts this morning she underlined there would be “no deviation from the strategy”. She added: “It’s about more of the same…and fine tuning some aspects.” We look forward to catching up with Sam soon.

Posted by: Kate Hanaghan at 10:10

Tags: results   reseller   AI  

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Thursday 23 May 2024

Xero UK revenue up 20% but HMRC delays continue to affect subscriber growth

XeroSmall business-focused accounting, payroll, and payments software provider Xero has published its results for FY24 (ended 31 March 2024).

Revenue was up 21% (in constant currency) to NZ$1.7bn, with annualised monthly recurring revenue up 22% ccy to NZ£1.96bn, and Adjusted EBITDA up 75% to NZ$526.5m (taking account of the NZ$28.9m non-cash impairment of Xero Go – Xero’s sole trader app for UK customers – which the company announced in March would be retired in September 2024).

The company now boasts 4.2 million subscribers globally, with total subscriber lifetime value up 12% ccy to NZ$15.5bn, and an average monthly churn rate of 0.99% (continuing to remain below pre-pandemic levels).

As a New Zealand-headquartered firm, Xero’s main business is in Australia and New Zealand (with subscriber count and revenue comprising 57% of FY24’s total; revenue up 22% ccy), but its international markets saw similar growth (+20% ccy overall), with the UK singled out as the star performer – up 20% ccy to NZ$461m; through with North America also still climbing double-digits, up 15% ccy to NZ$112m.

The company attributed that 20% ccy UK revenue growth mainly to “price changes” and “improvements in product mix” (given that subscriber number growth was more subdued, climbing 11% to 1.1 million), however it calculates that the figure would have been 1 percentage point higher had it held a Xerocon event during the period (as it had in FY23). Xero also cites delays to the HMRC Making Tax Digital programme, resulting in slower uptake, impacted FY24 revenues too – something which the company has seen as a drag on subscriber growth for a while now (see H1 demonstrates incoming Xero CEO has plenty to build on from November 2022), with mandatory filing delayed two years to April 2026 and minimum income thresholds raised to £50k (a year later for £30k income companies).

Xero expects FY25’s operating expense as a percentage of revenue to remain around 73% (FY24’s was 73.3%, in line with guidance), though it expects its product design and development costs percentage to climb.

Posted by: Craig Wentworth at 09:58

Tags: results   SMB  

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Thursday 23 May 2024

UK tech market faces slowdown as general election announced

General Election 2024Six weeks from today, the UK will be heading to the polling stations again. Speaking in Downing Street yesterday, a rain-soaked, D:Ream-serenaded Prime Minister Rishi Sunak called a general election to be held on 4 July.

The campaign will be one that pitches change against stability. The Prime Minister said the country needs to "decide whether we want to build on the progress we have made or risk going back to square one with no plan and no certainty." Labour Party leader, Keir Starmer, said, "That opportunity for change is what this election is about". The election is also set to be one that feels more personal and presidential than previous campaigns.

Parliament will be dissolved on 30 May, which provides five days for the wash-up period. Any unfinished parliamentary business will be lost at dissolution, so we will see some frantic days of effort, which will require co-operation of the Opposition, to pass key legislation that is still in progress. There are currently 214 active bills at various stages of scrutiny going through Parliament; there will only be sufficient time for a small proportion of these to pass in their current form.

The Digital Markets, Competition and Consumers Bill, which is intended to regulate and increase competition in digital markets, is in the final stages of approval (see View from the Chief Analyst: CMA and the perceived power of GAMMA(N)); however, the Data Protection and Digital Information Bill has further to go.

To ensure government resources cannot be used for party political campaigning, we will enter a 'pre-election period of sensitivity'. This period, which was previously referred to as 'purdah', is likely to correspond with the dissolution of Parliament and will mean any significant, controversial or long-term programmes where a new government is likely to hold an opinion will be paused.

Commenting on the announcement, TechMarketView's Chief Analyst, Georgina O'Toole, said, "Uncertainty is a growth suppressant. Across Whitehall, with the previous expectation of an autumn election, we had already witnessed changing behaviours. Departments had sought to spend their budget ahead of a pre-election hiatus, while in parallel, delaying any major decisions that might be reversed under a new government. Meanwhile, in the private sector, we have witnessed economic uncertainty translate into caution and a stifled—and more challenging—UK tech market.

Now, the date of the General Election is a certainty. But who will be in power is not. In Whitehall, the 'pre-election period' will arrive sooner than expected. It will slow the UK public sector tech market down over that period and post-election it will take time for any new policies to be implemented and new procurement activity to pick up. Suppliers to the public sector (central government, defence, and health in particular) are in for a tough ride the next few months. We are unlikely to see much of a pickup until Q4.

Meanwhile, in the commercial sector, recent positive news on inflation and on interest rates had the potential to give organisations the confidence to start making some bigger investments (although wider global turbulence remains); however, the election brings new uncertainty. Will a new government and a different economic policy change the current direction of travel? In the short term, we will also likely see a slowdown in private sector decision making too."

Posted by: Dale Peters at 09:14

Tags: policy   election   government   public+sector  

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Thursday 23 May 2024

Nvidia profits up 628% yoy in Q1

logoNvidia started off its FY25 with a continued display of its dominance of the market for GPU computing power, as the hyperscalers in particular have continued to consume its GPUs at an increasing pace amidst the high demand to run AI models.

Revenue for Q1 FY25 (ending 28 April 2024) was $26bn, up 262% yoy, with Data Center revenue $22.6bn, up 427% yoy. Profitability saw an even more impressive increase, with Net income up 628% yoy. Other areas of the business are almost a footnote at this point in comparison, despite still showing impressive growth if you were any other supplier. Gaming revenue for example was $2.6bn, up 18% yoy, Professional Visualisation was up 45% yoy, and revenue from Automotive and robotics was $329m, up 11% yoy.

Jensen Huang, founder and CEO of Nvidia said, “companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence.”

We have seen expanded collaborations from Nvidia with all the hyperscalers (AWS, Google Cloud, Microsoft and Oracle) to advance GenAI innovation. Nvidia also announced its new GPU architecture Blackwell in March (See - Nvidia: New AI Chip and innovations in Digital Twins & Robotics), and it is not slowing down the pace of innovation either, with a one-a-year new chip rhythm to be expected.

Last week it was reported that some of Nvidia’s biggest customers are taking aim at its Cuda software platform (a key part of its AI dominance alongside the GPU chips), by helping to develop Triton, software that was first released by OpenAI in 2021 and designed to make code run software on a wide range of AI chips. Rival chipmakers Intel, AMD and Qualcomm are all looking to use Triton to help lure customers away from Nvidia, whilst AI suppliers such as Meta, Microsoft and Google, which have all spent billions of dollars on Nvidia chips, are also contributing to Triton at the same time as producing their own AI hardware.

In response to these moves Nvidia is seeking new sales avenues outside the hyperscalers (plus Meta), a close partnership with Dell is one of those new expansion areas. Nvidia are looking to tap into the pool of government agencies and businesses that Dell serves. However, it doesn’t look like demand for its chips will be slowing down any time soon, I guess the next question is will Nvidia look to directly compete in the CPU arena as well?

Posted by: Simon Baxter at 09:12

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Thursday 23 May 2024

ActiveNav secures £6.5m funding to deliver Zero Dark Data vision

ActiveNav logoData governance software specialist Data Discovery Solutions (DDS), which you are more likely to know by trading name ActiveNav, is set for a fresh phase of growth having completed a £6.5m funding round led by long-term investors Gresham House.

This is DDS’ third funding round led by Gresham, and supported by ScaleUp Group, bringing the total raised since 2019 to c£15m. DDS, which includes core divisions ActiveNav and Actfore, plans to use the funds to fuel further innovation, expansion and market penetration.

Both divisions have grown strongly in recent years with Actfore notably benefiting from demand for data mining for cyber incident response. The software is used by businesses and public sector organisations in North America, the UK and Australia, to quickly analyse data compromised during a cyber incident.

Founded in 2011 as Active Navigation, DSS is still led by CEO and Founder Peter Baumann and has been chaired by ScaleUp Group founder and chairman, John O’Connell, for more than a decade. With the new funding, Baumann is leading DDS into its next phase of growth with the vision of achieving ‘Zero Dark Data’ for its clients.

Posted by: Tola Sargeant at 09:09

Tags: funding  

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Thursday 23 May 2024

More good news for OpenAI

logoNews Corp has joined the growing cadre of media companies to strike a deal for the use of its content by OpenAI. Described as a “a landmark agreement”, the multi-year partnership will provide OpenAI with access to current and archived content from News Corp’s major news and information publications. These include The Wall Street Journal, New York Post, The Times and The Australian. In addition to providing content, News Corp will share expertise to help embed and uphold journalistic standards across OpenAI’s offering. Financial terms of the arrangement have not been disclosed.

This latest tie-up comes just a month after the decision by The Financial Times to sign an agreement with OpenAI to license its content for the development of AI models and allow ChatGPT to answer queries with summaries attributable to the newspaper (see here). It also follows similar recent deals by OpenAI with the Associated Press, global news publisher Axel Springer, France's Le Monde and Spain-based Prisa Media.

Given the potential threats that Gen AI poses to media organisations, it has not surprising that not all companies in the industry are taking a collaborative stance towards the public Large Language Model providers. Earlier this year, The New York Times threatened legal action against the use of its content to train OpenAI’s foundation models, fearing significant lost revenues and infringement of their proprietary journalism. As we have noted before, however, the direction of travel for the sector appears increasingly clear: embrace AI and find new ways to add value and generate revenue or become yesterday’s news.

Posted by: Duncan Aitchison at 08:56

Tags: media   genAI  

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Thursday 23 May 2024

CGI appoints François Boulanger as next CEO

CGICGI announced yesterday its succession plan for its top job with current CEO George Schindler set to retire at the end of September. Schindler will be replaced François Boulanger currently President and Chief Operating Officer. Schindler will continue to serve on the Board and, for a transition period, will serve as strategic advisor to Serge Godin, Founder and Executive Chairman. This represents an end of an era at CGI during which Schindler has been CEO for the past eight years having spent nearly 40 years with the business.

“CGI has had an exceptional CEO in George Schindler,” added Serge Godin. “Over the past 8 years, CGI has profitably grown to over $14 billion in annual revenue, while our share price more than doubled and our market capitalisation increased more than 70%. Across every dimension, George successfully led our team to deliver significant value for all of our stakeholders, demonstrating the depth of his strategic vision and mastery of our business and the market. While George will retire as CEO, we are pleased that CGI will continue to benefit from his experience as both a strategic advisor and member of our Board.”

François BoulangerBoulanger (pictured) joined CGI in 1998 as Director of Project Accounting, having previously held strategic management roles at several goods and services companies. He was appointed President and Chief Operating Officer in 2022 and currently oversees CGI’s operations in Canada, U.S. Commercial and State Government, Asia Pacific Global Delivery Centers of Excellence, and Global IP Solutions. Prior to this appointment, Boulanger served as CGI’s Executive Vice-President and Chief Financial Officer from 2014, where he oversaw the company’s global financial operations.

Boulanger will take over the leadership at a time when growth has been slowing (CGI FY23: strong and resilient, but slowing) at CGI, reflecting a similar slowdown to what we have seen from so many other major IT services providers. Appointing Boulanger looks very much like the stability and continuity call, the challenge will be reinvigorating growth, and capitalising on the opportunities presented by Gen AI and other key areas of client investment.

Posted by: Marc Hardwick at 08:51

Tags: appointment  

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Thursday 23 May 2024

*UKHotVewsExtra* Will AI help DXC to finally turn the corner?

DXCAnnounced last week, DXC Technology’s latest full-year financials drew a line under another twelve months of falling revenue. On the plus side, the US IT services giant's FY24 results also revealed a small profit of $86m, which was a welcome improvement on the $566m loss reported for the previous fiscal.

Despite its travails, DXC remains a major player in the global technology market, with a broad footprint and a comprehensive array of offerings. As it looks to the future, like many of its peers, DXC has been increasingly focusing its attention on the evolving opportunity around AI. Fortunately for DXC, whilst it may not yet quite be “best in class” in terms of AI (as was predicted by former CEO, Mike Salvino), the company already has a strong foundation in this area. Just last week, DXC announced another step in its AI journey with the news that it is working jointly with Microsoft and infrastructure specialist, Ferrovial, to develop a generative AI platform called Quercus. The platform is designed to help organisations integrate secure, responsible AI solutions throughout their business operations to automate processes for improved profitability and efficiency. 

HVPMore than seven years on from the formation of the company, Research Director, Jon Davies, casts an eye over the performance to DXC Technology date and discusses what the future may potentially hold. TechmarketView customers including subscribers to HotViewsPremium can learn more by downloading "Will AI help DXC to finally turn the corner?"

If you do not currently have access to this HotViewsExtra but are interested in viewing it or any other of our research, please contact Deb Seth for more information.

Posted by: Jon C Davies at 08:40

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Wednesday 22 May 2024

Zen Educate raises $37m for acquisitions and expansion

Zen EducateLondon-based Zen Educate has raised $37m in a Series B funding round led by Round2Capital with participation from existing investors Adjuvo, Brighteye Ventures, FJ Labs, Ascension Ventures, amongst others.

The company operates an online marketplace that matches schools with substitute teachers and teaching assistants directly, based on skills, proximity, and experience. It has recently acquired recruitment agency Aquinas Education, and plans to use the Series B funds for more acquisitions in the UK and US to fuel its expansion in those markets.

Zen Educate was founded in 2017, and TechMarketView covered its early seed funding five years ago as part of our round-up of VC deals in Q3 2019. At the time we commented on the number of suppliers on the Crown Commercial Service’s Supply Teachers and Temporary Staff framework (then 126, now 104 in total) and how many were seeking to up their digital game – meaning competition for the likes of Zen Educate.

Zen Educate appears on Lot 1 (the “preferred suppliers list”) in the current framework RM6238 – alongside 100 other recruitment agencies; but interestingly doesn’t feature amongst the four suppliers in Lot 4 (“Education Technology Platforms”), for apps which can be used to hire temporary workers direct… which feels like a missed opportunity, since Zen Educate’s website describes its offer as  “a technology platform to connect teachers with schools directly”, going on to describe agencies as “expensive middlemen”. RM6238 expires in a couple of years, so perhaps Zen Educate will look to re-list itself at that point (assuming it hasn’t acquired one of the Lot 4 incumbents – some still file as “micro companies” – by then).

Posted by: Craig Wentworth at 10:06

Tags: funding   recruitment   M&A   schools   teachers  

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Wednesday 22 May 2024

Scale AI founder's profitability expectation as it raises $1bn

Scale AI logoSelf-proclaimed ‘Data Foundry’, Scale AI (see AI data infrastructure platform Scale invests in UK | TechMarketView), has raised $1bn in VC capital in a Series F funding round led by VC house, Accel. Other returning investors participating in the round included Wellington Management, Y Combinator, Spark Capital, Founders Fund, Greenoaks, and Tiger Global Management, New investors include DFJ Growth, Elad Gil, Amazon, ServiceNow Ventures, Intel Capital and AMD Ventures.

The investment values Scale AI, which was founded in 2016, at $14b. Its previous funding round, when it raised $325m, valued it at $7.3bn.

This time, we’ve learned a little more about the company’s financials. Founder, Alexandr Wang, aged 27, has revealed that the company’s annual recurring revenue tripled in 2023 (no amount revealed) and is expected to reach $1.4bn by the end of 2024. Wang also stated he expects profitability by year end too.

With three key ingredients required to power AI - algorithms, computational power, and data – Wang has successfully positioned Scale AI as a leader in the latter.  He states that in responding to the data requirements for large language models (LLMs) from OpenAI, Anthropic, Meta, and others, the company has “been involved in powering nearly every AI model out there”.

The financials – and the valuation – are interesting. Scale AI’s business model requires it to employ hordes of on-demand human workers to process and label data to meet the promise of high-quality data sets needed to train AI models. There has been significant scrutiny of the company in terms of the pay and conditions of its workers; Scale AI has an in-house outsourcing agency called Remotasks since 2017, employing people across Southeast Asia and Africa. Scale AI’s website claims it has 900 employees, but it is unclear whether this includes the outsourced data annotators (some investigation would suggest the numbers enter several thousand if they are included too).

According to Forbes, 90% of Scale AI’s business is now driven by GenAI. But Wang has his eyes firmly focused on enabling the future of Artificial General Intelligence (AGI). It is a long way off, but getting anywhere close will mean the models will need to increase in size, and data requirements will grow exponentially. It won’t just be a case of needing more data, it will be a case of requiring data that is far more complex, with expert reasoning embedded. As a result, and according to Fortune, Scale AI is turning, increasingly, to experts in their fields – including Ph.d level academics, lawyers, and accountants - to annotate data.

What’s not clear yet is how Scale AI’s profitability will be impacted as this shift to higher paid workers takes place. It’s a little ironic that a company sitting at the heart of the current GenAI frenzy is so wholly reliant on people. It’s easy to forget, as we get caught up in the hype, that data has to come from somewhere. And the requirement for quality data will always mean that there are people – in this case in their thousands – in the loop.

Posted by: Georgina O'Toole at 09:59

Tags: funding   investment   AI   data   ArtificalIntelligence   LLM   genAI   Foundation+Models   AGI  

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Wednesday 22 May 2024

Vitesse secures $93m to speed up claims

VitesseLondon-based treasury and payment solutions provider, Vitesse, has secured additional investment of $93m for its insurance focused proposition. The Series C funding round was led by KKR and supported by existing backer, Hannover Digital Investments. As a result of the transaction, KKR’s Managing Director of Tech Growth, Patrick Devine, will join the Vitesse board.

Founded in 2014 Vitesse provides a payments and treasury platform for the insurance industry. The platform facilitates real-time management and replaces the manual processing of claims payments and reconciliations. Vitesse plans to utilise the latest cash injection to fund further product development and to grow its footprint. In particular the company is hoping to capitalise on potential opportunities within the US market.

The claims process is one of the enduring areas of technology investment for insurers and is strategic both in financial terms and in respect of customer advocacy. The administration of a claim provides a key customer touchpoint, by which effectiveness and service quality is judged. It is also an important factor in terms of the profitability of an insurer's book of business.

Posted by: Jon C Davies at 09:28

Tags: insurance  

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Wednesday 22 May 2024

Coforge launches Copilot Innovation Hub

LogoFive months on from the announcement of its Gen AI-centric joint initiative with Microsoft Azure OpenAI Service, Coforge is establishing a Copilot Innovation Hub. The latest collaboration with Microsoft will focus on developing a pipeline of new industry specific generative AI solutions.

The first two offerings out of the traps are Underwriter Copilot for insurance carriers and Advisor Copilot for financial services organisations. The solutions seek to boost productivity through the automation of manual tasks, enabling improved decision-making by making recommendations based on enterprise data, and streamlining and optimising business processes.

Fast growing Coforge (see here) is not the only mid-tier offshore supplier to be ramping up its Microsoft Gen AI related efforts. Earlier this year Mastek unveiled a strategic collaboration with the software giant that focuses on harnessing GenAI (specifically, Microsoft Azure OpenAI Service and Azure AI Services) in retail, healthcare, manufacturing, financial services, and public sector use cases. Such initiatives have rapidly become table stakes for service providers hoping to maintain competitive parity as the latest disruptive technological wave gathers momentum.

Posted by: Duncan Aitchison at 09:14

Tags: offshore   microsoft   partnership   financial+services   genAI  

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Wednesday 22 May 2024

Marlowe set to complete £430m software and services disposal

MarloweAim-listed governance, risk and compliance (GRC) specialist, Marlowe plc, has released a trading update confirming the sale of various software and service assets to Inflexion Private Equity for £430m. The disposal, which was publicised in February this year, is set to complete on 31 May 2024 and follows a comprehensive review of Marlowe’s operations. The transaction will effectively free the company of debt.

The sale represents a significant portion of the Marlowe’s GRC operations and is equivalent to approximately 20% of the company’s revenue and 40% of its adjusted EBITDA. Going forward, Marlowe’s core compliance operations will focus on the company’s occupational health businesses and testing, inspection, and certification. In addition to clearing Marlowe’s current debt facility entirely, the net proceeds from the transaction will see around £228m of surplus cash returned to shareholders via a share buy-back programme announced today.

As a result of the deal with Inflexion, Marlowe CEO Alex Dacre has tendered his resignation and will transition with the divested assets. The Marlowe board has initiated a search for a new CEO and is considering both internal and external candidates. Kevin Quinn, non-executive chairman, will step in to lead the business on an interim basis until a permanent replacement appointed.

Alongside the restructuring, the reshaped Marlowe appears to be an an even keel and the company is currently trading in line with expectations for FY24. Revenue from continuing operations is expected to reach £292m for Testing, Inspection and Certification and £111m Occupational Health. Adjusted EBITDA for continuing operations is forecast to come in around £49m. Net cash on completion of the disposal is expected to be approximately £230m.

Posted by: Jon C Davies at 08:58

Tags: acquisition   M&A  

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Tuesday 21 May 2024

NEW RESEARCH Road to AI: Market Readiness Index of leading suppliers

TechMarketView is delighted to announce that our fifth annual Market Readiness Index is now in the hands of our valued Tech User Programme members.

This year’s MRI is titled: “The road to AI: Mapping the readiness of the Top 10 IT & Business Process Services Suppliers”.

The companies assessed were: Accenture, Atos Eviden, Capgemini, Capita, Cognizant, DXC Technologies, HCLTech, IBM, Infosys, and TCS.  mri

Our analyst team used TechMarketView’s unique and highly robust scoring framework to rate the suppliers across Corporate Resilience, Suitability of Offerings, Skills & Resources, Partner Ecosystem, Industry Expertise, Delivery & Execution.

The Market Readiness Index report is a combination of scoring and in-depth profiles giving a realistic and honest appraisal of the readiness of each supplier to address the AI – and in particular the Generative AI – needs of the market. Based on our independent data and analysis, we assess the capabilities and approach of the largest players in the UK market.

We’ve pored over the data and scoring, grilled the vendors, and spoken candidly with buyers and can now reveal that the Leading Pack (i.e., those suppliers exceeding the average score for the overall group in each category) consists of: Accenture, Capgemini, Cognizant, and TCS. Congratulations.

However, we highly recommended you read the full report to understand the narrative behind the scoring and which suppliers of the complete pack are best suited to your aims and culture.

By the way, a MASSIVE thank you to the Analyst Relations teams that helped co-ordinate the interviews and review process. You are the unsung heroes of our industry!

READ NOW: “The road to AI: Mapping the readiness of the Top 10 IT & Business Process Services Suppliers

If you are not a member of our Tech Buyer community, you can purchase the report HERE or by contacting Deb Seth.

Posted by: Kate Hanaghan at 09:50

Tags: AI   MRI  

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