There’s no let up in Advanced Computer Software’s (ACS) appetite for acquisitions. Hot on the heels of ACS’ purchase of Compass Computer Consultants in February (see here), Vin Murria’s ‘buy and build’ business has today acquired Microsoft Dynamics CRM practice, ConsultCRM. The terms of the deal were not disclosed.

Camberley-based ConsultCRM provides a range of Microsoft Dynamics CRM implementation services to clients from a number of sectors including finance, professional services and construction. It should slot nicely into the Advanced Business Solutions business enabling Advanced, which is already a Microsoft Gold Partner, to offer Microsoft Dynamics CRM alongside its other back office products and strengthening its CRM expertise.

It’s hard to imagine that this will be the last ACS acquisition that we write up for HotViews this year. Expect more of the same in the months ahead as Vin continues on her mission to drive organic and acquisitive growth across the Group.  

On Monday, the British Bankers Association, published an overview of how people bank in the UK and how the sector is using new technology to engage customers. It also highlights the pressure on the established banks and reinforces our view that banks must move quickly to give vendors more responsibility, as discussed in our FinancialServicesViewsMarket Trends and Supplier Landscape reports.

UK banking has reached a tipping point following rapid growth in online and mobile access. 40 million mobile and Internet banking transactions were made each week in 2013. Mobile banking apps usage more than doubled, with 12.4 million banking apps now downloaded. 750,000 customers of Santander logon to their bank each day and 72% of interactions between HSBC and its customers are by telephone or through the Internet. This creates a significant strain on the banks’ core systems as they have to cope with much higher numbers of interactions.

Contactless payments is the next revolution for banking systems to deal with. Over 28 million cards with contactless technology are already in circulation in the UK. RBS forecasts a trebling of “tap” payments this year to 44m, the number rising to 250m by 2023.

All these changes will transform how banks use their branches, with greater use of technology to aid account opening, mortgage and investment advice and a search by the banks for further sources of value add.

Banks need to move quickly to meet customer expectations and to provide higher levels of service. At the same time they are struggling to meet regulatory changes and address problems caused by years of under investment in IT. Vendors with clear strategies, utility models and end to end solutions will be in a strong position to help the banks cope with this revolution.

The Earthport management team gave an impressive performance yesterday at an investor meeting, ably supported by influential shareholder the World Bank and flagship customer (and shareholder) Bank of America. All those present were able to see the substantial progress the company is making. This AIM-listed company recently reported half-year results showing revenue up 81%, to £3.32 million, see Earthport docks impressive growth. Analysts are forecasting positive EBITDA and a near-doubling of revenue next year.

Earthport has all the hallmarks of a winner in the payments arena. It provides a utility service for banks to send payments across the world reliably, quickly and cheaply, linking its customers with domestic clearinghouses over its network of 60 international routes. The company does the difficult job of meeting the different regulations and formatting the payment instructions to meet the peculiar requirements of each national banking system. This would be an expensive and time-consuming task for individual banks to carry out. As the number and complexity of regulations surrounding KYC and money-laundering continue to grow this will prove an even more valuable service.

The number and diversity of cross-border payments look set to continue to grow strongly, with high levels of migration, e-commerce and international trade. Earthport’s growth path should also be boosted as more and more of the leading banks wake up to the need of using a scale-advantaged specialist in this area.

As we have said before, this is one to watch.

Software Europe may not be operating in the most exciting area of the UK SITS market – its flagship product is cloud-based expenses software - but it’s a great example of a UK SME punching above its weight in the NHS IT market. It’s also a welcome example of IT benefiting the NHS by enabling significant savings.

Despite being an SME with a turnover of less than £5m, the company’s software now manages over £65m of expenses for 600,000 NHS employees in the UK. Its ‘Expenses Health’ product - which reportedly enables NHS Trusts to save up to 20% on their expenses budgets - seems to be hitting the right note with NHS organisations keen to reduce costs as they battle to save £20bn by 2015 (see our UK Public Sector SITS Market Trends & Forecasts report for background if you’re a PublicSectorViews subscriber).

Little wonder that Software Europe is growing rapidly. The Lincoln based company, which has been around since 1989, won 28 new NHS clients in its Q3 (to end Dec ‘13) including Devon Partnership NHS Trust, Burton Hospitals NHS Foundation Trust and Royal United Hospital Bath NHS Trust. Revenue increased by almost a third over the previous year as a result.

Eligible TechMarketView subscription clients can read more on Software Europe in today’s UKHotViewsExtra.

They liked working with them so much they bought the company. In fact a pretty typical modus operandi for UK business process services leader Capita, which has just acquired erstwhile network services partner, Surrey-based Updata for £80m cash on the nail. (Hat-tip to Channel Register superhack Paul Kunert for signalling this deal over a month ago.) Updata is forecasting to turn over £42m this year (to June) with a £5.6m operating profit, much in line with Capita’s margins.

Capita had been working with Updata on some deals in the Scottish public sector since 2011, most recently sealing a £325m, 9-year framework contract to implement SWAN, the Scottish Wide Area Network (see Capita and Updata SWAN off to Scotland), much to the immense chagrin of incumbent BT.

Although its home turf is business process services, Capita wears a coat of many colours, notably in IT services (see Capita: a new force in UK IT services?). You’d be hard pushed to call out any particular ‘strong suit’ in IT services, but maybe that’s the point – any deal, any time, anywhere!

This deal also typifies the challenge that UK Government has in its worthy aim to introduce more SMEs into the procurement mix. Indeed, as Updata MD Richard Bennett put it, “as an SME, we realised that we would struggle to continue our growth in terms of capabilities and market opportunities”. Partnering works up to a point – but the commercial reality is surely that if the partnership proves successful and enduring, then acquisition becomes the obvious next step.

The deal has only just come to light. And if that means it has only just been signed, it would be fair to say that the Cabinet Office’s Crown Commercial Service (CCS) cut it fine. With just six days to go until support for Windows XP was due to end, several media reports (including Computer Weekly) highlighted yesterday that the UK Government has signed a deal with Microsoft to provide Windows XP, Office 2003 and Exchange 2003 support and security updates across the whole of the public sector for a further 12 months.

The agreement is worth £5.548m, and, as might be expected, CCS is keen to highlight the savings that it has achieved (“at least £20m”) in avoiding individual departments negotiating their own deals. The arrangement covers all of central and local government, schools and the NHS. It is widely reported that NHS England has more than 1m devices running Windows XP. Importantly, we can now expect a rush of upgrade activity, as the deal stipulates that in order to take advantage of the extended support, public sector bodies must have a “robust plan” in place to migrate away from the products within a year. Larger public sector organisations (250+ users) will also need to have a Premier Support agreement in place (most already will do).

CCS has done well to negotiate a deal; according to a Washington Post report last month, the US Government has failed to agree a similar arrangement. However, UK Government organisations will have known about the April 2014 deadline for more than six years. So, the need for such a deal calls into question why so many Government organisations have failed to act at a time when cyber threats are on the increase. Budget cut pressures? Poor IT management? Problems due to bespoke software being built for XP? The clock has started ticking all over again. And organisations will now have the option of moving to Windows 8.1 (see Windows for the desktop - again).

There’s a new BI player on the block following a set of moves initiated by venture and development capital investor Shackleton Ventures. Shackleton has sold its equity investment in Leeds-based lending software business Pancredit Systems to Equiniti Group (the business services provider delivering complex administration and payment solutions), for an undisclosed sum. The acquisition will continue Equiniti's initiative to refocus the business (see here).

Another aspect of the Shackleton exit is that part of the Pancredit business – the Panintelligence unit that provides BI solutions - will be spun out as an independent entity, backed by existing shareholders and Shackleton. This will establish Panintelligence as a specialist BI business in its own right, but it is moving into a crowded market that is undergoing a lot of change as interest moves from backward looking reporting to forward looking analysis. However, last year saw the Panintelligence division “gain momentum in a range of markets where it had an existing presence, as well as breaking ground in new markets” according to management so it obviously has market appeal. From what we can see, it focuses on the mid-market which is underserved in terms of BI tools.

Cambridge-based ‘real-time location intelligence’ products and services company Ubisense has topped up its piggy-bank with a £4.2m placing at 220p per share, around a 4% discount to the prior price, and adding 8% to the share count. Ubisense had drawn down £3.5m from a new £5m bank facility last year to support operations and investments which had cost the company over £2m in cash. Ubisesne reported deeper losses just last week (see here). The placing will pretty much double their year-end cash balance suggesting perhaps more acquisitions are on the way. If so, I only hope they do something to help the bottom line as well as the top.

Just Eat has just priced its IPO giving them a value slightly less than £1.5b – well in excess of expectations. Indeed twice the £700m we swooned at just in Jan 14. This for a company that aggregates takeaways in your locality. Or as some wag said “a guy with a server linking to the local kebab stall”. We’ve written much about ‘frothy’ valuations and indeed questioned whether Just Eat is a tech company?

I really don’t want to be a ‘party pooper’. Clearly Just Eat, AO.com, BooHoo.com and the rest have great business models and are highly disruptive in their respective markets. But they are just companies that use tech in their businesses rather than tech companies in any established definition. They have little or no IPR. Their models are easy to copy – indeed as Groupon found. They may be fast growing at the moment but we know the totality of the fast food, white goods or fashion markets. We know that growth will slow as market share increases. We know how general retailers are valued. We know that if these newcomers are successful (and many will fail) that their valuation metrics will be similar to today’s established players. We all probably know that all the real value creation was made for investors who came in prior to the IPO.

What harm if they get overvalued in the short term you might ask? If investors are that stupid why should we care?

In the winter storms, a large but not very well established tree was blown over in my garden. As it fell it took out many more established trees and a lot of saplings. I fear that the same will occur if we label companies like Just Eat as ‘tech’. When the bubble bursts in those stocks – as it undoubtedly will – it will affect sentiment for the rest of the tech market. Again as I have said before, the established tech market is NOT in bubble territory. Indeed is very fairly valued on profit and cash flow metrics.

That’s why you and I should be worried.

Microsoft has done it – the Windows 8.1 Update (available from April 8) now makes the OS look and act a lot more like Windows 7. The update can be configured to boot to the desktop on mouse and keyboard-based systems, all types of apps and shortcuts can now be pinned to the taskbar and as it is accessible from anywhere in the OS users can use the taskbar to switch between apps, and Close and Minimise buttons are back on apps which allows for Windowed apps. As for the Start button, currently it will take users to the Start screen but Microsoft is promising a Start menu similar to the old one. In essence, Windows 8 which was remade for touch, has been remade again in large part to incorporate non-touch. It has been an embarrassing and costly exercise which is not over yet and the ‘8’ tag may yet be dropped with next major release - rumoured for spring 2015.  

Another important announcement was Universal apps as part of Visual Studio 2013 Update 2 Release Candidate that allows developers to use 90% common code to build apps that work across multiple platforms - PCs, tablets and Smartphone. This is a move to bring Windows versions closer together across the platforms (while hopefully retaining the ability to ‘do the right thing’ for each platform). As part of the bigger picture it is also a plea to developers to build for Windows in an environment where web, Android and iOS environments look increasingly appealing. Microsoft needs developers on side if it is to execute on its joint cloud and mobile first ambitions. On the smartphone front, Microsoft also announced that Windows Phone 8.1 has an Apple Siri-soundalike voice assistant in the form of Bing-fed Cortana.

Although the developments will have been started way before Satya Nadella took up the CEO position they are a statement that the company - and Nadella - is looking to deliver change, something that the rollout of Office for iPad also signalled (see here). He has made a good impression in the short time he has been in role, the challenge is keeping the pace and changes rolling.  

Because it’s Friday, it’s always good to end the week on some really good news. And for me, the very best good news usually concerns jobs for our young people. Yesterday Accenture announced 2000 new jobs in the UK (London, Manchester, Newcastle, Edinburgh and Aberdeen). The jobs are at all levels too – from the fantastic Newcastle Apprentice Scheme which eventually leads to a Foundation degree but without the student loan! – through entry-level roles for graduates to people with existing experience in infrastructure services, financial services, IT strategy and digital skills.

Everyone moans about the lack of IT skills in the UK. But unless we tackle the problem ‘at source’ it will never be solved. More digital skills education (I’ve been looking at Clare Sutcliffe’s Code Club in more detail lately and I am mega impressed) through to sixth form colleges (like the proposed FE Code College in London) and then creating entry-level jobs for these people here in the UK rather than in Bangalore. A few years back nobody seems to ‘get it’ and I felt like a lone voice. Now everyone seems to 'get it' – including HMGovt. But action now will take many years to bear the fruit required. But at least we have now started down the road.

Let me start by declaring that I have been a Digital Barriers (DGB) shareholder since their IPO at 100p in March 10. I’ve known Exec Chairman Tom Black for a very long time since even before his Detica days and rate him highly. DGB’s shares had been riding high in the Holway Portfolio as I have reported on many occasions. Indeed they had more than doubled within a year. But…

… in early 2014, DGB put out a revenue and profits warning (See here)  which seemed to put the shares into freefall. Down c50% YTD and, at c85p, now lower than the 100p IPO price.

I’ve just come off a call with Black. This morning DGB has provided a trading update confirming revenues of c£19m for the FY just ended and ‘an aspiration to move towards breakeven in the current FY’.

There was good news on several fronts. The previous downgrade was due to both contract conclusion and product delays on TVI. Today DGB announced a £1.8m order with ‘a major US federal agency’ who have upped their order from an initial 50 handsets to ‘multiple thousands’(“Can’t give you a precise number, Richard, as that would reveal the number of agents they have…”) Another £2m+ order has come in from a law enforcement agency in the Middle East. Black told me they have secured 3 c£2m contracts in the last 5 weeks. So it really looks like those delayed contracts are finally closing.

On the TVI product front, four new products have been launched in the last four weeks and Black assures me “the delays are behind us”. DGB’s problems, frankly, stem from trying to do too much at once. I think Black gets that now.

Indeed because I’ve known Black for so long, I can ask him “as a friend rather than an analyst, have you now turned the corner?”. I got an emphatic ‘Yes’. As those many Chairmen and CEO readers that I know well will know, you can really only pull the wool over Holway’s eyes once! I doubt Black would risk it.

Anyway, after a long run of falls, DGB shares are up 2% this morning on the news.

We recently caught up with Simon Walsh, the new COO at EMC EMEA (see here). Walsh, who previously held senior roles at Colt and Computacenter, is the ‘point man’ for EMC’s EMEA President Adrian McDonald, helping to run an operation that employs around 10k people and generated 27% of EMC’s $23.2bn revenues last year.

By virtue of its various acquisitions, EMC Corporation now comprises four distinct brands: EMC Information Infrastructure (II), Pivotal, VMware and RSA. Over the past five years EMC’s revenues have grown at a compound rate of 9% and operating margins have increased from 18% to nearly 25%. In FY13, revenue from EMC’s mainstay Information Infrastructure business grew 5% with varying performances across their various product portfolio. Meanwhile, VMware, and Pivotal both grew 15%  (see EMC hits revised FY13 target). In other words, the high growth areas are helping to smooth out the dips elsewhere.

This is Walsh’s biggest job to date, both in terms of portfolio scope, organisational transformation and geographic coverage. It’s not for the faint-hearted; but one thing we would never call Walsh is faint-hearted!

Tesco has become a poster child for digital transformation and its latest (indirect) move reinforces that. Dunnhumby, is the ‘customer’ science’ company that helped drive Tesco’s loyalty card programme and use of the resulting big data assets to better understand what customers want (ultimately helping take Tesco into areas like banking and digital media as well as growing the core business). Tesco acquired Dunnhumby in 2006 and now Dunnhumby has made an acquisition of its own taking it into the advertising technology sector (adding to two previous purchases made since being purchased by Tesco).   

The target is Berlin-based ad technology provider Sociomantic Labs, who provides programmatic and retargeting advertising, with a strong focus on ecommerce. What that means is that it enables personalised marketing at scale, using data assets and an ad serve engine. It has c700m online customer shopper profiles and a plethora of large clients, resulting in the ability to combine data and services to serve up more precisely targeted digital advertising and personalised communications. These can be combined with Dunhumby’s data assets (from Tesco and many other retailers) to link customers’ interests across brand, while Socimantic can start to sell Dunhumby’s data crunching capabilities to its customer base.

What is really significant about this deal (terms were not disclosed but press reports suggest a purchase price of around $200m) is that it showcases the value of data as a financial asset and revenue generator, and a practical use of big data. We will be looking at the impact of data-driven applications in a new report from the ESASViews research stream shortly. The deal also highlights how marketing agencies are moving into the ESAS space, presenting a new threat to established providers. This movement will intensify as organisations accelerate their digital transform programmes (particularly in the front office) and more technology purchasing decisions are made by budget-holding line of business, digital and chief marketing officers – something highlighted in Capturing the digital front office opportunity.

If you own Google (GOOG) shares (as I do) you might wonder why your share valuation halved overnight. Don’t worry too much as you have now been given an equal number of shares in GOOGL. GOOG shares now have no voting powers. GOOGL have very limited voting power – mainly because most of the voting power is with the unlisted B Shares which are still controlled by Messrs Page & Brin.

If you believe in shareholder democracy then clearly this might well rankle. Google seems to have taken this approach so that it can offer shares to do acquisitions without giving away any control. It is said that other Silicon Valley firms are planning similar moves.

Last night the Google shares with limited votes ended higher ($571.5) than the non voting shares ($569.7)

Google also had a bit of setback with their recent $3.2b NEST acquisition. See Google enters the connected home with $3.2b NEST purchase. They found a fairly basic flaw in the smoke alarm. Google have suspended all new sales to work out a fix. The device has a feature where you can switch off the alarm by waving at it. Say your toast is burning but there is no fire. You wave at the alarm and it is silenced. But what if there really is a fire and you are waving in panic? (as in ‘not waving but drowning/burning’) The FT reports that NEST has put out a software update to deactivate the feature.

Maybe those simple battery operated £5 smoke alarms we have throughout our house aren't so bad afterall.

I caught up yesterday with Nick Hynes, tech entrepreneur extraordinaire and co-founder of mobile consultancy and media agency Somo. Hynes and co have just secured a further $5.5m in funding from the MMC London Fund – part of MMC Ventures– and other private investors.

Somo is a fascinating story as much due the prior careers of its founding team (Hynes established the European arm of search engine Overture– subsequently sold to Yahoo) as to the construct of the business. The beating heart of Somo is mobile app bespoke development, with which they have captured marquee global brands such as Audi, BP and de Beers. This is underpinned by a marketing services (media buying) operation – the original Somo business – and a growing portfolio of mobile app IP.

Somo has grown from its ‘founding four’ in 2009 to become a 180-man international operation facing off to some of the biggest names in the mobile tech and media industries – and winning. Very disruptive!

The AIM is about to host another new tech entrant. Rosslyn Data Technologies, the holding company for Rosslyn Analytics, expects to be admitted in late April 2014.

The valuation has yet to be disclosed but we do know is that Rosslyn Analytics was founded in 2007 to provide cloud-based BI and analytics software to SMBs. This part of the market is not well served in terms of BI and analytics so is primed for growth. Panintelligence emerged last week as a spin-out company, also targeting the SMB BI/analytics market (see here). Rosslyn covers the hard but essential task of data preparation and management (dealing with raw and dirty data) and also enables drag and drop integration of distributed data sets, along with visualisation so it has similarities with fast growing Tableau, Tibco Spotfire and QlikTech but adds the messy data preparation element too.

UK HQ’d Rosslyn Analytics raised £2.1m in late 2013 from Amati Global Investors to fund set-up in Europe and the US. Customers include HM Treasury, Aberdeen Asset Management and Capita.  Previous funding rounds included two IQ Capital-led deals.

Kimble Applications are pleased to be announced as a winner in the EMEA Innovation Challenge led by salesforce.com and identified as “Rising Star for 2014”.
 
The EMEA Innovation Challenge is a partnership between salesforce.com and leading European venture capital firms such as Notion Capital, Octopus Investments and MMC Ventures. It seeks to find Europe’s top entrepreneurs; those companies best harnessing the explosion of growth in Europe’s enterprise app market and building innovative cloud apps on the Salesforce platform.
 
Kimble is the most feature rich Professional Services Automation (PSA) solution on the salesforce platform. It enables the holistic management of the entire services business. In one product, it provides the functionality traditionally associated with a diverse range of CRM, PSA, Resourcing, Time and Expense and Financial reporting systems.
 
Sean Hoban, CEO at Kimble Applications, commented, “We are proud that, out of nearly 500 entries, our company has been recognised in this way. We are equally proud that our solution has enabled our customers to grow 25% faster typically than the industry average, by providing real-time information that allows business leaders to understand and respond to underlying issues and trends in their business. This holistic focus on business improvement, as opposed to just operational support, is unique in the market, and is essential for consulting firms to improve the quality of their business and realize their ambitions.”

The Kimble application offers rapid and dramatic benefits for any organisation that regards people as an asset. Our customers include some of the fastest growing services businesses across the globe, many of whom are TechMarketView subscribers.
 
To find out more about how we can help fuel your business growth, email info@kimbleapps.com or visit our website at www.kimbleapps.com

We are delighted to announce the names of the twelve companies that have been invited to participate in the fourth Little British Battler Day to be held in London on 23rd April.

They are:

• Company85
• Egress Software Technologies
• Eseye
• Genfour
• Mvine
• Purple Secure Systems
• Rant & Rave
• Sales-i
• Shaping Cloud
• TagPoints
• Thoughtonomy
• Virtualstock

The standard of applications was again incredibly high and it was very difficult for us to select which companies should be invited to participate. There were other candidates we considered to be equally worthy and it is simply a matter of logistics that we cannot invite more to participate on the day.

We look forward to welcoming the CEOs of our next 12 Little British Battlers to the event.

AIM-listed hosting provider, Nasstar, has released its preliminary results for the 15 months to the end of December 2013. The figures do not include e-know.net Ltd, which was acquired in January 2014 via the reverse takeover of holding company, Denara (for an aggregate consideration of £13m). In FY13, Nasstar had revenue of c£2.5m, up about £100k on the previous year. It was loss making at the operating level to the tune of almost £3m. The acquisition of fellow hosting firm, e-know.net, significantly changes its financial position. e-know.net had FY13 revenue of £6.9m (+20% on the previous year) and an adjusted EBITDA margin of 19% (up from 16%). The enlarged group will now have annualised recurring revenue “in excess of £9m”.

Nasstar has historically been focused on selling via channel partners and one of the reasons for buying e-know was to gain access to its direct sales channel – which is focused around the legal, financial services and recruitment sectors. Costs savings from the acquisition should filter through this year – for example, by migrating some of Nasstar's servers from outsourced data centres to e-know's own facility in Telford. There should be other “synergies” too, for example from consolidating the technical support functions and centralising sales and marketing teams.

There are great expectations for the current financial year. The company says 2014 “should represent a year in which [its] investment bears fruit and moves Nasstar into a commercially focused, profitable and sustainable business”. At sub-£10m, the new entity will still be a very small player in the market. However, e-know’s recent track record demonstrates there is growth in the small and mid-sized hosting market (see Mid-market Data Centre Services: Opportunities and Competitors). However, to gain notable scale beyond the £10m revenue mark is likely to require another acquisition.