I’ve been one of Martha Lane Fox’s 192,858 followers on Twitter for many years since I met her when she addressed an IMLG meeting. So I was one of the first to learn on Friday that Martha was to become an NED at Twitter – a role she described in <180 characters as Best. Job. Ever.

I was then interviewed by the BBC on the subject and limited my comments to the rather bland and obvious.

 "It's a really interesting appointment," Richard Holway, chairman of the TechMarketView consultancy, told the BBC.

But he added that in his opinion Twitter faced an uphill struggle when it came to turning the company's fortunes around.

"I think Twitter has huge problems and it will need some pretty major changes in order to make it relevant and, in particular, profitable."

We here at TechMarketView have always liked companies that can make a profit. High revenue growth, even faster profits growth and good cash generation gets our vote every time. This doesn’t just mean the ‘older-type’ companies. The way that Apple, Facebook and Google have created fantastic profit machines is awesome. In the last year Amazon has demonstrated that AWS can also be a great profit creator – and investors have given them their just desserts as a result.

We are still waiting for some of the Cloud/SaaS players to demonstrate the same profit-making attributes and will applaud them too when - or possibly if - they do.

Twitter has effectively never made a proper profit. On top of that it doesn’t seem to have developed a business model capable of doing that. Its user growth has slowed to a stop.

Martha Lane Fox has become a sort of National Treasure since becoming the first UK dot.com lady with Lastminute.com. It not only never made a profit but lost a lot of investors a lot of money during the latter part of her tenure.  As the UK’s Digital Champion, sitting in the House of Lords, Martha has done a great job in elevating the importance of that subject. She had also picked up a string of NEDs in the process – including Marks & Spencer and Channel4.

It’s both great to see a woman and a Brit on the board of Twitter. But what Twitter really needs are people with the experience of developing business models that can quickly generate profits. My BBC quotes should be read in that context.

I thought my post on Friday – Pre-orders for Tesla Model 3 top 325,000– would be my last Elon Musk post of the week. But today, Musk’s SpaceX Falcon 9 rocket launched a satellite into orbit carrying supplies to the ISS before returning to land on a floating dock in the sea. To see the amazing video Click here. SpaceX had already landed a rocket back on land in Dec 15  – See  my post The Falcon has landed. Musk said at a press conference today that SpaceX intended to reuse that rocket again in May. The significance of all this is that if you can reuse the rocket (up to 10 times according to Musk) the price per launch is dramatically reduced. SpaceX then becomes a very viable venture producing the profits Musk needs for to quest to colonise Mars.

Musk is never one to set his sights low. See my Nov 15 article – Tales from the Valley. Musk also claimed last week that Tesla would be worth more than Apple by 2025. Tesla has market value of c$33b today compared with Apple’s $600b. Of course, the claim could well be made a lot easier to achieve if Apple’s valuation sinks – which it has done in the last year! If Tesla really does crack the auto market, it has a lot greater potential than Apple has in its core smart device market. All of which just increases my conviction that Apple will enter the auto market itself soon.

I admit to being a bit mesmerised by the Elon Musk story – in much the same way as I was with Steve Jobs. Given the feedback, I know that a fair few HotViews readers are pretty mesmerised too!

Better late than never! But just as the waves of disruption never subside nor do TechMarketView’s predictions for the fundamental changes taking place in networking, cloud and security markets in 2016 and what they mean for suppliers.

Demand for routine infrastructure upgrades is just the start of any customer conversation – the real business lies in the applications, services and consultancy which sit on top of the fixed and mobile network links that bind them.

For the remainder of 2016, we expect to see the following:

- Fear of being caught out by cyberattacks combined with new data privacy legislation will drive extensive information security upgrades amongst public and private organisations, forcing suppliers to revamp product and service strategies to capitalise on opportunities.

- Performance and availability constraints within data centre infrastructure will put more pressure on companies hosting cloud services to adopt network virtualisation (SDN and NFV) as they bid to accelerate customer service provision and improve automation whilst cutting opex to optimise cloud profitability.

- Demand for fixed network bandwidth upgrades and additional wireless coverage amongst enterprises provides an opening for upselling of additional services and applications, particularly around security and BYOD.

- Increased integration of on- and off-premise virtual applications and services into hybrid clouds will need a foundation of strong management and orchestration platforms if suppliers are to protect their IS business from super scale public cloud providers.

- The exponential growth of IoT networks and connected devices is creating a wealth of potential opportunities, but suppliers will need to accept they are only one link in a long value chain, demonstrate their expertise and choose partnerships well if they are to establish a foothold.

These predictions are available in full to subscribers of our ever popular InfrastructureViews research stream: TechMarketView Predictions 2016: Networking, cloud security report.

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We had long been concerned that Access intelligence, a supplier of SaaS solutions had been spreading itself too thinly with many different operations within what is still quite a small company. Consequently, we are pleased to see that focus is central to the new management strategy. Last year it disposed of its software maintenance and hosting business, Willow Starcom, and has now sold its Due North e-procurement business to Proactis.

At the same time, it has significantly increased its scale and portfolio within the reputation and risk management sectors, adding over £3m to group revenue during 2H 2015, via the acquisition of Cision UK and Vocus UK. This activity hit the bottom line, with a substantial increase in losses from continuing operations, up to £4.7m, on revenue of £8.1m. At the year-end the company had cash of £1.5 million and this would have been boosted by the £4.5m sale of the Due North business. No dividend was paid for the year.

Vuelio is the group’s re-branded and up-scaled operation in reputation management, enabling companies to monitor and manage communications with stakeholders. The other businesses in the group are crisis and incident management with AIControlPoint and training and competence management (through AITrackRecord). The strategy of greater focus and targeted investment will continue throughout 2016 and further M&A activity is expected.

The management of stakeholder communications certainly seems to be a growth business, and the SaaS model should prove attractive to a large number of potential clients. Given the continuing reorganisation across the business, a need for substantial investment in software and platform assets and the company’s intention to build market share, the road to profits may yet be a long one. Nevertheless, the company’s progress should be helped by the clearer sense of direction.

We are delighted to announce that the fourth annual ‘Evening with TechMarketView’ will take place on Thursday 8 September 2016. Following the success of the sell-out 2015 TechMarketView Presentation & Dinner, this year’s event will once again be held in the magnificent premises of the Royal Institute of British Architects (RIBA) in Portland Place, London, from 6.30pm.

The evening, which will be centred around our 2016 research theme ‘Surfing the Waves of Disruption’, will commence with short, insightful presentations from the TechMarketView analyst team highlighting key trends in the UK software and IT services market. This will be followed by plenty of time for networking over drinks and a sumptuous three course dinner with your peers.

We’re expecting a similar audience to the previous three years with around 250 ‘movers and shakers’ from the UK tech scene, for what has been described by previous C-level attendees as “the best networking event in the industry”.

Tickets do sell quickly, so we’d advise you to book early to avoid disappointment! We’ve held the prices at the same level as last year - £395+VAT per person for TechMarketView research subscription clients and £495+VAT per person for everyone else. There are also a limited number of tables of ten available at £3,950+VAT.

To secure your place, please click here to book or email tx2 events who are organising the event for us on eventenquiries@tx2events.com.

If your organisation would also be interested in sponsoring the event please email Tola Sargeant (tsargeant@techmarketview.com) for details of available sponsorship packages.

I first met Cristiano Lincoln Mattos, founding CEO of Brazilian cybersecurity firm, Tempest, about three years ago (see Tempest starts brewing up a storm) and was most impressed. Tempest is one of the few Brazilian tech companies that has firmly established roots beyond its domestic market – some 15% of revenues derive beyond Brazil’s borders – including here in the UK (see Brazilian Tempest getting more secure in the UK).

Tempest has just announced a R$28m (c. £5.5m) minority investment from Brazilian VC firm, Fundo Aerospacial, among whose key shareholders include EMBRAER, the Brazilian aerospace manufacturer which you may (or may not) be surprised to learn is the world’s 3^rd largest commercial aviation company.

This is great news for Tempest, which plans to use the funds to expand its international presence in Europe and Latin America. I’ll be meeting Lincoln again soon and will bring you more then.

Dell signed up AIM-listed utility cost management consultancy Utilitywise as an OEM partner as it builds out its Internet of Things (IoT) service capabilities and looks for new routes to market.

The deal is one more piece in the IoT jigsaw that we think most infrastructure service providers will have to carefully and gradually assemble if they are to address demand for connected services that span multiple devices, networks, back end systems and hosting platforms (download TechMarketView's Predictions 2016: Networking, cloud, security report for more detail).

Newcastle-based Utilitywise’ t-mac building energy management systems (BeMS) solution will now be integrated into a much broader automated IoT platform interconnecting heating, ventilation and air conditioning (HVAC), security, refrigeration and lighting systems, for example.

Dell’s OEM partner program for independent software vendors, systems integrators and solution providers is well established. But despite specific agreements with the likes of Intel and Thingworx, we think its IoT element remains underdeveloped and expect to see Dell announce more partnerships in the future.

The Utilitywise customer base will also give Dell a route to client engagements in the UK utilities sector which it would otherwise have struggled to find. Both companies will jointly sell a cloud based IoT platform as a means for utility companies to reduce waste, identify efficiency improvements and generate operational cost savings.

And Dell will be keen not to fall behind in a fast paced market which is now starting to heat up. Rival IS providers are also investing heavily in IoT technology and partnerships, including BT, Vodafone and Telit.

The Daily Mail & General Trust (the owners of the Daily Mail) has confirmed that it is in discussion about launching a bid for much troubled Yahoo. Just one of a rumoured 40 other parties, including Verizon, IAC and CBS, that have expressed an interest ahead of the 18^th Apr 16 deadline for initial expressions of interest.

In the case of the DMGT, it is likely that the Yahoo content assets, like Yahoo Finance, would move into an expanded DMGT online business. The Daily Mail is the most successful news site in the US and UK. Although many would say that the word ‘news’ was stretched a little! The remainder of Yahoo, including the highly valued Alibaba stake, would be taken private by a PE group.

I’ve written about Yahoo for longer than I care to recall. I am no fan of CEO Marissa Mayer as you might guess from such posts as Yahoo’s Marissa Mayer approaches the end of the road. Conversely, 1) I have been a major user and fan of Yahoo Finance for a decade or more. I would happily pay for it or put up with more ads. It is crying out to be monetised. 2) I made a considerable gain on my Yahoo shares which I both bought and then sold as a proxy for Alibaba.

The sooner this is all resolved the better.

We don’t tend to cover the gaming/gambling SITS sector but when a major acquisition in this area was brought to our attention we certainly took notice. Canadian listed but Las Vegas based NYX Gaming is paying £270m for UK based OpenBet, who delivered revenue of c£65m and adjusted EBITDA of £21.8m in its last FY.

OpenBet, founded in 1996 and whose £208m MBO was backed by PE Vitruvian Partners 5 years ago, is the technology name behind many of the UK’s betting operations such as William Hill, providing digital gaming capabilities, including the first omni channel gaming solution. The relationships will not end with the acquisition as William Hill is providing £90m to help finance minnow NYX’s move (c£78m market valuation), while SkyBet is putting up £20m in shares.

This is another case of a UK HQ’d business moving across the pond but is also a reminder that the UK has a thriving gaming sector, raising the question of whether this move could mark the start of a wave of interest in UK operations in the sector. Certainly, there has been significant consolidation among high street bookies, in part to boost their online channel positions. UK tech businesses in sector have the means to stand tall however – e-gaming giant and FTSE 250 listed Playtech is said to have a £1bn in hand for acquisitions. Gaming/gambling, already a market for SITS providers, is firmly part of the digital transformation agenda. With the segment undergoing change, that indicates fresh opportunities for SITS suppliers. 

IBM’s Global Process Services (GPS) division has extended a partnership with Trintech, a US-based record to report process automation player, which has an impressive client list, apparently with half of the FTSE 100 - including the likes of Lloyds Bank Asset Finance, HSBC, BAE Systems, AstraZeneca, Sky, Unilever and Whitbread.

IBM will now use Trintech’s cloud-based ReconNET reconciliations tool for its BPO customers to automate the process of handling high-volume transactions. Transaction matching on typically smaller, but high volume reconciliations remains a very manual process for many large organisations, making it labourious and at higher risk area of error. Automating the process makes a lot of sense for a number of reasons – freeing up staff on to higher value activities like compliance, exceptions and customer service, while improving productivity and reducing cost and write-offs.

Trintech is another player to add to the list of emerging business process automation (BPA) players operating in the UK market now partnering with the major BPS players (see Business Process Automation: What is Intelligent Automation?). However, Trintech’s latest accounts at Companies House show a business generating £2.6m in revenue (FY15), down 22% yoy. Partnerships are a win-win for both sides in the BPA market. They are therefore vital for driving higher volumes and revenue streams for BPA providers. Meanwhile for the big BPS players, BPA partnerships are now essential to remaining innovative and competitive.

Nasstar’s results for the year to the end of December 2015 show underlying revenue growth of 3% (to £13.8m), lower than the 8% it reported in H1– for which it blames the “unexpected and unrelated customer events we faced in July 2015”. The inorganic growth figure was 23%. Adjusted EBITDA increased to £2.9m from £2.3m, and down at the operating level the company reduced losses from £1.8m to £1.2m

Nasstar’s services cover hosted desktop, Office 365, hosted Exchange, SaaS, IaaS, hosted telephony services, managed networks and end user support services. As such, 3% growth feels light and it needs to get back to something more like the 8% it achieved in H1.

Notable positives in the year include the attainment of cost synergies and cross-sales following the integration of the various acquisitions the company has made. On top of this, it moved forward with hiring people into several senior roles – including the appointment of a new Managing Director in January 2016 – and renewed a contract with its largest customer.

In October of last year, Nasstar acquired VESK, which enabled it to strengthen its position in certain verticals (e.g. legal) and move into the public sector. Nasstar’s model demonstrates how important acquisitions can be for small companies that need to move quickly to take advantage in disruptive markets. However, it ideally needs to develop a more robust organic growth line that can withstand the “unexpected”.

SAP slipped out a warning late Friday that its Q1 results were going to be weaker than expected, pulled down by slower software sales - down 13% - particularly in the US and Brazil.

Revenue is expected to come in at €4.7bn vs. the €4.5bn of the year ago quarter which is below average street expectations, although good management is showing up in improved operatng profit, up 28% to €0.81bn.

At this point in SAP’s cloud transition it is the relative performance of the on premise vs. cloud parts of the business that is important. A 33% lift in cloud revenue to €0.68bn added €180m, taking it to c14% of overall revenue (vs. 11%), which is positive and puts SAP ahead of Oracle whose cloud revenue is languishing at c7% (see here). However, at €0.61bn vs €0.70bn, software licence revenue only added €20m over the quarter. The key question is how is HANA faring. Hopes are pinned on S/4HANA where customer numbers increased from 2700 to 3200 but we don’t have an indication of the scale of the implementations yet.

It is too early to draw conclusions from the widening gap in growth between cloud and traditional business revenue, particularly considering that Q1 is SAP’s smallest quarter, but this metric, along with S/4HANA adoption will be keenly watched when the full results are released later this month.

A recent meeting with Dassault Systemes provided some food for thought because it was apparent that the company has transcended its roots, with a current remit that is much broader than PLM and engineering design. The Dassault Systemes of today is a working example of a data driven company, using its expertise in the physical but also the digital environment.

It describes itself as the 3D Experience company. In our view that’s too abstract and does not convey what it does. We like the unofficial description that its software can create a virtual twin of the real world, enabling testing to be carried out in the virtual world but produce the same results as it would in the real world.

That works for the physical products that Dassault has long been associated with but it is being innovative and applying its modelling approach to non-physical outputs such as business processes and the customer experience. By taking in relevant data, business metrics and desired outputs, its platform can be used to model digital outputs such as experiences, business models, or financial models that can end up as new products, just as it can model something physical like a car (trendy Tesla is a flagship client – see here). It all comes down to understanding and using data and analytics, and applying an engineering approach to digital output and all forms of lifecycle management.

We think the Dassault of today hits several of the major market trends. Its focus on lifecycle management puts it firmly in the camp of a data driven business; it bridges the physical-digital worlds; and it is experiencing while simultaneously enabling modernisation through digital transformation. One of its challenges is market awareness of its modern stance. SITS suppliers would do well to take a fresh look Dassault Systemes to see how its platform could be used to improve digtial propositions.

It’s a little unusual in trading statements to see the UK market lumped in with Greater China and Brazil. But such was the case with mid-tier UK-headquartered recruitment firm Michael Page International (aka PageGroup), whose CEO, Steve Ingham, alluded to ‘challenging market conditions in several of our larger markets, including Greater China, the UK and Brazil’.

Not that PageGroup’s UK performance was anywhere near as dire as Brazil, where gross profit plummeted 31% yoy in Q1 (to 31^st March), or for that matter, Greater China (-5%). In fact, UK GP remained flat, ‘impacted by the timing of Easter and the uncertainty surrounding the EU Referendum’. Technical disciplines and permanent placements at higher salary levels were most affected. Temporary recruitment GP grew by 6%.

Net net, across the Group, headline GP rose by almost 5% to £142m, just under 4% growth in constant currencies. Ingham’s outlook for the rest of the year was muted, given ‘the unpredictable nature of the current cycle and … limited visibility’.

We should continue to expect wide diversity of performance in the UK recruitment market as we have for some time (see Diversity shows at Michael Page, Robert Walters), driven as much by company business models (see FDM, Adecco, InterQuest – it’s all in the model) as by skittish market conditions.

Customer proof points in the emerging Intelligent Automation space are all important for business process service (BPS) providers and their business process automation (BPA) partners. So it’s thumbs up for Genpact and natural language generation player Arria NLG that they are progressing their partnership to the next stage.

As part of the arrangement, Genpact has commissioned Arria NLG to develop three ‘fully market-ready applications’ for Genpact's customer base, initially in the banking and financial services industries. These cover model documentation and validation, financial planning and analysis (FP&A); and credit assessment. It’s likely Genpact will include these products within its growing systems of engagement technology portfolio, where it is partnering with other automation players like Rosslyn Analytics and Omprompt to deliver Intelligent Automation to customers (see here and Business Process Platform opportunities in digital transformation).

Arria’s technology uses a form of artificial intelligence to extract information from complex data sources and present that information in natural language (i.e. as if written by a human). It’s potential application in business process services could be huge if NLG is able to rapidly produce meaningful intelligence from data at scale. For instance, it could provide valuable source material to support analytics and process re-engineering improvements, in areas where data is ballooning, such as HR and F&A as well as specific industry sectors like banking and finance.

One of the big questions facing BPS providers is whether to partner or build/white label your own BPA technology. We think partnering with a third party provides a level of validation for customers that their BPS partners are paying more than simply lip service to this disruptive technology. Providers 'going it alone' will have a harder job to prove otherwise.

Following its work to refocus on data solutions (see here), AIM listed IS Solutions is rebranding to reflect the change.

The proposed new name (awaiting shareholder approval at the AGM in July) is D4t4 Solutions, to reflect its quad data play - data collection, management, analysis and solutions. To be honest, we were puzzled by the name until we saw the logo, which is a visual representation of the word 'data'. 

The data focus, centred on providing applications to drive value from data no matter what stage the client’s data is in its lifecycle, makes a lot of sense. It will enable the company to take a higher value proposition to market compared to its play as an integrator of portals, analytics and enterprise content management. Its Celebrus acquisition (big data analytics) has been influential in the change of focus but is not the only driver as there have been changes to the senior management team too. As an data analytics house with surrounding data capabilities, IS Solutions/D4t4 is in a market hot spot and primed to continue the storming growth of H1 FY15 (to September 30) where revenue more that doubled to £7.04m while pre tax profits were £1.54m (and a 22% margin) vs. a £350k loss. 

Six Degrees has hopped back on to the acquisition trail with the purchase of cloud services provider, Carrenza. Terms of the deal were not disclosed.

Carrenza took part in our third Little British Battler event in 2013 and we’ve watched the company over the past couple of years as it’s continued to innovate. In FY15, it achieved revenue growth of 8% to £4m (growth was 12% in FY14) and a 12.5% EBITDA margin.

Six Degrees is of course no stranger to acquisitions, and the addition of Carrenza brings various benefits. It helps Six Degrees with its on-going strategy to move up the value chain through the provision of more complex services – notably around cloud integration. Secondly, it gives Six Degrees consulting/integration capabilities around Amazon Web Services’ public cloud offerings. And finally, it gives the firm in-roads into the public sector, where existing Carrenza clients include Government Digital Service (Carrenza hosts the majority of GOV.UK’s staging and production environments on its cloud). We therefore think this is a very canny purchase.

Six Degree’s growth plans are, however, two-pronged as it is investing in organic growth too. In January its backer, Charlesbank, said it would add another £12m to support the company’s organic growth plans - for example, hiring new people and developing tools. 

Six Degrees’ financial year runs to the end of March, so we haven’t been briefed on the year yet. However, by our estimates, it should be very close to hitting the £100m revenue mark.

Universe Group, the supplier of POS, payment and loyalty systems into the petrol forecourt and convenience store sectors, delivered on its forecasts for a strong second half. The profit performance was slightly ahead of expectations with operating profit up 18% to £2m. Revenue declined by 2% to £20.3m due to the ending of some low margin contracts. Net cash at year end reached £2m.

Throughout 2016, the company will be rolling-out its systems into Conviviality’s 650-store estate, see here, and looking to increase its presence in the convenience store sector where the April 2015 acquisition of Spedinorcon has provided the Group with scale and portfolio. With an addressable market of 47,000 stores (contrasting with a total of 9,000 petrol forecourts), there is significant opportunity for growth, particularly as the product portfolio continues to expand, boosting potential upselling.

Competition is fragmented in both target sectors and there is scope for market share gains, boosted by Universe’s recent rapid rate of new product introduction, with a new back office system and point-to-point payment encryption.

Given the considerable progress we would expect this year in convenience stores and further upsells in the petrol market, we would not be surprised if expansion plans into other retail sectors were put on the back burner. Any geographical expansion would also be carefully considered, using channel partners or working with an existing customer. Acquisitions could also feature, but the management is in no hurry, looking to ensure that any deal adds real value in new market sectors.

Analysts are suggesting a low double-digit revenue growth in 2016 and operating margins roughly flat (having climbed to 10% in 2015). These expectations appear well within Universe’s compass given the Conviviality deal, the anticipated operational gearing and its plans to become the one-stop-shop for convenience store technology.

Nowhere in the Business Process Services (BPS) landscape are the waves of disruption as potentially high as in Robotic Process Automation (RPA), where software robots remove the need for humans to perform routine rules-based back office tasks.

RPA tools can also do away with the need for traditional ERP system integration (SI) projects that aim to get systems ‘talking to one another’ by enabling data to be extracted from and into different systems automatically.

In both cases, the addressable spend to BPS providers and systems integrators is vast – worth over £10bn in 2015 according to our estimates. RPA is small in revenue terms today, but it is already having a disruptive deflationary impact on manual BPS operations spend, and this looks set to extend into the SI arena too.

In our initial report into the BPA sector Business Process Automation – a brave new world for BPS providers we introduced RPA, and highlighted how it had caught many incumbent BPS providers by surprise. Two years on, we now see a huge fight-back by BPS players via partnerships - e.g. Sopra Steria, Accenture, HCL and IBM partnering with industry pioneer Blue Prism (see hereand work back) and Capgemini, HP and Deloitte with UiPath - to show that they are ready and willing to deliver the kind of step change in productivity and performance for their customers offered by RPA.

RPA poses significant threats to incumbent BPS providers. But there is also huge opportunity too as we see RPA broadening its application over the coming years, becoming more strategic in tackling system interoperability and process silos across the enterprise.

Subcribers to TechMarketView's BusinessProcessViews research service can read our analysis of the who's who in RPA and opportunities and challenges for suppliers in Part Three of our series into BPA here: Business Process Automation: Opportunities in the Robotic Revolution.

If you don't yet subscribe please contact Deb Seth dseth@techmarketview.com who will be happy to help.

We reported in January that mid-tier offshore services firm Mastek had recovered to deliver modest growth at the end of 2015, after having spun out its US-based insurance activities, but that building its private sector business was going to be a long slog. See Mastek struggles to find its feet.

Nevertheless, Mastek has added to its UK and private sector credentials with its recent win of a contract to develop a mobile application for S D Taylor, part of the Non-Standard Finance (NSF) Group and provider of home loans. The move to mobile is part of S D Taylor’s digitisation strategy and aims to automate the processing and checking of weekly loan collections, ensure regulatory compliance and provide real-time customer information to enable quicker decision-making.

While only a relatively small step forward, this presents Mastek with a useful example of its capability in a growth area and builds on its experience within the UK home lending market. Mastek’s agile development capability and generally innovative way of approaching opportunities probably also played a large part in them winning the business.