There seem to be a host of startups offering 'click to call' software for your website so I wonder how any of them make money (rhetorical question perhaps?). Anyway, here's another, in the shape and form of London-based ResponseIQ which recently raised £850k in a seed funding round backed by Mactaggart & Mickel Investments, and the founders of Trend Investments, among others. ResponseIQ previously raised £128k on crowdfunding platform Seedrs in May 2015. All good stuff – but how do you tell them apart?

EMIS Group's performance for the year ended December 2017 has been overshadowed by its failure to meet service level agreements (SLA) with NHS Digital (see EMIS fails to meet NHS Digital obligations).

Total revenue was up 1% to £160.4m (2016: £158.7m), which was in line with management expectations. Recurring revenues improved by 4%, meaning they now represent 83% of total revenues. However, its failure to meet certain SLA obligations with NHS Digital had a dramatic impact on profits. When the situation was revealed EMIS said the financial consequences were likely to be "in the order of upper single digits of millions of pounds". We now know that a provision of £11.2m has been made to cover any potential settlement and costs associated with these breaches.

The SLA issues relate to underreporting of performance associated with the current GP Systems of Choice (GPSoC) contract and stretch back to 2014. NHS Digital is still conducting its own assessment of the issues. EMIS' management said that it has had positive discussions with NHS Digital and they believe that its relationship with the organisation remains strong.

The business has also undergone a significant amount of change since Andy Thorburn joined as CEO in May 2017 (see EMIS names new CEO). Costs associated with the reorganisation and cost reduction programme, including a number of senior level hires, in 2017 was £5.8m. Adjusted operating profit for the year was £37.4m (2016: £38.8m), but, largely as a result of reorganisation costs and the SLA provision, statutory operating profit fell 55% to £10.6m (2016: £23.5m).

The NHS Digital SLA issue has been hugely disappointing for the business, but given the ongoing challenges of ever tightening NHS budgets EMIS delivered a solid performance in 2017. The outlook for 2018 is looking positive, with revenue equivalent to 90% of 2017 revenues already secured.

Hedgehog Lab is a Newcastle based mobile-focused tech consultancy with international growth ambitions. Originally founded by current CEO Sarat Pediredla and Chief Product Officer Mark Forster the company now employs 120 people with offices located in the UK, US, India and Denmark.

Having worked as developers in other agencies for a number of years Pediredla and Forster took the opportunity to build a company centred around software developers. Originally founded in 2007 as a web agency, Hedgehog Lab pivoted in 2011 to focus on developing multi-platform software for Mobile, Web, VR, AR, Wearables, Connected Platforms and IoT.

Hedgehog serves the market need for a small / mid-size technology consultancy that has a combination of strategy, design and technology skills across different platforms. It exploits the fact that many IT companies lack strong design capabilities and that most strategy companies lack the necessary engineering skills, particularly around mobile product development. ​

With PE investment from Maven Capital Partners​ now on-board Hedgehog Lab is focusing on differentiating itself by investing in those tech skills that are currently hard to find. Hedgehog got into mobile apps early and has now invested heavily in VR and in establishing an AI practise. ​

It currently primarily delivers project-based services to a client list that includes the likes of Thales, The Financial Times, Channel 4, Mitsubishi and Microsoft HoloLens and has recently started delivering resource augmentation and outsourced product development as it looks to scale the operation. For many customers Hedgehog Lab’s value is in accelerating product development cycles without having to invest heavily in in-house mobile and digital teams and we look forward to following its scale-up journey as it focuses on landing larger enterprise deals.

Full year results out today from AIM-listed SafeCharge (a provider of payments processing services, technology and risk management solutions for online and mobile businesses) show the firm achieved good underlying growth of 17% to $111m. “Underlying growth" refers to a comparison with 2016 following the reshaping of the existing customer base to upgrade the "qualityof revenues". A straight compare on the previous year shows revenue up 7%, with a stronger H2 where growth was 11%.

Growth has come from both new customers and through expanding existing relationships and of note is that c30% of transaction volumes were processed through its own SafeCharge Acquiring platform in December 2017.

In terms of profits, the Adjusted EBITDA margin dipped from 32% to 30%, which we think is probably a result of some of the work it has done so reshape its customer base.  

For 2018, guidance from the Board indicates that revenue will be $125m-$130m, with Adjusted EBITDA of $36m-$38m.

We’ll have more once we’ve met up with the company.

The payments sector is large and growing rapidly as the migration of cash to electronic payment continues to accelerate. Subscribers to our Financial Services research should read “Understanding the UK Payments market” for more context on the market.

For years Salesforce has pursued large enterprises, stressing the number of multi million dollar deals in its quarterly earnings. Now it is focusing on the small business market – specifically small business not SMEs – with the Essentials services.

Essentials (currently sales and service but not marketing) are low price, simplistic versions of its core offerings, aimed at 1-25 employee companies, with a maximum of ten users at $25 per user/per month. But they do include Einstein, thereby making advanced techniques available to the large small business market.

There are several takeaways from the announcement. While large enterprise deals are essential they are costly to secure and renew, which contribute to Salesforce’s rising sales and marketing costs. Obviously, it will need a high volume of Essentials sales to match a single large enterprise sale but Essentials sales are low cost self service – and there is a large addressable market because there are plenty of small businesses who have not bought into CRM. The new service is a challenge to Microsoft Office 365 as Salesforce tries to tempt businesses to move up from email and spreadsheets but it might be a speculative play for Microsoft Dynamics customers too due to the lower price point and access to the Salesforce Small Business Hub for more ERP type functions.

The entry point applications are on ramp to Salesforce’s more advanced products – the company needs volume to reach its 2022 $20bn revenue target (see here). Essentials also run on the core Salesforce platform and are being announced as retirement plans for two small business applications - Desk.com and SalesforceIQ - that do not run on the core, are being disclosed. These moves mean Salesforce has one less platform to support but also highlights the work necessary to appeal to small businesses (and that it hasn't got it right with Desk.com and SalesforceIQ), particularly when there are competitors like SugarCRM, ZoHo, ProsperWorks and Infusionsoft who can offer applications with lower price points than Essentials. The small business market is attractive but it’s easy to get the approach and products wrong. 

I am not going to rant. At least, not today. What I am not going to rant about is the Government's Smart Meter rollout plan – I will leave that until BEIS (Department for Business, Energy and Impractical – sorry, Industrial – Strategy) issues its quasi-quarterly update on Smart Meter installations, which I am now expecting at the end of this month.

I only mention the subject because one of the beneficiaries (yes, there are some) of this misguided programme, AIM-listed, Glasgow-based utility meter installation and asset management firm, Smart Metering Systems (SMS), has reported another good year.

Headline revenues in 2017 grew by 18% to £79.6m, gross profit by 9% to £40.4m and operating profit by 10% to £22.6m. This meant gross margins fell from 55% in 2016 to 51%, and operating margins from 31% to 28%. SMS completed a substantial share placing at the end of last year to bolster growth (see SMS – right time, right ‘place’ to scale up). SMS has a large capex requirement (£124m in 2017 – almost treble that of the prior year) as it purchases meters from manufacturers outright and leases them to electricity companies.

As I have said many times before, it's not that smart meters are a daft idea – they most certainly are not. What is daft is Government's cack-handed approach in mandating their universal installation against impossible deadlines. Oh dear – that was a rant, wasn't it. Sorry.

Over 2017, StatPro, the provider of increasingly SaaS-based portfolio management and analytics solutions, has made some further significant strides forward.

Reported revenue was up 31% to £49.3m and EBITDA came in at £7m, up 36%. Losses before tax were £3.4m. Operating cash flow improved 43% to £10.7m, but net debt doubled to £20m after the Delta acquisition. Some 82% of the group’s Annualised Recurring Revenue is now SaaS-derived. Organic revenue growth was only 2% with the shift to cloud, a small churn of the still-large StatPro Seven base and as management attention focused on integrating the acquisition.

The May 2017 acquisition of Delta from UBS added some £9m of revenue and has filled out the Group’s performance and risk solution. The deal shifts StatPro’s centre of gravity into the front office and fixed income expertise, significantly increasing StatPro’s addressable market. StatPro aims to transfer the Delta clients onto a unified Revolution platform within three years and will be working to build the necessary functionality on the cloud-based service.

StatPro has certainly cemented its position with the largest asset managers, with ten of the top fifteen now using StatPro systems. The company has re-vamped and up-skilled its direct sales team and the improved pipeline and greater share of wallet within large fund administrators should drive revenue growth through 2018.

Next year, StatPro will introduce a new organisational structure to improve management focus on specific markets, setting up “Source: StatPro” (managed data services and complex asset pricing), and “Infovest” (now 100%-owned) offering integration and data management alongside “Revolution”, (the SaaS-based, StatPro Seven and Delta analytics businesses) which will comprise 80% of group revenue.

StatPro management is relentlessly moving the business forward and we can expect an uptick both in growth rate and margin in 2018.

We stated in our Business Process Services Predictions 2018 that we thought the combination of strategic consulting expertise and platform based intelligent automation in the form of ‘Virtual BPO’ was a potential game changer for UK BPS.

We heard today that services firm Symphony Ventures and digital labour platform provider Thoughtonomy have signed just such a deal. This is a very exciting development for UK BPS and will see Thoughtonomy’s Virtual Workforce platform enable Symphony Ventures to offer clients access to on-demand digital labour.

This will support the digitisation and automation across a broad range of front and back office functions including finance and accounting, customer services, operations and support and can either be managed by the client themselves or provided by Symphony Ventures as an outsourced service.

The contract will provide a platform scaled to deliver over 2.5 million work hours per year, and capable of automating the work of up to 4,500 people and will incorporate a combination of Artificial Intelligence (AI), and Robotic Process Automation (RPA) tech.

We expect to see more of these types of deals this year. ‘Virtual BPO’ has no legacy of labour intensive operating models with which to contend and can offer those clients who are ready for it a ‘blank sheet of paper’ for process redesign and delivery. It has the potential to really shake up the BPS market and to pose a real threat to traditional players.

Although the Temenos bid for Fidessa took the markets by surprise (see our comment on 20^th February, Temenos takes a punt on Fidessa), the management of this Swiss-HQ’d provider of banking software had been planning its route into the Capital Markets business for some time. The £1.4bn deal, now recommended by the Fidessa Board of Directors, opens up the sector which Temenos reckons to be spending some US$14bn on IT. Looking at 2017 revenues, Capital Markets revenue will account for 40% of the enlarged Group.

The Fidessa portfolio sits well with that of Temenos and there is significant potential for cross selling. At the same time the Fidessa operation, which will run as a stand-alone division in the new Group, should benefit from Temenos’s emphasis on R&D, its strong sales focus and its approach to partnership and innovation.

The timing of this deal looks inspired. FinancialServicesViews subscribers can learn more by accessing “Temenos and Fidessa – Building a Full Service Provider”, here.

Geospatial software firm 1Spatial’s trading update today signalled that results for the year ending 31^st January will be a significant improvement on the year previous. Whilst short on detail the core geospatial business has performed better than management expectations with higher revenues, margins and adjusted EBITDA.

As we mentioned in October, 1Spatial was gathering positive momentum (See here) in its transition and whilst there was still more work to be done was moving in the right direction. Recent contract wins with the likes of Northern Gas Networks, US Federal Highways and a State contract win in Michigan in partnership with Esri all will have helped.

A year ago, the company changed leadership with former CFO Claire Milverton becoming CEO and steering the company towards focusing on its core geospatial business. This has now resulted in the decision to sell 80% of Enables IT to Champall Consultancy, an entity owned and controlled by Michael Walliss the MD and founder of Enables.

Enables was acquired by 1Spatial back in July 2015 and provides IT managed services mainly to the SME market.  It generated £6.9m of revenue and £0.5m of EBITDA in the last financial year and was classified as the Group's Cloud division. However, a large portion of these revenues were accounted for by one major customer which has now taken the decision to insource the services provided by Enables. 

1Spatial will retain a 20% interest in Enables but will now sensibly focus efforts on growing its core global geospatial business which has much greater potential for growth. 

The performance of Forbidden Technologies plc in 2017 never recovered from its challenging start to the year. The resignation of CEO Aziz Musa in February 2017 had a significant impact on the cloud video platform provider and the business was without a full time CEO for six months. When new CEO Ian McDonough joined Forbidden Technologies in September 2017 he had little time to make any real difference to the performance of the business.

Revenue for the year ending 31 December 2017 fell 2% to £759k (2016: £775k), and invoiced sales were down 29% to £714k (2016: £1.01m). The business made an operating loss of £2.36m (2016: loss of £2.37m) and an EBITDA loss of £1.84m, which was slightly worse than the previous year (2016: loss of £1.79m). Forbidden Technologies remains debt free, but cash and cash equivalents fell 53% to £1.75m (2016: £3.71m).

McDonough described the results as "disappointing" and pinned the blame almost entirely on the disruption in leadership. Since his arrival, he has made a number of new senior appointments, so the issue of leadership should now be addressed.

The business will now focus where McDonough believes it has competitive advantage, namely its patent pending Blackbird 9 codec. Blackbird will be elevated to be the master brand at Forbidden Technologies, and it will subsume the Forscene branding used for its video post-production and publishing platform.

2018 will see a continued focus on recurring infrastructure sales versus its project-based revenue, and there will be an increased emphasis on the North American market. Forbidden Technologies seems to have had a reasonably positive start to the year, with double-digit growth in invoiced sales compared to the same period last year -- investors will want to see that momentum maintained throughout the year.

Last night I had the pleasure of attending the Annual Dinner of the Information Systems Security Association (ISSA) at the magnificent Armourers Hall in the City. I was sat next to Lord David Blunkett and realised that his views and mine on every subject were pretty much identical - even our views on Jeremy Corbyn!

The key speaker was Dr Vint Cerf who, together with Bob Kahn, are recognised as the ‘Fathers of the Internet’. Back in the early 1970s, Cerf worked on ARPAnet - the predecessor of the Internet and designed the TCP/IP protocol. At MCI he developed the first ever commercial email system. Cerf is now, at the age of 75, still very active as  ‘Chief Internet Evangelist’ at Google.

Cerf’s speech, as you might expect, centred on security around the IoT. A typical home could easily have 100+ connected devices (not difficult to imagine if you think of individual lights, heating, gates, doors, curtain tracks - even loos and showers!) How do you make those both secure and practical? Which voice should be permitted to ‘Open the gates’? How do you permit short term guests to control the heating in their rooms or even use an internet connected shower? Normally you wouldn’t want anyone to access the CCTV cameras in your home. But you might want the Fire Brigade to have access if your house was on fire and they wanted to check the location of any trapped people. What Cerf called ‘Episodic Access’ would pose huge security issues.

Cerf didn’t have specific answers to his own questions - other than admitting both the problem and the opportunity for all this to be used for nefarious purposes.

At the risk of being accused of being a Luddite, I did come away thinking that the simple ‘On/Off’ light switch was difficult to beat!

The overwhelming shift towards services requires tech businesses to create a flexible, ever-evolving business model that adapts to changes in technology, the competitive landscape and customer expectations.

For the Finance function this means managing new business models, meeting new regulatory requirements and making sure their financial systems are an integral part of a unified business application platform seamlessly processing transactions and sharing data across the organisation.

Join our Morning Briefing at The Brewery, Londonon the 20th March, 8am-11am to hear valuable cloud business insights from leaders in finance and technology. You’ll hear industry experts discuss cloud business systems and why organisations are adopting cloud applications for today’s service-based, digital economies.

Agenda

Opening Keynote - Tod Nielsen, President & CEO, FinancialForce. Tod will share how the advent of the 'New Services Economy' has meant businesses must create a flexible, ever-evolving business model that adapts to changes in technology, the competitive landscape and customer expectations

The launch of the independent 2018 State of Finance research & report including: Hear results on how economic and finance models are changing as disruptive business models impact every sector and hear which finance technology and platforms are supporting successful businesses.

The latest innovations in cloud technology: Understand how adopting a single platform, cloud approach can provide an end-to-end solution that aligns sales, service delivery and finance and improves KPIs across the board.

Speakers from the industry describe the challenges they faced and how they have deployed technology to dramatically improve their efficiency and achieve some startling results around growth and profitability.

REGISTER FOR THE EVENT HERE

Brought to you by FinancialForce - Cloud ERP, Financials and Professional Service Solutions for the Tech Industry.

As we’ve noted previously, there are some good assets within Cambridge based Ubisense, the enterprise location intelligence systems supplier, but they are struggling to shine (Still much to do to make Ubisense make sense). However, as the company reported its first full year results under ‘new’ CEO Richard Petti, there were flashes suggesting they are making their way to the surface.

Work during 2017 to refocus the business on “own-product sales” in automotive, aerospace, telecoms and utilities while managing out its legacy third-party Geospatial service business and reposition the product portfolio around its SmartSpace and myWorld software products showed progress. Although revenue growth was a modest 3% to £27.3m (year to December 31 2017) it was a turnaround from the 40% plummet of 2016 (Ubisense - the truth is in the numbers). Athough still negative, the bottom line showed an improvement as the operating loss shrank from £6.2m to £3.9m. 

The results of fundamental changes are emerging. Revenue from its own products is now 61% of the total and software revenue saw 21% growth to £3.9m, albeit only to 14% of total revenue. The 22% decline in geospatial third party services revenue is actually a positive as this was a planned move to reduce reliance on third parties. One of the performance drags to tackle is low margin hardware and services revenue in the SmartSpace business which is no small task.

The company is in the business of connecting and managing industrial processes, it is hooked into ‘digital twin’ concept (like Dassault Systemes, Autodesk, PTC, Siemens) and has prospects in Industry 4.0 around smart production technology. The components are present within Ubisense but it still has heavy lifting ahead to sort the business out.

Two companies outlined plans to beef up their cloud security portfolios this week, with Palo Alto Networks set to spend US$300m acquiring Evident.io and CyberArk buying up Vaultive’s assets.

Implementing and monitoring secure end user access to a wide range private, public and hybrid cloud hosted applications and services is a growing headache for IT departments as public and private sector organisations continue to shift more workloads off-premise (subscribers to SecureConnectViews can read our ‘Cyber Security Market Trends and Forecasts 2017-2020’ report here).

Both Palo Alto and CyberArk now see a need for next generation security tools designed to be “cloud centric” from the ground up. Evident.io is a privately held US company which has developed the Evident Security Platform (ESP), a single dashboard for multiple cloud accounts that monitors AWS and Microsoft Azure deployments to identify security and compliance vulnerabilities in default service configurations and user settings. The acquisition is expected to close in the third quarter with Evident.io co-founders Tim Prendergast and Justin Lundy joining Palo Alto.

Israeli firm Vaultive too specialises in providing secure user access to cloud services. Financial details of the completed transaction were not disclosed, but its technology assets are now destined for CyberArk’s Privileged Account Security Solution, specifically developed fro for hybrid cloud environments spanning public and private SaaS, IaaS and PaaS platforms.

We expect it will take time for Palo Alto and CyberArk to integrate those newly purchased cloud security tools into their current identity access management (IAM) and cloud access security broker propositions. But once that work is complete the two companies will be better placed to meet demand for secure cloud access from both new and existing clients.

We are very pleased to announce that InterSystems will be our Ruby Sponsor for the 2018  ‘Evening with TechMarketView’.

Our sixth annual Presentation and Dinner will be held once again at the magnificent Royal Institute of British Architects (RIBA), in Portland Place London, from 6.30pm on Thursday 13th September.

Up to 250 of UK tech’s ‘great & good’ are expected to attend the evening event which has become a popular fixture in the tech calendar and has been described by attendees as “the best networking event in the industry”.

‘Breaking the Boundaries’ after drinks with InterSystems

The evening will begin with an extended welcome drinks reception giving plenty of time for networking over a glass or two of your favourite tipple. We’re delighted that this year your welcome drinks will be sponsored by InterSystems, whose technology is used by businesses in finance, government, healthcare and other sectors where lives and livelihoods are at stake to help manage risk, meet regulatory demands, streamline operations, and transform enterprise data into sound business decisions.

After a few drinks with your peers, you will be treated to an hour or so of insight on key trends and suppliers shaping the UK tech sector from our leading analysts. And, in line with our 2018 theme, we will of course be ‘Breaking the Boundaries’ too (more on that in due course) before we sit down to a sumptuous three course dinner.

Book by 1 May for early-bird rates

As in previous years, TechMarketView subscription clients and SMEs that have been through our Little British Battler (LBB) and Great British Scaleup (GBS) Programmes benefit from a 20% discount on ticket pricing. Our growing band of UKHotViews Premium subscribers also qualify for this discount (yet another reason to sign up!).

Ticket sales will go live tomorrow so look out for the link in tomorrow’s UKHotViews. To get the best deal, book before 1 May to secure early bird prices.

To express your interest in other sponsorship packages related to this or future events – some of which come with sought after speaking slots - please contact TechMarketView’s Tola Sargeant or Sarah Robinson directly (tsargeant@techmarketview.com).

Wipro is selling its data centre hosting business to Ensono for an undisclosed sum. The deal will see 900 employees and 8 data centres transfer to Ensono. A strategic tie-up between the firms will enable Wipro to maintain access to those data centre capabilities while Wipro’s strategic focus for its core business will be around "digital spend" (more on this from our analysts after today's analyst conference.)

Wipro originally gained this data centre capability via its acquisition of Infocrossing in 2007. Back then, the Indian PurePlay (IPP) paid $600m for NASDAQ-listed Infocrossing, gaining BPO, managed messaging services, ERP managed hosting services, and infrastructure outsourcing capabilities. All but the data centre hosting business has been integrated into Wipro and will not be divested as part of this deal with Ensono. 

At the time, Wipro said the acquisition opened up “exciting growth opportunities in the large total outsourcing space”. To us, the move seemed to be at odds with the typical position of the IPPs who were looking to maintain an asset light approach to IT services. Furthermore, the outsourcing market of today looks very different to that of ten years ago; for several years now, the battle for outsourcers has been to maintain growth (or in some cases contain a decline) in a market where contracts are much, much smaller.

The divestment is no real surprise, and we’ve seen many other players divest services and assets in the low growth areas of the data centre and end user markets. Success here requires a very ‘well oiled machine’ suited to this part of the arena where growth will in part be dependent upon taking market share.

For Ensono – which has acquired UK firms Inframon and Attenda in the past couple of years – the move beefs up its US data centre capabilities, with potential for cross-sell and upsell opportunities for both firms.

We are very pleased to announce that tickets for the 2018 ‘Evening with TechMarketView’ are now on sale! Secure your place now and bookby 1 May for specially discounted early bird rates on tables of ten.

We look forward to welcoming you to this, our sixth annual Presentation and Dinner, at the magnificent Royal Institute of British Architects (RIBA), in Portland Place London, from 6.30pm on Thursday 13^th September.

Up to 250 of UK tech’s ‘great & good’ are expected to attend the evening event which has become a popular fixture in the tech calendar and has been described by attendees as “the best networking event in the industry”.

Superb networking coupled with expert insight on tech trends

There's another twist and turn in what is becoming the IT recruitment sector's longest running soap opera – InterQuest.

You'll have to catch up on the 'story so far' yourselves – start with New Nomad leads InterQuest back to No-Man’s-Land and work back). But suffice it to say that after multiple near-death experiences, its founding executive chairman, Gary Ashworth, attempted to delist InterQuest from AIM via an MBO but only garnered 58% of the shares, leaving the company in some sort of weird limbo.

Now we hear that InterQuest has acquired up to 95% of London-based banking and financial services consultancy, Albany Beck, in an all-share deal worth £2.4m (pre-dilution). Albany, which was recently restructured, had revenues of £1.3m last year but made a £100k pre-tax loss. Oh, and Gary Ashworth is a shareholder, as is Luke Johnson, who holds shares in Ashworth's MBO vehicle, Chisbridge. It's actually a bit more complicated than that but my eyes are already glazing over.

This is all prelude to the release of InterQuest's FY2017 results, which reveal a 5% decline in revenues to £136m, coupled with 3% growth in net fee income (gross profit) to £22.4m, lifting gross margins from 15.1% to 16.5%. The £399k operating loss in 2016 was turned into a £1m profit in 2017, a 0.7% operating margin.

I have no idea where this saga is leading. Worryingly, I'm not sure that management does either.