The shares of global spend management company Proactis Holdings almost halved in value in April as investors reacted to lower organic growth and the loss of several larger customers.

Management are now working hard to rebuild investor confidence and although this may take some time, there are several reasons for optimism. Firstly, the churn of customers has returned to more normal levels and the pipeline of new business is encouraging. It generally takes 6 months to bring convert a new customer contract to revenue and so the relatively poor performance re client intake in 2017 has now worked through the system. New client acquisition in the past year has been stronger with 64 new names and an ICV of £8.7m (compared with 54 and £4.1m in the year to July 2017).

“Upselling” is also a major current positive. 120 existing customers either signed up for more seats or took on more modules, thereby increasing average contract revenue. Here Proactis has built an extended portfolio of services, often by acquisition, for example with the latest deal to buy Netherlands-based Esize giving them a travel and expense management system. The large Perfect Commerce deal also provided a strategically important network solution linking buyers and sellers, thereby opening up further opportunities for supply chain management and finance solutions.

Proactis now has a top 5 position in its market, focusing on mid-market companies, on-boarding them relatively quickly and providing a development path of additional functionality to drive consistent value. Management will report £52m of revenue and c.£17m of EBITDA for the full year to July. They are anticipating a return to higher rates of growth in the year to July 2019.

The company has the strategy, market reach and the portfolio to regain its momentum, although this will not happen overnight.

We are very pleased to announce that Aqilla will be a Sapphire Sponsor for the 2018 ‘Evening with TechMarketView’.

Our sixth annual Presentation and Dinner will be held once again at the Royal Institute of British Architects (RIBA), in London on Thursday 13th September from 6:30pm.

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”.

We are delighted to welcome Aqilla, as a sponsor for the evening.

Aqilla Limited was founded in 2006. They have developed a web-based accounting solution designed for medium-sized businesses and organisations. It is feature rich and designed for the cloud meaning it runs with ease within any browser whilst saving you time with it’s reporting functionality. Aqilla is multi company, multi currency and even multi lingual, so we’re very excited to have them on board!

Event Details:

Date: Thursday 13th September 2018
Venue: Royal Institute of British Architects, London 
Registration & Drinks Reception: 6:30pm. An extended networking drinks reception commences from 6:30pm and is sponsored by InterSystems. This will be followed by the speaker sessions and a first-class silver service dinner.

To Register:

You can book individual seats, or why not recognise your key clients and partners by booking a table for ten. For more details and to book your place click here or contact our event management partner, tx2events on T: 020 3137 2541.

TechMarketView Event Rates for:

• Subscription clients
• UKHotViewsPremium clients
• Or if you're one of our Little British Battlers, Great British Scaleups or Early Stage Partner Programme companies

Sales of enterprise cyber security hardware, software and services again outpaced most other areas of the UK SITS market in 2017/2018.

A combination of GDPR-related data privacy compliance assessments and persistent threats from cyber criminals and state-sponsored hackers kept security top of mind. IT departments invested heavily in the products, services and skills they needed to maintain optimum levels of protection against the data loss, unauthorised access and operational disruption which could bring their organisations to their knees.

But the headline double-digit market growth rate masks uneven fortunes as some suppliers enjoyed a stellar year and others saw their security businesses shrink.

Our latest Cyber Security Supplier Ranking 2018 report rates the performance of the Top 20 players by revenue and analyses the differences in strategy and approach that determined their comparative successes during the year.

The report is available for subscribers to SecureConnectViews to download here: Cyber Security Supplier Ranking 2018.

For further information on becoming a subscriber, please contact our Client Services team: dseth@techmarketview.com.

As part of ‘An Evening with TechMarketView’ on 13th September 2018, we will be discussing the digital journey of one of the world’s top energy providers and the valuable lessons for tech suppliers. You will also benefit from our analysts’ insight into what it takes to be a leading supplier with double-digit growth and more.

Guest Speaker - Andrew Johnson, Senior Manager, Shell

Andrew is a senior manager at Shell Retail, part of the team responding to the digital challenge at Shell. With 43,000 sites across the world Shell is one of the world’s largest retailers, serving 25 million customers a day. 

Starting his career in predictive analytics, Andrew’s experience grew into being one of the first to lead the development of cloud, real-time processing, big data and many other disruptive technologies into the Retail sector. 

For the past ten years this has included shaping and driving Shell Retail’s B2B global approach, creating and launching new innovation into territories across North America, Asia and Europe.

Most recently Andrew has led the launch of a new payments product in China and is working on some inspiring digital solutions for Europe.  He has a passion for pushing the boundaries of technology and has developed a reputation for innovation and delivery through a pragmatic and practical approach. 

Sponsors: InterSystems, Aqilla and Brands2Life

To attend: Click here for more information and to book your tickets.

Are you part of an organisation that wishes to raise its profile within the industry?

To sponsor, contact Sarah at srobinson@techmarketview.com or call +44 (0)7880 908 008.

We hope to see you there!

Arcontech Group PLC, a provider of products and services for real-time financial market data processing and trading, has chalked up another successful year. Revenue for the twelve months ended 30^th June 2018 was up a healthy 9% yoy to c.£2.5m. This was driven in the main by additional annual licence sales to existing customers. Profit before tax rose ahead of expectations by an impressive 54% yoy to £576k and the company entered the new FY with both no debt and cash balances of £3.21m (2017: £2.64m).

More encouragingly, sales of its new desktop product, upon which Arcontech has pinned much of its medium term growth aspirations (see here), have begun to materialise. The last FY saw two global clients that were trialling the solution both sign up as paying customers and roll-out the platform internationally. There are a further six clients currently running trials of the software and the company’s recruitment of additional sales resource during the last twelve months is expected to start bearing fruit in the second half of the coming financial year.

Commenting on the outlook, Arcontech management painted a confident picture unaffected by the uncertainties of Brexit. The company’s pipeline of prospects is positive. Its high level of recurring revenue coupled with a robust balance sheet, moreover, means that Arcontech is able to both sustain current levels of investment in product development and carry on the hunt for strategic acquisition opportunities. This is, however, an intensely competitive market space in which customer needs are constantly changing. It is also an arena where sales cycles are long and unpredictable. Continued growth is by no means a given.

Capita has appointed the Finance Director of rail operator Go-Ahead Group as its new CFO. Patrick Butcher is expected to join the company and the Capita Board at the end of the year.

Current CFO Nick Greatorex announced his intention to step down back in July and will now leave Capita at the end of September. Greatorex was the last remaining connection to the previous management regime and now means CEO Jon Lewis has a completely new team in place with which to drive his strategy forward.

Butcher has been CFO of the Go-Ahead Group since 2016 and brings 19 years of experience as a finance director, including six years as Group Finance Director at Network Rail. His most recent experience at Go-Ahead,best known for operating the challenging Thameslink and Southern Rail franchises is particularly relevant and should set him up well for the roller coaster ride of large-scale outsourcing.

 ‘Encouraging progress. But needs to try a lot, lot harder’. 

At last some good news relating to the numbers studying Computing-related subjects at GCSE and A level

• UK entries for GCSE Computing were up 11.8% at 74.6K. Only 20% of those taking the subject were girls. This despite 54% of schools not offering the course due to a shortage of suitably qualified teachers.
• A further 73K studied GCSE ICT - the last year this will be available. Girls represented 37% of those taking the exam.
• But this is still a minute proportion of the 4.55m subjects studied at GCSE level. Over 760K students studied English at GCSE. 770K studied Maths.
• The most popular subject at GCSE was the Science Double Award at 801K.
• 10,286 students took A level Computing this year; up 24% on last year. Boys outnumbered girls 10:1 but at least the number of girls on the course increased by 48% in the last year.
• 21,130 students are now registered on a university Computer Sciencedegree course - 60% higher than 10 years ago.

It is really good that the numbers studying STEM subjects at GCSE are rising - indeed now outnumber those studying all other disciplines. But the numbers studying Computing are still pitifully low - with girls even more so.  A lot of this is to do with the shortage of qualified teachers - not surprising when one considers the much higher salaries on offer in the commercial sector.

I’ve never really understood why girls find Computing so unattractive. Is it the ‘geek’/’nerd’ image that the media promotes? A lack of female role models? Afterall most computing ‘stars’ are still male. The females I have come across in IT have been, at the very least, a match for their male counterparts. Google, Facebook and others have publicly said that they see ‘soft skills’ as more important than ‘hard’ qualifications. Without digging a hole for myself, females often have better developed ‘soft skills’ than males.

Anyway, I think the results card for today is‘Encouraging progress. But needs to try a lot, lot harder’.

Interim results from Sopheon the AIM-listed enterprise innovation management provider shows that momentum built last year has continued into 2018. For H1 2018 Sopheon has seen a 27% increase in revenue to $15.9m (H1 2017: $12.5m) achieving EBITDA of $4.1m (H1 2017: $3.0m).

Sopheon’s strategy to move to a newer ‘out-of-the-box’ Accolade Express for quicker time to value is seeing an increase in the volume of transactions with 29 licenses signed in the period including 9 new customer wins. The company is also benefiting from a strong finish to 2017 where it signed deals with two large US and German blue chips where it is now in the process of rolling out its Accolade solution across those businesses globally.

This has given Sopheon record revenue visibility for full-year 2018 at $27.2m (2017: $20.3m) and given that the final quarter traditionally has a strong weighting on its overall results means the company looks in good shape for the rest of 2018.

VMware grew its Q219 revenue 13% yoy to US$2.2bn, with turnover from the international business up 15% to US$1.1bn (now representing 51% of the total).

The company pointed to large software defined data centre (SDDC) and hyper converged infrastructure-led deployments with European telcos and service providers like T-Systems for the performance, alongside partnerships with Amazon Web Services (AWS), VeloCloud and other cloud service providers (CSPs) in the UK, France and Germany which are helping the company reach new customers.

Software license revenue expanded 15% yoy to US$900m with turnover from services up 11% to US$1.3bn. Whilst GAAP net income grew to US$644m, the total includes a gain of US$231m from the investment in Pivotal Software, without which yoy net income would have increased just under 2% to US$413m.

That metric may have been the cause of an initial 4% dip in VMware’s share price on the news, though their value has since recovered to pre-announcement levels. Indeed we see nothing on the horizon to disrupt the Dell EMC-owned subsidiary’s progression in the near term, with its broad portfolio of cloud hosting and data centre virtualisation products well placed to capitalise on both service provider and enterprise demand for hybrid IT infrastructure and multi-cloud strategy implementation.

Computacenter continued its strong start to FY18, building on a better than expected Q1 to grow H1 revenue 18% yoy to just over £2bn.

While turnover from the Services business grew by a modest 2% to £575m, Computacenter’s Technology Services revenue expanded by an impressive 26% to £1.4bn. That was partially driven by two very large UK contracts which pushed UK specific Technology Services revenue up 48% yoy to £633m, offsetting a 4.5% decline in UK Services revenue precipitated by challenges in the Professional and Managed Services divisions.

Those two “margin dilutive” UK Technology Services deals did not have too negative an impact on the company’s overall statutory pre-tax profits, up 9.5% to £52m during the period with Computacenter’s share price rising 8% on the news.

Computacenter CEO and TechMarketView Boring Award winner Mike Norris pointed to “buoyant market conditions” behind the strong performance, spurred by customer demand for increased network capacity, cyber security provision, workplace upgrades and cloud migration

Those are all trends which we expect to show continued momentum in the short term at least (subscribers to SecureConnectViews can read our Security, Networking and Cloud Predictions 2018 report here). Despite some seasonal fluctuation (and unfavourable comparisons to an outstanding H217), Norris is confident the second half of FY18 will see further progress, including a turnaround in the UK Services business led by workplace transformation projects involving Microsoft Windows operating system upgrades.

Intuit released Q4 results overnight but they were put into the shade by senior management changes that will see the CEO of 11 years Brad Smith and CTO Tayloe Stansbury step down at the end of the year. There is an orderly transition, with each continuing in position as they hand over to replacements drawn from the existing Intuit team. However, the share price dipped as the market reacted to the news.

Sasan Goodarzi, current EVP and GM of the largest and fastest growing small business and self-employed group (which includes QuickBooks Online), will take on the CEO role as of January 1 2019. Senior VP and chief product development officer for the small business and self-employed group Marianna Tessel, will step into the CTO role.

The duo are taking on a company that has strengthened on the back of small business, the self-employed (including the gig economy) and adoption of online tax and accounting (check out the HotViews archive here). Revenue was up 17% to $988m in Q418 (to 31 July) which was ahead of market expectations. Net profit rose from $34m to $49m although there was an operating loss of $81m. For the full year revenue was up 15% to nearly $6bn with net income of $1.2bn and operating income of $1.4bn.

Goodarzi and Tessel are inheriting a respected company that has made good progress shifting to a platform and cloud proposition (as competitor Sage is also doing) but still has work to do. The company also has to build a presence outside its US home market, increase its presence in Canada, Australia, and the UK and get further international expansion underway if it is to withstand the rise of cloud pure plays like Xero. 

Elon Musk and Tesla is turning into a bit of a road crash. It was less than three weeks ago that Musk announced - in a tweet - that he was ‘taking Tesla private at $420. Funding secured’. Then on Friday we heard that this ‘take private’ plan had been abandoned. According to Musk, shareholders - in particular the army of smaller private shareholders - had rebelled as they wanted to keep their shares invested in a publicly quoted company. Musk admitted that ‘going private would be challenging…and be even more time-consuming and distracting than initially anticipated’. There are serious doubts that the funding was ever'secured'. 

In my post on 20^th Aug - Tesla - now my Head not my Heart - I admitted having sold my Tesla shares at the end of July. I also said that I would consider reinvesting if Musk appointed a COO - like ‘a Tim Cook to Apple’s Steve Jobs’. Now looks as if the Tesla board is thinking the same way.

This episode, and others, only confirms my view of Musk is a seriously troubled individual. With the right help, Musk can make full use of the genius that he undoubtedly is. But I doubt this is the last we will hear of the‘take private' issue. There is a SEC investigation and several individual lawsuits to contend with first.

I’ll continue to watch from the sidelines…

Expense control is tough enough when tracking the purchase of discrete products and services. But it's much more complicated tracking spend on professional services such as law firms, particularly in large enterprises with in-house legal departments who may engage many different law firms each working on various 'matters'.

This was the gap in the market spotted by entrepreneur Nicholas d’Adhemar, whose startup Apperio has just raised a further $10m/£7.5m in a Series A round, led by Draper Esprit and supported by existing investors Notion, IQ Capital and angels. Launched in 2013 as 'Legal Tender', Apperio had previously raised some $4m in various seed funding rounds.

Apperio tracks effort and cost incurred by law firms on behalf of enterprise clients, providing dashboards and other analytics for client firms to 'get the whole picture' and drill down to individual law firms and matters. Apperio charges its enterprise clients for the service (SaaS) but offers it free to law firms who are working for Apperio clients.

The legal profession is not known for pioneering in tech. There is a growing band of 'legaltech' startups with point solutions for different aspects of legal services, such as document management (see Legaltech Clarilis secures £3.1m to fuel expansion) and contract workflow management (see Juro contracts for $2m funding round). A quick internet search revealed many others, but I couldn't spot any that looked like 'full-fat' ERP-like systems for the legal profession.

Building one from the ground up is probably a big ask. But perhaps a more realistic opportunity is a for 'wrapper' app that can make 'best of breed' point solutions such as Apperio work seamlessly with each other as well as integrate with enterprise accounting and CRM systems.

Despite the claims of the Minister for Implementation, Oliver Dowden, the latest government figures suggest that it is large business not SMEs that are reaping the benefits of the Digital Marketplace frameworks (G-Cloud, Digital Outcomes & Specialists (DOS), and Digital Services).

Evidenced spend for the period 01 January 2018 to 31 July 2018 was £984m, up 45% compared to the same period last year (2017: £678m). However, the proportion of spend via SMEs continues to fall—micro, small and medium sized businesses represented 38% of spending in the first seven months of 2018 compared to 47% in the same period in 2017. Evidenced spend via large businesses was up 65% to £561m (2017: £339m) compared to an increase of 19% to £378m (2017: £318m) for SMEs.

This data-driven report provides preliminary analysis of sales across the Digital Marketplace, including a comparison between SMEs and large businesses, the shift towards DOS, variations between subsectors, the top 20 suppliers in each subsector and the biggest spenders. It follows our full review of 2017’s data in February 2018 (see here) and will be followed by more in depth analysis of spending in 2018 when the final Digital Marketplace data is published early next year.

If you are an existing PublicSectorViews subscriber, you can read the report now. If you'd like to discuss an extension to your existing subscription or would like details of how to subscribe to TechMarketView, please email Deb Seth.

NASDAQ yesterday closed at a record high of 8017.

Established in 1971, NASDAQ took 17 years to hit its first 1000 point. In the crazy dot.com days it took less than two months to jump from 4000 to 5000 peaking at 5132 on 10^th Mar 2000. I remember those crazy days well as I wrote articles with titles like ‘Emperor’s New Clothes’ and ‘Dot.con’. I’m still proudest of my ‘FreeJellyBeenz.com’ spoof which I presented in my annual speech at the 2000 Regent Conference. When the crash came in April 2000, NASDAQ kept on falling for over two years - hitting a low of just over 1000 in 2002. A reduction of nearly 80% from its high.

NASDAQ’s foundations are in companies like Microsoft, Cisco, Oracle and Dell. Indeed NASDAQ is probably responsible for the IPO as the now know it. More recently it has been powered forward by the FAANGs.

The most common question I get asked as an analyst is whether we are heading for another crash like that in 2000. The fundamentals are very different. Many of today’s major constituents are highly profitable with huge cash piles. Indeed most of the big loss makers - UBER is a good example - are still private. Tech is now THE economy rather than a ‘nice to have extra’ as it was back in 2000. Most people and businesses could - and did - operate quite well without the internet or email back in 2000. Take that away today and we would all grind to a halt.

That’s not to say that a ‘Correction’ won’t happen. But, having said that, a ‘Correction’ has been forecast for 3+ years now and has still not happened. Personally I think that it’s the global economy as a whole that runs the greatest risk - it is not tech specific.

Starling Bank, a well-regarded challenger led by Anne Boden, ex-COO at Allied Irish Banks, has reported on a year of progress.

Over the year to November 2017 the number of accounts rose to 210,000, up from 43,000. The average deposit is relatively high at £900. (By comparison, Monzo had 750,000 account holders and average deposits of <£100 at its February year end, although it had only just started taking deposits). Starling made a pre-tax loss of £11.6m in the year to November, up from a £4.3m loss a year earlier. (Monzo reported a £33m loss in the year to February).

Starling has also made progress with larger actors in the financial services sector, renewing its contract with the DWP for the support of Universal Credit and signing with Mastercard Send to provide access to UK payments schemes. Particularly noteworthy however, is a deal with RBS/NatWest“to provide payments services to support new initiatives”. Further details are not yet available, but a key component of Starling’s value to RBS should be the technology and infrastructure underlying its banking-as-a-platform service launched earlier this month. Starling have already opened up this API-driven service to Raisin UK, an online savings marketplace.

An obvious route to scale for the technology-driven challenger banks is to hook up with larger, incumbent players. (We discussed this trend and the growing sophistication of Fintech providers in addressing this market opportunity in two of our recent FintechViews reports, see here and here). However, while Starling’s technology may offer substantial advantages to RBS in terms of cost, CX and agility, the Starling management will have to be adept at navigating the complex organisation and radically different culture of their much larger partner if they are to get maximum value from this latest engagement.

VMware’s planned purchase of CloudHealth Technologies will boost its multi-cloud capabilities, giving its customers better tools to analyse and manage cost, usage, security and performance across public cloud platforms including Amazon Web Services (AWS), Microsoft Azure and Google Cloud.

Details of the transaction were not disclosed, but reports suggest VMware will pay around US$500m for the company. The Boston, Massachusetts-based start-up has raised around US$85m to date from investors Kleiner Perkins, Meritech, Sapphire Ventures, Scale Venture Partners, .406 Ventures and Sigma Prime Ventures.

Founded in 2012 it has around 3,000 customers around the globe, including Pinterest, Yelp, Dow Jones, Zendesk, Skyscanner and SHI, with the CloudHealth platform often delivered by third party managed service providers (MSPs).

CloudHealth's technology is likely to be amalgamated into the VMware Cloud proposition to help deliver greater automation, compliance, security and governance, insights and analytics to VMware’s customers, though CloudHealth may continue to operate as an independent subsidiary under its own name.

The deal looks like a sensible move for VMware, with multi-cloud already a central pillar of its strategy. Many mid-market firms and enterprises now find themselves using multiple cloud suppliers simultaneously to optimise the cost, performance and availability of their IT services but often struggle with the overhead of monitoring and managing them.

Other suppliers which have boosted their multi-cloud capabilities this year include Cisco, Six Degrees, HPE, UKCloudandRackspace, and we expect more will follow suit over the next 12 months.

The Police Service of Northern Ireland (PSNI) has chosen Civica to supply its new Criminal Justice Data Sharing (CJDS) solution.

Civica Digital beat seven other suppliers to the contract and will now act as PSNI’s strategic partner to develop, support, maintain and provide services for future development and enhancement of the new platform. The contract is for an initial five-year period, plus three optional extension periods of two years, two years and one year. According to the contract award notice the total contract value over the maximum ten year period is £8.6m.

The new CJDS system will support information sharing between PSNI’s case management systems, the five main Criminal Justice Organisations (CJOs) in Northern Ireland via Causeway (Northern Ireland’s Criminal Justice Data Store) and the Police National Computer (PNC); it is scheduled to go live in November 2019. The system has been designed by Civica Digital to be scalable and is based on a set of reusable services. It will also include operational management and self-monitoring tools.

Information held on the CJDS platform will be able to be shared via the PNC, allowing data to be linked across the wider UK and European police data sharing platforms. It should also improve information flow between PSNI, the Public Prosecution Service, prison and forensic science services.

As we discussed in our Predictions Compendium 2018 and UK Police SITS Supplier Landscape & Market Trends report, digital join up across the criminal justice system is an essential aspect of transformation in the sector. It should help improve efficiency, reduce duplication and minimise the quantity of lost data.

PSNI published its Digital Strategy to 2020 & Beyond in 2017 to accelerate digitalisation across the organisation. The CJDS solution award follows the investment in a new command and control system earlier this year (see Capita secures PSNI command and control deal). The contract also cements Civica's position in Northern Ireland's blue light sector following its Northern Ireland Fire and Rescue Service deal earlier this month.

Deloitte UK has recorded revenue of £3.1b for the year ended 31^st May 2018. This is up a respectable 5.1% yoy but marks a notable deceleration from the 8.7% top line increase achieved in FY 17. It is also the firm’s worst growth performance since 2014. Distributable profit was down slightly by c.4% largely as a result of the decision to invest in automation. Despite the slowdown, however, Deloitte’s equity partners will enjoy their best payday for a decade with each receiving an average of £832k.

From a SITS perspective, more significant was the almost complete stagnation of Deloitte’s consulting business. Having surged ahead by 13.6% in the previous year on the back of strong demand for digital transformation services (see here), the firm’s consulting practice sales could only limp forward by 1.7% in FY 18.  This included the additional revenues brought by the acquisitions last summer of both creative agency Acne and proposition design consultancy Market Gravity. A less than 1% yoy growth in financial services sector revenue, which contributes over a third of Deloitte’s turnover, would seem to have taken its toll.

The firm’s total IT services revenues will have been buoyed a little by strong demand for its cybersecurity capabilities. These sit within Deloitte’s Audit and Risk Advisory practice which grew by 10.2% yoy. We believe, however, that cybersecurity services are unlikely to account for much more than 5% of the firm’s SITS portfolio.

We have commented before on the impact that technology is having on the delivery of consulting services. This last year saw Deloitte establish an internal centre of excellence for robotic process automation as well as an artificial intelligence studio. Both are aimed at helping the firm and its customers improve efficiency and effectiveness at lower cost.

TechMarketView’s UK SITS Market Forecast 2018 report estimated that IT consulting services grew by over 5% in the UK last year.  Against this background, Deloitte's performance comes as some surprise. It will be interesting to see whether fellow Big 4 competitors PwC and EY, which are due to publish their results over the next month or so, report similar slowdowns.