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Japanese-headquartered technology corporation NTT and IT services and consulting player, NTT DATA, officially merged their respective IT services operations outside of Japan, back in October 2022 creating a new joint operating company NTT DATA, Inc. The combined company published results for FY23/24 (year to March 31st 2024) – its first full year as a consolidated business - that show Net Sales increasing by 25.1% to ¥4,367.4bn (FY22/23 ¥3,490.2bn). New orders received (excluding NTT Ltd) grew a whopping 75.8% to ¥4,790.9bn as the company delivered increased operating profits of ¥309.6bn, up 50.4%. Operating margins were 7.1% down -0.3bps on the previous year.
Revenue and operating profit growth is primarily attributed to the performance of its European and Japanese businesses as well as the consolidation of NTT Ltd. The EMEA and LATAM business did particularly well with Net Sales growing 136% to ¥828.5bn (FY22/23 ¥692.5bn) and EBITDA ticking up 7.7%. New orders received in the ‘region’ also grew by a whopping 102.3% to ¥876.9bn (FY22/23 ¥774.6bn).
Looking forward 2024/25 growth is expected to be quite different with Net Sales expected to tick up by just 1.4% YoY, whilst operating profit is anticipated to grow 8.5% YoY as the impact of the business consolidation falls away. That said, shareholders remain positive on the impact of the consolidation with NTT Data Group Corp share price still up more 21% on where it was a year ago. The Group is targeting a client base of 120 companies by the end of 2025 (currently 106) with revenue of ¥4,700bn. Investment called out to help achieve this (as part of its current three-year plan) predictably highlights a combination of generative AI and M&A in both Japan and overseas markets.
NTT DATA has made a significant step forward in scale off the back of NTT/NTT DATA consolidation. The challenge remains showing how this will contribute to sustained organic growth and executing on a new mid-term management strategy that promises to deliver on the potential of IT and connectivity convergence and genuine new business value propositions.
Posted by: Marc Hardwick at 08:55
Tags: results IT+services
If (like me) you have previously bought something from Dell you might have received this email yesterday (see right). If so, you are not in the minority, as Dell warned yesterday it has been the target of a cyber-attack which has resulted in information being stolen on approximately 49m customers.
Dell warned that a threat actor claims to have stolen information which included names, physical addresses, and Dell hardware and order details. However, Dell offered assurances that financial or payment information, email addresses, and telephone numbers were not compromised.
As reported by Daily Dark Web, a threat actor named Menelik was found to be attempting to sell a Dell database on a hacking forum. The data, allegedly stolen from Dell, pertains to customer and other information systems purchased from Dell between 2017 and 2024. While the authenticity of this data has not been confirmed, it matches the information listed in Dell's data breach notification. The post has since been deleted from the forum, suggesting that another threat actor may have already purchased the database.
The incident seems to have involved a Dell portal which contained a database with limited type of customers information related to purchases from Dell. As the data did not include email addresses, we can rule out targeted online Phishing attacks as a follow up, but that doesn’t mean that victims can’t still be targeted. Threat actors could target specific people with physical mailings with phishing links or that contain media (DVDs/USB drives) to install malware on targets' devices. While this may sound far-fetched, threat actors have conducted similar attacks in the past. Therefore, be wary of any physical mail or emails you receive that claim to be from Dell asking you to install software, change passwords, or perform some other potentially risky action.
This is poor form for Dell, who offer ‘end-to-end’ cybersecurity for organisations, including zero trust architectures. Clearly, they are not taking their own medicine so to speak, and the attack highlights that even IT suppliers need to do much more to build their own cyber resilience.
Posted by: Simon Baxter at 10:14
The past week has seen a slew of announcements from companies seeking to boost investment in the UK AI industry. The UK is increasingly seen as an attractive location for building AI capabilities, with a Pro-AI regulatory stance from the UK government, numerous hubs of talent from UK universities and strong demand from both enterprise corporations and UK startups for AI compute and solutions.
On Tuesday we covered San Francisco HQ’ed AI data infrastructure company Scale, who announced it is creating a new European HQ in London, as the company seeks to expand its global footprint (See AI data infrastructure platform Scale invests in UK).
In addition, CoreWeave, a cloud provider for AI, announced yesterday that it has opened an office in London as part of a broader expansion into Europe. The new UK expansion represents a £1 billion investment to bolster the country's AI potential, and will create job opportunities across engineering, operations, finance and go-to-market. CoreWeave plans to open two UK data centres in 2024 with further expansion planned in 2025.
Another was British self-driving car startup Wayve, who said on Tuesday that it had raised $1 billion in a Series C funding round led by SoftBank. Founded in 2017, Wayve is one of many startups looking to use AI to enable autonomous driving — technology that allows cars to effectively drive without humans at the helm. The business is aiming to license its self-driving technology to other firms, including retailers and automakers.
SoftBank also announced that it is in advanced talks to buy UK Chip manufacturer Graphcore for an undisclosed sum. We first reported a possible sale of Graphcore in February sale (See - Is UK chip designer Graphcore considering a sale?). The firm has struggled to capitalise on the AI demand and compete with Nvidia, and is seeking new funding to continue operating as revenue has halved and losses increased.
Such investment in the UK is certainly a boon for Prime Minister Rishi Sunak, who has been seeking to transform the UK into a world leading location for AI development and innovation. However, the investment still pales in comparison to the multiple billions of dollars pouring into building AI foundation models, infrastructure and software, much of which still predominately sits in the United States. Only yesterday President Biden announced a $3.3bn investment by Microsoft to build a new artificial intelligence (AI) datacenter in Wisconsin.
Posted by: Simon Baxter at 10:00
First quarter results from Rackspace show the firm continuing its turnaround journey with a few positive notes.
However, while key financial data (revenue, operating profit and EPS) “exceeded the high-end of guidance”, according to CEO, Amar Maletira, the figures are still a bit ouchy. Revenue was down 9.0% to $691m. The firm operates two business units, Private Cloud and Public Cloud. The former saw revenue slump 15.0% over the comparable period last year, while Public Cloud was down 5.0%. Non-GAAP operating profit was $16m, down 68% on last year.
Rackspace did, however, complete its debt refinancing, giving it “ample” liquidity and “runway for our turnaround”. The plan this year is to set the firm up for a return to consistent growth and profits.
In the last full financial year, Rackspace dipped 5.0%. Last night, it issued guidance for Q2 suggesting revenue will be in the $668-$678m range. Non-GAAP operating profit is expected to hit $20-$22m.
Posted by: Kate Hanaghan at 09:50
Tags: results
Aliter Capital LLP has acquired Essex-based Bates IT as part of its buy-and-build strategy that aims to create a leading UK critical network infrastructure services provider.
Bates has a history stretching back over 80 years, including providing IT services and software solutions for the last 25 years. It currently provides ICT support, networking solutions, and managed services across the public and private sectors with a particular strength in the health sector.
Terms of the deal have not been disclosed, but it was completed using capital from Aliter Capital II, a £134m fund that was launched after Aliter completed fundraising in December 2022. The launch of Aliter Capital II followed Aliter's maiden £92m fund (Aliter Capital I), which was launched in 2017 and closed 21 transactions.
This is the second investment to be completed under Aliter Capital II after it acquired ITM Communications (ITM) as its buy-and-build platform in January 2023. Simon Fieldhouse, who was appointed as ITM's Group CEO in October 2023, will now work with Bates IT's principal shareholders and directors, Barry Fuller and Christopher Fuller, to pursue both acquisitive and organic growth.
The Bates acquisition will provide the deep sector knowledge to support ITM's plan to develop a specialist healthcare practice within the business. With Aliter's backing, it should enable the business to expand outside of its current South and South East of England base and establish a national footprint.
Aliter is actively looking to acquire complementary businesses as bolt-ons to ITM, and TechMarketView will be following its progress.
Posted by: Dale Peters at 09:38
Tags: nhs acquisition infrastructure healthcare IT+services Network
Leatherhead-headquartered Bytes Technology Group (BTG) has appointed Sam Mudd as CEO. The FTSE 250 firm has also appointed two independent NEDs to the Board.
For the past decade, Mudd has been MD of the Phoenix Software business, which was acquired by Bytes in 2017. She has been on the BTG Board as an Executive Director since July 2023, and has served as interim CEO of BTG since February 2024.
It’s been a difficult period of the firm following the resignation of former CEO, Neil Murphy. In February, Murphy made a shock exit from the company following four years at the top. He resigned with immediate effect after revealing previously undisclosed share trades (totalling c.£3m in 100+ transactions across near three-year period) to the Board. Bytes’ shares were hit hard at the time.
Today the firm said it expects to have concluded the investigation into Murhpy's actions ahead of its preliminary results announcement (date tbc) and plans to update the market on its findings “as applicable”. In March, we received a full year update on the firm’s performance.
Today’s new CEO announcement is an incredibly positive step forward. Mudd is uniquely positioned to take on the role and has the right credentials to drive the company forward. We wish her every success in this new chapter.
Posted by: Kate Hanaghan at 09:35
Tags: people CEO
Wind the clock back to FY22 and Business Process Operations come AI/Data/Analytics specialist Genpact was posting consistently strong growth (see here), lifted on demand for data services. FY23 was much tougher for the business where demand for data/tech/AI that was already subdued in the first half of the year, went into reverse in the third quarter. This saw growth slow to just 2% in FY2023 (see here).
Q1 2024 results were out yesterday, and they show a slightly improving picture with total revenue growing 4% YoY to $1.13bn with the Digital Operations business up 5% and Data-Tech-AI (now 46% of the total) revenue up 3%. Future growth of the business depends on getting this “New” segment firing again, and the exec team had been restructured to support that. Adjusted operating profit was $182m, up 2% YoY, with a corresponding margin of 16.1%.
Genpact is currently transitioning from one era to another with long term CEO “Tiger" Tyagarajan retiring and handing over the reins to Balkrishan "BK" Kalra, the firm’s Financial Services and Consumer and Healthcare lead earlier this year. The business has also been pivoting from ‘old school’ lift and shift operations towards more transformation-led project work at a time when market demand has softened. Whilst the strategic direction is the right one for the long term, it's clearly going to take more time to get Genpact firing on all cylinders again.
Looking forward, Genpact expects full year revenue to fall between $4.59bn to $4.63bn or growth of approx. 2.5% to 3.5% as reported, or 2.7% to 3.7% in constant currency, which would show slight improvement on FY 2023.
Posted by: Marc Hardwick at 08:44
Version 1 has announced new appointments to its leadership team, with Louise Lahiff taking the role of Chief Operating Officer (COO) and Patrick Cooney joining as Chief Financial Officer (CFO).
Lahiff brings a decade of experience within the company to her new role. She previously served as Director of Strategy, People & Planning and in 2022, she became the first woman to join the board of Version 1's software entity. As COO, Lahiff will oversee the delivery functions across the UK, Ireland, India, and the USA.
Joining Lahiff in the executive team is Patrick Cooney, who spent nine years as Europe CFO at Kerry Group. In his new role, Cooney will be responsible for Version 1's growth strategy, which includes both M&A activity and expanding into new markets. He is taking over from Andrew Langford, who is retiring after serving as CFO since 2017.
Version 1 has recently acquired Farsight Consulting and secured significant new contracts, such as with National Highways. With these new appointments playing a critical role in the company's ambitious growth plans, we expect to see more M&A activity and strategic partnerships from Version 1 in the near future.
Posted by: Dale Peters at 15:49
Tags: appointments digital+transformation
UK Research and Innovation (UKRI) has announced funding for keystone projects across healthcare, law enforcement and law as part of its Responsible AI UK (RAI UK) programme.
The programme aims to support consortia-led research projects to ensure AI technologies are designed, deployed and used responsibly within societies. The majority of the funding (£10.5m) forms part of the £31m programme, which is led from the University of Southampton and backed by UKRI, through the UKRI Technology Missions Fund and the Engineering and Physical Sciences Research Council (EPSRC). UKRI has also committed an additional £4m to support these projects.
The PROBabLE Futures (Probabilistic AI Systems in Law Enforcement Futures) project was one of the beneficiaries of this round of funding. The 4-year interdisciplinary project, which secured funding of £3.4m, is seeking to develop a framework to understand the implications of uncertainty and to build confidence in future Probabilistic AI in law enforcement. The project is led by Northumbria University in partnership with the Universities of Northampton, Cambridge, and Aberdeen, law enforcement partners, technology suppliers, third-sector and academic partners.
Funding has also been provided to a project designed to address sociotechnical limitations of large language models (LLMs) in healthcare and law. Led by Queen Mary University of London (QMUL), the project secured £4.4m to help harness the potential of LLMs for improving efficiency and effectiveness in these fields, while mitigating the risks of deploying poorly understood systems, e.g. biases, privacy leaks, and lack of explainability. QMUL is collaborating with Accenture, Bloomberg, Canon Medical, Microsoft, the NHS and a range of service users on the project.
The third investment is for the Glasgow University-led Participatory Harm Auditing Workbenches and Methodologies (PHAWM) project. It secured £3.5m of funding to work in partnership with researchers from the Universities of Edinburgh, Sheffield, Stirling, Strathclyde, York and King's College London, as well as 23 other partner organisations, to help pioneer participatory AI auditing. This approach will see non-experts, including regulators, end-users and those likely to be affected by AI-based decisions, play a role in ensuring that AI systems provide fair and reliable outputs.
Additional funding through the UKRI Technology Missions Fund was awarded to the Digital Good Network, The Alan Turing Institute and the Ada Lovelace Institute to ensure that public voices are attended to in AI research, development and policy, and to The Productivity Institute to gain insights on how the uptake of responsible AI can be encouraged through incentive structures, business models and regulatory frameworks.
These are important projects that should provide vital data to support the responsible application of AI in critical services. The rush to achieve much-needed productivity gains through the application of new technology needs to be tempered with a sound knowledge of the implications it may have on individuals, industry and the wider society.
Posted by: Dale Peters at 10:12
Tags: nhs funding police health government AI lawtech ethics public+safety bias
Shares in NASDAQ-listed Arm dropped nearly 10% in after-hours trading yesterday despite the UK-based chip designer reporting record results for Q4 and FY24 and forecasting annual growth of at least 20% through to FY26.
Arm has been a beneficiary of the boom in AI-related spending even though it’s not directly involved in the same way as NVIDIA, and its latest results are impressive. But investors, who sent shares in the Softbank-backed group soaring on its IPO last September, were apparently unimpressed by the forecast for the coming year.
The company’s guidance for FY25 revenue came in at $3.8bn-$4.1bn, compared to a consensus estimate of $3.99bn and FY24 revenue of $3.2bn.Revenue for the current quarter is expected to be in a range between $875m and $925m. That is lower than the quarter just closed but Arm’s business is ‘lumpy’ and quarter by quarter revenues do vary.
Indeed, Q4 FY24 is a tough comparator. Revenue in the quarter was up 47% year-on-year to $928m with record royalty revenue and strong growth in license revenue. Profits also showed strong growth with non-GAAP operating profit for the quarter at $391m, a 42% margin.
For the full year, revenues surpassed $3bn for the first time at $3,233m, 21% above FY23, with non-GAAP operation profits of $1.4bn, 80% higher than last year, delivering a 44% operating margin.
A recovery in the semi-conductor industry in the second half of Arm’s fiscal year drove an 8% increase in royalty revenue to $1.8bn for the year, as demand related to smartphones increased and Arm gained market share in the automotive sector and with cloud hyperscalers.
At the same time, demand for energy-efficient AI capability from data centres to edge computing boosted licence revenue by 43% in the year, to $1.4bn.
AI is increasing demand for Arm-based technology across all end markets, which CEO Rene Haas believes means Arm is well positioned for sustainable growth for many years. As he explained in his letter to shareholders yesterday: "From cloud to edge, all AI software models, from GPT to Llama, rely and run on the Arm compute platform. As these models become larger and smarter, their requirements for more compute with greater power efficiency can only be realized through Arm."
Against this backdrop, Arm is confident that it will achieve revenue growth of at least 20% in fiscal 2026 and 2027. By most standards, that’s a pretty good outlook!
Posted by: Tola Sargeant at 09:56
Tags: results shareprice
Yesterday, saw IT Services giants CGI and Accenture both announce separate new 5G partnerships with Nokia and Virgin Media O2 respectively, as SITS providers look to capitalise on the growing market opportunity of Industry 4.0.
CGI and Nokia have signed a strategic partnership to combine Nokia’s 5G private wireless networking kit with CGI’s broad portfolio of business services and solutions. The partnership has already been tested out in Northern Ireland where a 5G testbed for the Smart Nano NI consortium has been set up as part of a five-year plan, to accelerate smart manufacturing and investment into the country. CGI claim the 5G/4G private network is a first for manufacturing and education in Northern Ireland, providing access to network technologies and NarrowBand-Internet of Things (NB-IoT).
Virgin Media O2 and Accenture have coincidentally announced a similar partnership looking to capitalise on the UK’s growing mobile private network market – something that Accenture estimates is already worth a half a billion pounds. In similar fashion to CGI & Nokia, Virgin Media O2 & Accenture will combine 5G private network capabilities with the SITS provider’s industry applications —including computer vision AI for product quality control, monitoring of equipment to meet factory floor compliance and queue management systems to improve CX. Liberty Global, the joint owner of Virgin Media O2 alongside Telefónica, is also exploring opportunities for these solutions in other geographic markets outside the UK.
Both partnerships are looking to capitalise on the potential of Industry 4.0 and the coming together of Operational Tech (OT) and IT, that should support smart manufacturing and the creation of intelligent factories. Industry 4.0 will require companies to roll out sensor rich ecosystems and IoT-based programmes that will require network providers and SITS providers to collaborate and partner closely.
However, it's also not all about Manufacturing - mobile private networks can also underpin use cases across other industries. For example, Virgin Media O2 back in 2022 activated the 5G-connected hospital with South London and Maudsley NHS Foundation Trust to support mission-critical hospital activity. Expect to see more of such announcements in coming months.
Posted by: Marc Hardwick at 09:40
Tags: partnerships manufacturing 5G Industry4.0
ServiceNow and Microsoft have announced an expanded strategic alliance which will combine their generative AI capabilities. The integration of ServiceNow's Now Assist and Microsoft's Copilot will bring together two generative AI assistants, as ServiceNow aim to create a more seamless enterprise experience.
The AI assistants will interact to execute common productivity tasks, integrating the intelligence of Now Assist with ServiceNow’s AI-powered workflows with Microsoft Copilot. This will allow users to get help from the most relevant AI assistant, regardless of the platform they are using.
Copilot will be able to hand off employee requests to Now Assist in Microsoft Teams. Whether it’s requesting or resolving a customer’s support issue, or getting connected to a live agent for support on a complex problem, Now Assist will provide employees with responses to questions as well as recommend actions and next steps in a conversational manner. Now Assist will be able to combine its domain knowledge of enterprise and user context with organisational data from Microsoft 365 chats, email, calendar, and files.
Future capabilities will also enable experiences such as allowing employees to engage Copilot for Microsoft 365 from ServiceNow to create documents, such as a presentation in Microsoft PowerPoint, based on ServiceNow prompts. The Now Assist and Copilot integration will be generally available in autumn of 2024 and ServiceNow will be hoping its new AI features continue to power its impressive growth (See ServiceNow Q1 exceeds guidance, in a quarter replete with AI news).
I have said in previous posts that for many organisations the biggest benefit they will get from GenAI is through the software they already use every day, with this latest announcement from ServiceNow a great example of that. GenAI is being built into almost every platform and SaaS application, and it is quickly becoming table stakes for technology suppliers who are seeking to keep pace with the expectations of an AI-driven customer and employee experience.
Posted by: Simon Baxter at 09:39
TechMarketView spoke to System C's CEO Nick Wilson at the company's user conference in Birmingham earlier this week.
Since he joined System C, Wilson has been taking steps to build out the management team and transform the business with a new brand and increased investment in systems, processes, and R&D.
Introducing the conference, Wilson framed the company's capabilities around four Cs: convergence; core; customer; and cloud and AI. Regarding convergence, he said he was seeing more passion and drive to ensure health and social care are working together; this is an area where System C has a position of strength.
The company plans to continue to focus on its core, i.e., health and local government across the UK, Ireland, and a small number of Commonwealth countries. System C is striving to enhance its offering to customers; Wilson highlighted the improvements it has already made in the implementation of its Liquidlogic adult social care platform.
System C has secured some big wins recently, including its electronic patient record (EPR) contract with The Royal Wolverhampton NHS Trust. The Trust, coupled with System C's work in the wider Black Country Integrated Care System (ICS), should provide a good case study on convergence for the business.
The company positions itself as an alternative to the likes of Epic and Oracle Cerner in the EPR market, which Wilson sees as being too big, expensive, and difficult to implement for most NHS trusts. He sees these deals as status symbols for the large trusts and not a financially sustainable option for the NHS as a whole.
System C has been investing heavily in innovation, including cloud and AI, where it is working with Microsoft to introduce voice recognition to enhance note-taking and using AI to help process social care data. More generally, Wilson said its customers’ journey to the cloud is well underway, which is having a positive impact on the company's annual recurring revenue.
The key priority for System C this year is operational excellence. Wilson has introduced a new operations function, led by COO Mark Scott, which will bring together System C's support, implementation, deployment, and professional services teams.
The company has made two acquisitions since Wilson joined the business, Clevermed and OCC. He said the company is positioned to make further M&A moves, but any deal will need to be highly strategic either in terms of geographic scale or enhancing its proposition significantly.
It is clear System C has made significant improvements under Wilson's guidance, and it is increasingly well-positioned to help health services and local government address the myriad challenges they face. The challenges in these sectors are so inextricably linked they can only be tackled by more effective convergence of services, which should provide plenty of opportunity for System C.
Posted by: Dale Peters at 09:30
Tags: nhs convergence conference healthcare local+government interview
Google DeepMind and sister company Isomorphic Labs have introduced AlphaFold 3, upgrading its existing world leading AI model that can now predict the structure and interactions of all life's molecules, including proteins, DNA, RNA, and ligands. Google claims the model's predictions are at least 50% more accurate than existing methods, and in some categories, the accuracy has doubled.
DeepMind first released AlphaFold in 2018, advancing our understanding of decoding the shape of proteins, a scientific problem often compared to mapping the human genome. In 2020, AlphaFold 2 was released, achieving a significant breakthrough by accurately predicting the structure of most proteins simply from their DNA sequence. Millions of researchers have used AlphaFold 2 to make discoveries in areas including malaria vaccines, cancer treatments and enzyme design.
The latest version, AlphaFold 3 expands on this by covering a broad spectrum of biomolecules, potentially unlocking transformative science in areas such as bio-renewable materials, resilient crops, drug design, and genomics research. Isomorphic Labs is already using AlphaFold 3 to collaborate with pharmaceutical companies on real-world drug design challenges.
AlphaFold 3 generates the joint 3D structure of given molecules, revealing how they fit together. The core of the model is an improved version of Deepminds Evoformer module — a deep learning architecture that underpinned AlphaFold 2. After processing the inputs, AlphaFold 3 assembles its predictions using a diffusion network, akin to those found in AI image generators. The diffusion process starts with a cloud of atoms, and over many steps converges on its final, most accurate molecular structure.
DeepMind was an early pioneer of the use of AI in the field of drug discovery and biology. Over the past six years it has retained its position as a world leader, with AlphaFold offering huge potential to reshape medicine and our understanding of the human genome. Whilst GenAI grabs the headlines with a focus on augmenting the workforce and boosting our productivity, it is AI deep learning architecture’s like AlphaFold that could reshape our very understanding of the world.
Posted by: Simon Baxter at 09:15
London-based insurtech startup, Eleos has secured $4m in funding for its digital life proposition. The seed investment was led by Fuel Ventures and Indico Capital and supported by APX.investment.
Founded in 2022 by former Wipro Application Lead and Zaask founder, Kiruba Shankar Eswaran (CEO), Eleos provides income protection and life insurance products that can be bought entirely online. The insurtech offers its customers various ancillary benefits to help offset the cost of their premiums including a remote GP service, mental health support and a cashback scheme.
Eleos’ API interfaces enable its partners to broaden their own offerings and revenue streams by providing the insurtech’s FCA regulated products on a white labelled basis. Eleos’ partners include credit finance specialsits Loqbox, CreditLadder, CreditSpring and Updraft. To date the insurtech has around 20k customers across the UK. The company intends to use the cash injection to fund the expansion of its operations.
Eleos is a fairly early-stage venture, so it’s perhaps a little soon to measure the market appeal of its offerings, however, the size of its current customer base suggests that the insurtech has made a good start to life. Eleos’ embedded insurance approach is also an innovative proposition and taps into a wider and growing trend across financial services that has evolved from the success of open banking (see: BaaS and embedded finance drive banking evolution and Financial Services Predictions 2024).
Posted by: Jon C Davies at 08:50
Tags: funding startup
UK based IT, communications and cloud provider Daisy Group has confirmed a significant merger with Wavenet, a company primarily owned by Australian financial giant Macquarie (See Macquarie cash funds Wavenet acquisition spree). The merger involves separating Daisy Corporate Services from the group and integrating it into Wavenet.
The new company, retaining the name Wavenet, will serve over 20,000 UK enterprise customers, including the NHS and Transport for London. The deal is expected to value the combined entity at over £1bn. Macquarie will remain the largest individual shareholder, supporting the deal alongside debt financing from Ares. Wavenet will continue under the leadership of executive chairman Bill Dawson, with Matthew Riley, founder and chairman of Daisy Group, assuming a non-executive director role.
Initially listed on the London public market, Daisy transitioned to private ownership in 2014 with support from Toscafund Asset Management. Daisy Group saw overall revenue grow c.27% to £417m in 2023 driven by growth in Connectivity and IT services. The business operates through two divisions: Daisy Corporate Services (DCS), for the mid to enterprise market, and its Small to Medium Enterprises (SME) business. One area of concern for Daisy is its significant debt balance (£462m), which it has used to fund a series of acquisitions including XLN Group in 2022, cyber security service provider ECSC Group in 2023 and most recently cloud communications provider 4Com for £215m in April.
Daisy is not the only UK focused channel provider to scale through acquisitions recently, with Giacom acquiring UK Cloud distributor intY back in December (See Giacom underpins cloud capabilities with intY acquisition). Giacom of course has roots in Daisy as well, formerly known as DWS (Digital Wholesale Solutions), which demerged form the Daisy Group back in 2020 (See DWS re-launches under Giacom brand.
Posted by: Simon Baxter at 10:23
The widely publicised cyber-attack on the armed forces payment network has placed Sopra Steria firmly in the spotlight. In Parliament yesterday, Grant Shapps, the Secretary of State for Defence confirmed that a malign actor had gained access to a system containing the personal data of regular and reserve personnel as well as some recently retired veterans. The data includes names and bank details, and in a small number of cases, addresses.
Shapps confirmed that the system is operated by SSCL - the provider of critical business support services owned by Sopra Steria (Cabinet Office selling SSCL stake to Sopra Steria | TechMarketView) – under a seven year agreement running until 2027. He was keen to communicate that the system sits completely separately to the Ministry of Defence’s core network and is not connected to the main military HR system. A multi-response plan is in place to “support and protect” the armed forces personnel affected.
His statement in Parliament pointed to “evidence of potential failings by (SSCL), which may have made it easier for the malign actor to gain entry”. According to Shapps, a specialist security review of SSCL and its operations – in defence and the wider public sector - is underway, with the results set to determine any further steps that need to be taken. Already, he has stated that the MOD “was not responsible for failing to issue correct instructions, in terms of the contractual requirement to keep data safe”.
In the short-term, the MOD, alongside SSCL, is making changes to the system to make sure that it is secure before recommencing payments through it. In the longer-term, this incident has the potential to damage Sopra Steria and SSCL reputationally. As we know from the experience of others, like Capita (see Capita updates on eventful start to the year | TechMarketView), even the most contained incidents can result in significant costs and a wider-ranging fall-out.
In SSCL's annual report, the organisation states that it works closely with clients, partners, and other organisations to minimise risk to client data to ensure resilient delivery of client services. It also states that it works with the MOD and others to ensure it is responding effectively to emerging cyber-security threats. As well as the MOD, SSCL provides services to a large number of central government organisations, as well as the wider public sector (including the Police).
Of course, we will have to wait for the results of the review to determine, for certain, where the failings lie. But if it is deemed to have been negligent there will be wide-ranging consequences. Sopra Steria’s growth strategy is built around several repeatable propositions (Public Sector Supplier Prospects 2024 and Beyond | TechMarketView), many of which have their roots in SSCL or in its Defence & Security business. It has also built a strong reputation in cybersecurity, with those capabilities established within the Defence and Security practice and, since, taken into other high-profile contracts, for example at NS&I (see NS&I proves a happy hunting ground for Sopra Steria | TechMarketView). Sopra Steria will be concerned about the impact on future opportunities, including the Government Shared Services Programme procurements (see Government Shared Services: Synergy Cluster procurement | TechMarketView).
Posted by: Georgina O'Toole at 10:16
Tags: defence sharedservices payroll F&A cyber data cybersecurity public sector
FY24 results out overnight from Kyndryl show the firm is now confident of an earlier-than-expected return to growth.
The firm appears to have executed well in FY24, continuing its shift away from no or low margin contracts (and continuing the theme from earlier quarters) – a hangover from the IBM days. Revenue was down 6.0% (constant currency) to $16.1bn reflecting this. Adjusted EBITDA leapt 20% to $2.4bn, driven by the firm’s initiatives across Alliances, Advanced Delivery, and Accounts. Again, another sign that Kyndryl is performing well against its plan. As a specfic example, during the financial year, Kyndryl recognised more than $500m in revenue tied to its hyperscaler alliances. Encouragingly, Kyndryl Consult saw revenues jump 16% in FY24.
Notably, the firm’s outlook suggests a revenue decline of -2% to -4% in the new financial year, with a return to growth expected in the fourth quarter.
Clearly, the move by IBM to hive off the infrastructure services business that is now Kyndryl (and which continues to evolve) has been a very smart move indeed – for both parties.
At ServiceNow’s Knowledge 2024 event, the firm announced the launch of a new joint innovation centre with Fujitsu, to be opened in the latter half of this year in Kawasaki City, Japan.
The Fujitsu-ServiceNow Innovation Center will focus on automating legacy systems and complex business processes. Although the plan is to target multiple sectors, the pair are starting in the Manufacturing sector to create solutions for Engineering Chain Management and Supply Chain Management operations.
The starting point will be cloud-based offerings to both streamline operations and improve data-driven management, combining solutions from ServiceNow and Fujitsu’s Uvance offering set. Fujitsu will also be able to call on its CASE (Customer Advisory and Support Excellence) advisory services and industry expertise. Fujitsu has also said it will expand its own use of the Now Platform. Fujitsu and ServiceNow have been partners for quite some time, and we know that over in Europe, this has served as a rich mine of opportunities.
Fujitsu announced FY23 results at the end of April. In Europe, there was a “pull-back” in orders from last year’s “large-scale” deals with the carve-out of the German private cloud business also impacting the numbers. Contract renewals and new wins in the UK (the largest subsidiary outside of Japan) suggest progress in the commercial sectors, but we think Fujitsu needs to put more focus on getting deeper into some key sectors. ServiceNow’s Q1 data (also out end of April) saw the firm exceed guidance.
Posted by: Kate Hanaghan at 09:45
Tags: innovation partnership
Irish regtech specialist, Corlytics has announced another addition to its portfolio with the acquisition of a UK focused RegTech platform developed by Deloitte. As a result of the deal, Deloitte UK Partner and Head of RegTech, Kent Mackenzie, will join Corlytics as COO, along with 16 other Deloitte staff. The move follows hot on the heels of the news in April that investment firm Verdane had taken a majority stake in Corlytics.
The Deloitte platform provides comprehensive regulatory management and has been designed to enhance how organisations structure compliance operations. The technology includes an end-to-end workflow and provides a central point for controlling and managing compliance and regulatory change across the organisation. Deloitte developed the platform from scratch and has been refining the technology over the past eight years.
Regulatory compliance represents a constant challenge for financial services organisations. As regulators look to digitalise processes, the bar has effectively been raised in terms of demonstrating proof of compliance. Meanwhile, in an increasingly crowded marketplace, Corlytics has been acting as something of a consolidator. In 2023 the regtech completed the acquisition of document management specialist Clausematch for an undisclosed sum, as well as ING’s SparQ (see: UK regtech Clausematch acquired by Corlytics).
Corlytics appears to be increasingly well placed to capitalise on the opportunities arising as the market evolves. The regtech has a strong client base which includes 40% of the top 30 Systematically Important Financial Institutions. Driven by sales of its core compliance products, Corlytics has grown 60% a year since 2020 and doubled its client base. Off the back of this impressive performance, founder and CEO John Byrne, has forecasted growth of approximately 35% CAGR through to 2028.
Posted by: Jon C Davies at 09:35
Tags: M&A acquisitions
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