Wednesday, 23 September 2009

eg solutions wades through the chewing gum

(By Anthony Miller – Wednesday 23rd September 2009 3:00pm). I caught up again this morning (Wednesday) with Elizabeth Gooch, founding CEO of ‘Little British Battler’ operations management software player, eg solutions (see eg – setting an example). They’d just reported their interim results, which pretty much reflected the somewhat more upbeat market assessment in their trading update a month ago.

What piqued my curiosity was Gooch’s carefully nuanced observation that “our financial services client base is gradually returning to 'business as usual' in operational terms”. She explained to me that meant clients were now thinking about managing the end-to-end business again rather than just survival. However, getting customers to sign on the dotted line was still "like wading through chewing gum” with many customers still abdicating decision-making responsibility to endless committees. Contracts that should have been done and dusted last July are still 'awaiting signature next week'. As such, Gooch is expecting a tougher H2 despite clients taking their fingers off the panic button. In fact this ties in very much with the sentiment expressed in Richard’s earlier post (see Corrugated), and why we think we’re still the best part of a year off any meaningful software and IT services sector recovery.

But Gooch is valiantly pressing onwards and upwards. She is moving the business model to more of a ‘pure' software play, i.e. sell and train, while leaving the implementation to customers and partners. As such, SaaS (now just a small part of revenues) will play an increasingly important role. It’s pretty key for eg solutions to step up growth as its fortunes are too closely concentrated in the hands of a few marquee names. Indeed, over 40% of eg’s revenues derives from its top three clients.

The new and arguably biggest market opportunity for eg is public sector, to which they currently have no exposure. eg's ‘operational intelligence’ message should ring especially true with local authorities, but this will be a tough sell without a partner. Just as it happens, Capita Life & Pensions is already a client – sounds like an entree to us!

No comments:

Post a Comment