Friday, 13 February 2009

Micro Focus ‘making do’ nicely

(By Anthony Miller). One of our favourite UK software plays, Micro Focus, looks on a ‘steady as she goes’ course, according to its Q3 IMS today (see here). CEO Stephen Kelly reiterated recent guidance of a flat H2 compared to H1 on an organic basis though recent acquisitions will give a slight revenue boost. Margins sound like they should come close to H1’s 42.7%.

Yesterday Micro Focus also announced a new framework agreement with UK BPO leader, Capita, who will use Micro Focus’ tools to ‘modernise’ its Life & Pensions systems. As we have said many times before, if you are going to hang on to anyone’s coat-tails, you can’t do much better than the UK BPO market leader! As we have also said many times before, Micro Focus is once again a company for the times, fitting in ever so sweetly with the ‘make do and mend’ imperative that CIOs are pursuing in the quest to maintain and modernise legacy applications on lower IT budgets.

Capita is no different from any other commercial enterprise in looking for cost-efficient IT. Indeed, last month Steria UK announced a 5-year deal to develop and maintain Capita’s L&P systems (see here). The work will be done offshore by virtue of Steria’s acquisition of Xansa back in 2007. Capita’s relationships with Micro Focus and Steria clearly suggest it is taking very seriously the emerging threat from TCS and HCL, both redeveloping their UK L&P processing platforms, TCS via Pearl/Diligenta and HCL via Liberata. However, these Indian players still have a long way to catch up with the UK market leader.

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