NelsonHall Industry Insight: July 4, 2011

The following extracts are  commentary and insight from NelsonHall Industry Insight, NelsonHall analysts weekly views on key industry developments that impact your sourcing. Register to receive your copy weekly  This newsletter forms part of NelsonHall's Key Vendor Assessments service. For further details, contact Paul Connolly.

Atos Finalizes Acquisition of Siemens IT Solutions & Services

Jul 01, 2011 | Mergers and Acquisitions by Rachael Stormonth

Atos has completed its acquisition of Siemens IT Solutions and Services GmbH (SIS).

The meeting has in particular approved the following resolutions:

• o Approval of the contribution by Siemens to Atos of SIS
• o As consideration for the contribution, Siemens has received shares of Atos representing 15% of the share capital of Atos and bonds convertible into new or existing shares of Atos representing a nominal amount of €250m and a cash payment of €176m
• o Dr. Roland Busch, Member of the Managing Board of Siemens AG, has been appointed member of the Board of Directors of Atos
• o The change of company name from Atos Origin to Atos.

The deal creates a new company with proforma 2010 annual revenues of €8.7bn and 78,500 employees across 42 countries.

Atos has a new slogan "We are your business technologists. Powering Progress".

Analyst comments:

Today's announcement follows the approval of the transaction by Atos shareholders at the Atos Extraordinary Shareholders meeting held this morning.

The change of the name to Atos (dropping Atos) was widely circulated in advance.

A 9 page 'NelsonHall Perspective' published in December 2010, when the intended acquisition was first announced (http://www.nelson-hall.com/research-programs/key-vendor-assessments/nelsonhall-perspectives/?avpage-views=article&id=70680&fv=1), gives details of the transaction and discusses what this will mean for Atos on terms of opportunities for challenges, also for clients of SIS.

A follow up perspective will be published after NelsonHall talks with management of the new company next week.

Capita Acquires Ventura to Enhance Customer Management Services Capability

Jul 01, 2011 | Mergers and Acquisitions by John Willmott

Capita has acquired Ventura for £65m to enhance its capabilities in customer management services.

Ventura achieved fiscal 2011 revenues, for the year ending January 31, 2011, of £156m together with an operating profit of £8m. The company was a Next plc subsidiary and its clients include O2, Orange, British Gas, and BMI.

Analyst comments:

Capita has recognized the importance of offering customer management services alongside its specialist industry-specific and back-office services and has taken steps to develop and scale its capabilities in this area.

Indeed, it is increasingly important that BPO vendors offer a combination of customer management services and industry-specific services, as companies increasingly seek to integrate customer-handling and service delivery to achieve one-and-done customer service across multiple channels.

In particular, this capability will enable Capita to offer customer management services into existing local authority clients where it has been forced to partner in the past with suppliers such as Vertex, e.g. in Service Birmingham, for the contact center services components of contracts. In addition, it will boost Capita's ability to target U.K. central government. Overall the government sector, principally central government, accounts for approximately 20% of Ventura's revenues, with three major clients being the Department for Work & Pensions, the Child Maintenance & Enforcement Commission, and the Legal Services Commission.

It also potentially gives Capita a mechanism for enhancing its attractiveness to life insurance companies, enhancing its ability to offer end-to-end customer service in conjunction with open books and into the financial services sector in general.

Mastercard Enhances Payment Gateway To Accept China Union Pay Cards

Jun 30, 2011 | New Offerings by Andy Efstathiou
industry: Retail Banks

Mastercard has signed a contract to enhance its payment gateway to accept China Union Pay (CUP) Cards. UnionPay and MasterCard will cooperate to configure their systems to enable the MasterCard Payment Gateway to process transactions made using UnionPay Cards for e-commerce merchants outside of mainland China.

In addition, Mastercard and CUP have signed an extension to their memorandum of understanding, which sets out how the two firms will work to develop new capabilities and offerings for cross border payments.

Analyst comments:

This is a significant addition to Mastercard's card processing base. China has the largest number of cards in the world (mostly debit cards) and its citizens and workers are beginning to rapidly increase their global travel. This should provide a significant boost to revenues and earnings over the next decade.

TCS Financial Solutions Awarded Contract for TCS BaNCS Banking Suite by PostFinance

Jun 30, 2011 | Contracts by Rachael Stormonth
industry: Retail Banks

TCS Financial Solutions has been awarded a 4-year contract to implement TCS BaNCS by PostFinance Switzerland, a business unit of Swiss Post.

The application components to be deployed are multi-entity and multi-currency, and cover accounts management, domestic and international payments including credit transfers and direct debit along with market connectivity to domestic clearing in Switzerland, Pan European clearing with SEPA and international payments on SWIFT.

Analyst comments:

This contract to modernize a European major's legacy payment transactions and accounts management systems is a significant for win for TCS Financial Solutions; it will be an important reference for its ability to manage a large transformation program in a key mature market in Continental Europe. Critical to its success will be delivering each project while causing minimal disruption to the client's operations.

Fiserv Acquires CashEdge For $465m To Expand P2P Payments Capabilities

Jun 29, 2011 | Mergers and Acquisitions by Andy Efstathiou
industry: Retail Banks

Fiserv has agreed to acquire CashEdge, a provider of consumer and business payment solutions, for $465m in order to expand its P2P payments capabilities.

CashEdge strengthens Fiserv's capabilities in:

• o Account-to-account transfer
• o Account opening and funding
• o Data aggregation
• o Small business payments
• o Person-to-person payments

Both companies compete in digital payments:

• o Fiserv with ZashPay
• o CashEdge with Popmoney.

Analyst comments:

Vendors are beginning to consolidate rapidly to broaden their offerings for clients into plug-and-play solutions where clients will not have to invest in functionality development or extensive integration.

Fiserv is aggressively moving into payments services to build its business, as banks de-emphasize risk-based businesses.

T-Systems Partners with Beyondsoft in Professional Services For China

Jun 29, 2011 | New Partnerships by Dominique Raviart

T-Systems has announced a partnership with Chinese IT services vendor Beyondsoft in professional services (systems integration and consulting) for Chinese and MNCs with needs for IT services in China.

Analyst comments:

This agreement differs from T-Systems' partnership with Cognizant, which is essentially a delivery agreement for providing work to key clients, of which Deutsche Telekom is by far the largest. This agreement is to address the local IT services market in China.

NelsonHall estimates that Beyondsoft has ~5,000 personnel. The largest IT services vendor in China is Neusoft with 18,000 personnel.

As western IT services firms look to expand their presence to be able to service multi-national clients with operations in China, and/or to penetrate the Chinese domestic market, expect to see a mixture of:

• § Acquisitions of smaller firms (with a few hundred employees) with capabilities in specific sectors
• § Partnerships such as this with larger local firms.

SunGard Acquires FINACE to Expand Securities Finance & Collateral Management Capabilities

Jun 28, 2011 | Mergers and Acquisitions by Charles Juniper
industry: Investment Banks

SunGard has acquired the FINACE software unit from Swisscom IT Services, part of Swisscom Telecommunications. FINACE is based in Zurich and develops securities lending, repo, synthetic finance and collateral management software.

Analyst comments:

Sungard has a strong portfolio of securities processing solutions, which it has been developing and expanding for many years now. This acquisition builds Sungard's capabilities in securities finance and collecteral management, which are high focus areas for regulators and banks looking to manage risk more effectively.

Sungard will incorporate this acquisition into its existing suite of securities solutions and roll out usage of the FINACE suite to a global audience (rather than the Swiss audience it has been exposed to so far).

Allscripts Launchs Revenue Cycle Management Service for Physician Practices

Jun 27, 2011 | New Offerings by John Willmott
industry: Healthcare Providers

Allscripts has launched a revenue cycle management service, Allscripts RCM Services, for physician practices.

The service is platform-based and priced on the basis of a percentage of monthly collections. The service is based on Allscripts' practice management software and supports:

• § Operational planning and scheduling
• § Final collections and denials management.

Analyst comments:

Revenue cycle management services are well-established with the major health systems and hospital groups. However this service aims to take revenue cycle management to the physician practice level. Its level of success seems likely to depend on extent to which physicians believe they will receive a responsive service from Allscripts and can avoid an impersonal service and vendor lock-in, together with the Allscripts' ability to offer IP and pricing that is superior to in-house capability.

SQS Expands Service Delivery in India

Jun 27, 2011 | New Offerings by Dominique Raviart

SQS is expanding its service delivery in India with the opening of a third center in Pune.

The new center is to accommodate 350 seats and is part of a plan to build a 60,000 square-feet facility that can host 1,800 testing professionals in three main buildings. SQS currently has 400 personnel in India.

The center is located in the Hinjewadi special economic zone.

SQS is servicing from India clients like Siemens PLM based on its Test Automation FaQtory, U.K. optical retailer Specsavers and Swiss telecom service provider Sunrise, also gaming client such as THQ and Warner Brothers Games.

SQS has recently expanded its language capabilities in India to include German.

Analyst comments:

SQS likes to report its growing success in hiring talent in India, driven by the growth of multi-year managed testing services contracts. By our estimate, SQS has added during the first six months of 2011 ~100 personnel, which represents, still by our estimate, the net hiring of the company in India for full-year 2010. Roughly, SQS has therefore doubled its net hiring effort this year.