IT Industry News – March 2016

 

March 2016 saw the $3 billion sale of Dell Services to NTT, a direct result of Dell’s restructuring following the recent purchase of EMC. IBM was out bolstering its services business with a couple of acquisitions; the first was Optevia, a UK-based integrator focused on Microsoft Dynamics; and the second was Bluewolf Group, a global Salesforce consulting partner. Montreal based Yellow Pages picked up Toronto based Juice Mobile, primarily for its mobile marketing capability. Another Toronto company, Influitive raised some cash ($8.2 million) and bought a couple of mobile app companies, Ironark Software and Triggerfox; and Netsuite bought IOity solutions a cloud based manufacturing software company.

While IBM was bolstering its services business through acquisitions it was also trimming staff, with a reputed 14,000 jobs on the block. Other companies laying off staff included SurveyMonkey and smartwatch company Pebble. Cisco meanwhile was spreading some cash around with significant investments into India’s digital connectivity initiatives and a smart city initiative in Berlin.

In other news, the tech world lost a couple of icons. Andy Grove, founder of Intel passed away, as did Ray Tomlinson the inventor of email.

On the economic front, the US added another 200,000 jobs in February and the various surveys were generally positive. Canada on the other hand lost 2,300 jobs and the unemployment rate hit 7.3%.

That is it for Eagle’s look at what was happening in the technology space over the last month, compared to the same month in previous years.

In this Issue:
> General Interest
> Company News
> Merger & Acquisition Activity
> Primary Sources

> GENERAL INTEREST

General

Distributed Denial of Service (DDoS) attacks are more frequent, bigger and more damaging than ever before, a new report by internet security firm Verisign has warned. According to statistic published in the VeriSign Distributed Denial of Service Trends Report, DDoS activity is the highest it’s ever been, with the final quarter of 2015 seeing an 85% rise in instances. That’s almost double the number of attacks when compared with the same period in 2014.

An industry icon, Andy Grove, has passed away aged 79. He was Intel’s first employee in 1968. He played a critical role in the decision to move Intel’s focus from memory chips to microprocessors, and led the firm’s transformation into a widely recognized consumer brand. He became Intel’s president in 1979 and CEO in 1987. He served as chairman of the board from 1997 to 2005. Under his leadership, Intel produced the chips, including the 386 and Pentium, that helped usher in the PC era. Grove was lauded by venture capitalist Ben Horowitz, in a September 2015 award ceremony at the Churchill Club, as “the man who built Silicon Valley.”

The inventor of email, Ray Tomlinson, passed away from a heart attack at 74. In 1971, Tomlinson, who had earlier implemented Transmission-Control Protocol (TCP) on TENEX, a PDP-10 operating system, decided to create an e-mail system. The idea of sending messages to someone on the same computer dates back to the 1960s. Tomlinson decided that there must be an easy way to send messages between users on different computers and that would be really useful. Tomlinson built the first e-mail system using his earlier invention, CPYNET, an early file transfer protocol program. He called that first e-mail program: SNDMSG.

US federal agencies reported 77,183 cyber incidents in 2015, the Office of Management and Budget (OMB) says in a new report. That shows an increase of 10% percent compared with 2014, according to OMB’s Federal Information Security Management Act (FISMA) report.

The economy – Canada

Canada lost 2,300 jobs in February as losses in full-time work offset a gain in part-time jobs, according to seasonally adjusted numbers from Statistics Canada. Canada’s unemployment rate rose by 0.1 percentage point for the third consecutive month, reaching 7.3% for the first time since March 2013.

The Canadian staffing index rose in February, following a trend of moderate year-over-year declines. The index, which measures staffing activity in Canada, rose to a reading of 97 in February, up 5% from a reading of 92 in February 2015. The index value of 100 corresponds to the size of the industry in July 2008, when the index began.

The economy – US

The number of IT jobs in the US grew 0.2 percent sequentially last month to 5,074,900, according to TechServe Alliance, the national trade association of the IT & Engineering Staffing and Solutions industry. On a year-over-year basis, IT employment grew by 3.8% since February 2015 adding 186,500 IT workers. Engineering employment was essentially flat up only 0.02 percent sequentially to 2,530,500. On a year-over-year basis, engineering employment grew by an anemic 0.6% since February 2015 adding 15,700 engineering workers, continuing to underperform the overall workforce.

U.S. private employers added 214,000 jobs in February, above economists’ expectations, suggesting solid job growth despite market turmoil and worries about a slowing global economy. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 190,000 jobs, with estimates ranging from 160,000 to 225,000.

The Conference Board’s US leading economic index edged up in February, suggesting modest growth through early 2016. The index rose 0.1% in February to a reading of 123.2 (2010 = 100), following decreases of 0.2% in January and 0.3% in December.

CEOs now expect 2016 US gross domestic product growth of 2.2%, down from an estimate of 2.4% at the end of 2015, according to the Business Roundtable’s first-quarter 2016 CEO Economic Outlook Survey. CEOs expect sales and capital expenditures to increase in the next six months; however, the report found hiring plans declined by nearly 10 points from last quarter.

Young Americans are overwhelmingly confident in their ability to find a job, despite 74% of respondents feeling as though their colleges and universities are failing to fully prepare them for their post-grad careers, according to the most recent “Way to Work” survey released today by Adecco Staffing USA. The survey found 50% of the students surveyed feel “determined” and “optimistic” about their job search, with more than 75% of generation Z and millennials expecting to find a job within four to five months of graduation.

Economists surveyed by the National Association for Business Economics lowered their growth projections for the US economy in 2016 and 2017. The forecaster’s median forecast in the new survey is for inflation-adjusted US gross domestic product (real GDP) to grow at an annualized rate of 2.2% in 2016, down from 2.6% forecasted in a December 2015 survey.

The Conference Board’s consumer confidence index for the US rose in March following a decrease in February. The index rose to a reading of 96.2 (1985=100), up from a reading of 94.0 in February.

The American Staffing Association’s index measuring employment in the US staffing industry rose slightly to a reading of 93.34. However, the index was 2.98% lower than the same week last year. Staffing employment during the past four weeks averaged 92.97, down 4.26% from the same period last year.

Despite volatility in financial markets, the outlook for the US economy has not changed much over the past three months, according to a report from TD Economics. Weak global growth remains a key headwind, but domestic demand continues to be supported by a healthy labor market and low energy prices. Led by household and business spending, TD Economics projects US economic growth of 2% in 2016 and 2.2% in 2017.

The economy – Outside North America

According to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC), 79% of employers believe that economic conditions are improving in the UK, while 81% of businesses plan to hire more permanent staff in the next three months. However, the data also shows that hiring intentions are weakening within smaller businesses.


> COMPANY NEWS

IBM’s latest round of layoffs are likely to affect 14,000 workers. IBM has declined to provide details on the size of a "workforce rebalancing" effort, which employees have said began March 2. IBM declined to provide an actual number of jobs targeted for cuts, but noted that the company hired 70,000 people in 2015 and currently has 25,000 open positions around the world, including in the US.

Cloud-based polling platform provider SurveyMonkey will lay off approximately 100 employees, or 13% of its staff, as the company works to revamp its products with a focus on business use. The layoffs cap off a turbulent period for the Palo Alto-based company. Last May, then-CEO David Goldberg died unexpectedly, leading SurveyMonkey on an extensive, two-month search for a successor. Former HP executive Bill Veghte was eventually chosen for the job. His appointment was met with enthusiasm, as Veghte was not only highly regarded as an executive, he also was a close friend to Goldberg. But Veghte’s tenure would be short lived. In January, Veghte stepped down from the CEO role to take a position on SurveyMonkey’s board, alongside Goldberg’s widow — and Facebook COO — Sheryl Sandberg. Veghte cited strategic differences with investors as the reason behind the move. Veghte was replaced with former GoPro CEO, and SurveyMonkey chairman, Zander Laurie.

Cisco is working with Berlin’s government officials to push forward plans in making the city smarter. The San Jose, California-based IT firm announced plans to work with Berlin’s Senate Department of Economics, Technology and Research in digitizing the lives of Berlin’s residents. In a statement, the company said telemedicine — remote communication and the diagnosis of patients across digital platforms — security and network infrastructure improvements are the main areas of focus. Cornelia Yzer, Senator for Economics, Technology, and Research in Berlin, and Anil Menon, the Global President of Smart+Connected Communities, joined with Cisco to sign a Memorandum of Understanding, leading to the investment as part of Cisco’s $500 million “Deutschland Digital” initiative.

Cisco has also committed to investing more than $100 million in India to support the country’s digital connectivity initiatives. The investment will span a bevy of research and technology organizations with the aim to boost India’s GDP growth, create jobs, support infrastructure and move more services online.

Are smartwatches a fad?  Pebble, a key player in this space, is reputedly laying off about 25% of its staff, or 40 employees. CEO Eric Migicovsky said that lack of investment from Silicon Valley was to blame for the layoffs, despite having raised $20 million on Kickstarter, followed by $26 million in the eight months that followed. He added that the company would focus on health and fitness angles, and will be partnering with Amazon to market to India.


> MERGER & ACQUISITION ACTIVITY

San Mateo, Calif. cloud-based business software firm NetSuite Inc. has acquired Pittsburgh, Penn. cloud-based manufacturing software vendor IQity Solutions. This will allow NetSuite to create a cloud-based system that both discrete and batch manufacturers can use to monitor the production process from start to finish. IQity’s CEO spoke positively about the deal. “It’s definitely something we welcome,” says IQity CEO David Gustovich, who has been involved in the manufacturing industry for 32 years and will become area vice-president of NetSuite’s centre of excellence division under the deal. “[Manufacturers] are constantly seeking ways to simplify the complexity of their operations, but more importantly they’re seeking to get rid of all the different point solutions… that they’ve invested in over the years,” he says. “And part of that simplification is bringing all of that information that’s required to run their business into one integrated business system.” When the acquisition was announced, IQity and NetSuite already had nearly 40 joint customers, though both parties now expect that number to grow.

Toronto-based marketing software maker Influitive has acquired mobile app startup Ironark Software. Ironmark is the company behind home and family organizer Hub and business task and schedule manager Workbase. $8.2 million in investment came through the government-owned Export Development Canada and VC firm Leaders Fund, and increased funding from existing investors. The company made a second acquisition this month, acquiring Triggerfox, the Toronto-based startup behind a customer relations management mobile app.

IBM has bought Optevia, a UK-based systems integrator specializing in Microsoft Dynamics CRM for the public sector. Optevia will join IBM Global Business Services, where IBM says it will help meet the increasing demand for software as a service CRM offerings in the public sector. Optevia has been working with Microsoft Dynamics CRM since 2004 and has racked up 200 public sector customers since then.

IBM is acquiring global strategic Salesforce consulting partner Bluewolf Groupin an effort to extend the company’s cloud services capabilities. Bluewolf, a consulting firm and a SalesforceGlobal Strategic Partner with operations in five countries, has been an expert in Salesforce for over 15 years and the firm boasts of completing over 9,500 successful Salesforce projects. Rumor suggests the deal is close to $200 million. Bluewolf will join IBM’s existing Interactive Experience (iX) practice of its Global Business Services to form a deeper consulting capability for clients adopting Salesforce technologies.

Since Dell announced its acquisition of EMC last fall, the company has begun the expected reorganization in preparation for the combined entity’s focus, which includes divesting of business lines to reduce overlap and redundancy. The latest realignment will see Japan’s NTT Data Corp. acquire Dell Services in a US$3 billion deal that “will significantly increase NTT Data’s presence in North America,” according to a statement released by NTT Data this week. “The combination will create a rich portfolio of IT and digital business solutions for some of the most attractive services industry sectors including healthcare, financial services, insurance, and the public sector,” the company said

Montreal-based Yellow Pages Ltd. has acquired Juice Mobile, a privately-held, Toronto-based marketing service provider and automated mobile advertising platform developer, for $35 million. The acquisition will allow Yellow Pages to add programmatic to its already-considerable stable of digital marketing services, which include online advertising division Mediative, launched in 2010. Though founded only in 2010, Juice Mobile’s direct programmatic platform, Nectar, and real-time bidding platform, Swarm, are already used by an extensive network of brands and publishers, including more than 300 Fortune 500 companies – a list that should merge well with Yellow Pages’ existing networks of local consumers, businesses and advertising agencies, the company said in its statement. Juice’s revenues exceeded $25 million last year. In addition to its Toronto headquarters, Juice owns additional offices in Montreal, Waterloo, Vancouver, New York, Los Angeles, and Chicago, and also operates a mobile media publishing network that garners 11 billion impressions per year. Yellow Pages, of course, is probably still best known for its iconic business directories, which it has been publishing in one form or another since 1908. However, in the Internet age the company has reinvented itself as a digital media and marketing solutions firm that focuses on supporting neighbourhood businesses through a network of websites, including YP.ca, RedFlagDeals, Canada411, and dine.TO.