A tale of two halves

A tale of two halves

After the biggest one day fall in the FTSE index for five months there was a small recovery the next day which was attributed in no small part to a single market sector report from the Chartered Institute of Purchasing and Supply stating “UK service sector activity increases at strongest pace in four months during July”. Apparently the seasonally adjusted Markit/CIPS Business Activity Index recorded 55.4 up from 53.9 in June.

Have we come to this? Could such a minor increase cause a stock market rally after the possible meltdown scenario of the US debt ceiling debacle? How would the markets handle really good news? Is it any wonder that smaller investors are deserting the volatility of the markets?

A more sombre and informed barometer is to be found in a survey released the same day by Dawinderpal Sahota of the respected TechMarketView, which is headlined “UK Software and IT services Market to shrink”. Predicting a “significant downturn this year compared to 2010” – down last 2.5% in 2010 and now looking like 3% in 2011 and around one percent in 2012.

The main culprit for this being Cloud computing. In a lot of cases for the service provider, Cloud is the cannibalisation of existing revenues for more flexible payment by use, no need for large parts of existing infrastructure, even licenses are going on a usage basis, prices go down and risks go up. However, most service providers are racing to embrace it mostly at the cost to their current service margins. “Cloud computing is especially disruptive because it requires software publishers and IT and business services providers to completely reconstruct their operating and business models” Mr Sahota concluded.

Add to this the technological advances for remote management of IT and need for fewer staff; Offshoring and near-shoring options which drive down prices significantly and the fact that all corporations are significantly holding back on unnecessary expenditure. Now choose which report is most likely to influence your pension fund’s performance in the longer-term. Sorry – did you say that you are in the process of selling down?!!!

Posted in Technology Comments: one


One Response to A tale of two halves

  1. BhGemjQ6b says:

    Fascinating blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple adjustments would really make my blog shine. Please let me know where you got your design. Thanks.

Leave a Reply

Your email address will not be published.