In today’s digital-focused world, having decent IT infrastructure, a slick website and efficient data storage matters. Not to mention good cyber security, the value of which is growing given the increasing prevalence of data hacks. But in a year when economic turmoil has put undue pressure on many of the UK’s businesses, technology spending has taken a back seat. Computer services companies have struggled as a result.
Computacenter (CCC) and Aveva (AVV) are prime examples of this phenomenon; both had to stomach a slide in constant-currency turnover in 2016. Computacenter blamed falling UK-based sales on home customers procrastinating ahead of the EU referendum. But strong performances in France and Germany helped reduce the rate of that decline. With major political votes in these two countries in 2017, it will be interesting to see whether continental customers also reduce tech investment in uncertain times.
Embattled oil and gas companies also sidelined tech spending last year and Aveva felt the repercussions. The same could not be said for Fidessa (FDSA), though. Its customers are mainly banks, insurers and asset managers and, although trading has hardly been plain sailing for these companies, pressure from regulators to boost efficiency and adhere to new guidelines kept IT spending high.