The second quarter of 2011 was marked by the remarkable acquisition of BI consulting firm Partake by Ernst & Young. Previous quarter, KPMG bought outsourcing specialist EquaTerra. Are the big accounting firms investing again in IT consultancy and services?

In the beginning of the year 2000 under great pressure from public opinion and various monitoring organizations, the big four accounting firms were put under pressure to divest their consulting divisions. Their opinion was that Consulting and public Auditing in large companies was incompatible and could lead to conflict of interest and lack of objectivity or critical attitude in the performance of the audit function.

Some of the "big six" as they are called responded to this such as PWC, Ernst & Young and KPMG. Others such as Deloitte did not for their own reasons and put off this decision.

Why do they now invest in IT services again?

Various reasons can be given that fit within the new context in which accountants organizations must operate:

• The higher quality and compliance requirements placed on the information of larger companies
• The growing influence of automation and standardization of the internal data processing, internal & external reporting and forecasting.
• Higher requirements this imposed on the combined knowledge of accounting, corporate governance, risk assessment and the knowledge of the software in use by customers.

This together with the lower fees for the standard audit work, makes it in many cases necessary and lucrative for Accountants organizations to compensate and supplement their traditional services with specialized IT-related consulting services. Partly due to tighter internal and external oversight of the accountancy profession, social protest against the danger of collusion in functions seems to be decreased.

Enterprise software market growing again

Many IT-related markets are still under pressure but according to the latest market research from Gartner, the worldwide market for enterprise software in 2010 grew by 8.5 percent with a total revenue of $ 245 billion. In 2009, the market still fell by 2.5 percent and revenue of $ 226 billion.

Microsoft maintained at first place and won a share of 22.4 percent in the global market for enterprise software, among others through the wider adoption of Windows 7 and Microsoft Office 2010. Revenues totaled at $ 54.7 billion. IBM finished in second place with sales of $ 25.4 billion and a market share of 10.4 percent. Oracle posted 23.9 billion revenue - the largest relative increase with 19.4 percent - and thus occupied third place with 9.8 percent market share. SAP was number four with sales of $ 12.9 billion on a market share of 5.3 percent. Symantec finished in fifth place with sales of $ 5.6 billion and a share of 2.4 percent.

CIC agrees with the expectations of Gartner and thinks there are various mergers and acquisitions on the horizon. Software vendors and service providers want to expand their customer base, add special features - vertical or technology-driven - to improve their overall marketposition.

Navigation and Fleet Management

TomTom shares have sharply fallen on the stock market after the profit warning on Monday 27/6. The Satellite navigation systems maker warned that sales of navigation boxes are collapsing even faster than expected. In April, TomTom also issued a sales warning before in April. Investment banks downgraded stock price goals considerably.

Trust in the shares is normally gone now for a couple of months and has to be rebuilt again.

Tom Tom is our Dutch pride in the market for personal navigation devices (PND) and fleet management devices (FMD). These markets are characterized at present with many players fiercely competing with each other.
In the PND market, main competitor Garmin is stronger in North America, and in the field of commercial online (route) maps Tom Tom compets with Google and NAVTECH, which in turn was bought by Nokia.

The FMD is a growth market, Qualcomm is the largest player globally and in North America. Second place is taken by Trimble and FleetMatics.

Tom Tom tries to expand its content and services business with built-in navigation equipment but also through its FM division, to compensate for the declining sales at the PND side.

There are too many local players with their own platforms in the FMD market who have no chance to survive. Acquisitions by Tom Tom seem therefore useless. Tom Tom has the fastest growing FM business in Europe and from almost nothing has climbed to second place.

CIC is particularly interested in PND and FMD because we together with our UK business partner, Red Squirel are holding buy mandates of international parties in these markets, such as tracking and tracing in combination with mobile and Machine to Machine communications. We are always searching for qualified candidates who are looking for a strategic partnership and a lucrative exit.