Couple of things are unclear with Persistent : 1) What kind of IPs in SMAC are they holding, their IP revenue is still not growing at the pace at which it should be growing in SMAC category. 2) Their Services business, like all others is struggling to grow - it constitutes around 80% of their revenue today. Can anyone throw their counter thoughts on these two points.
Persistent systems partnership with Microsoft Azure is 6 years old and going strong. The relationship is probably from the early phase of Azure cloud computing venture?
Any idea how this will going to impact ?
Enterprise solutions without the enterprise headache.
This is the tag line of PRM CLOUD SOLUTIONS
Lots of news flow here
Not sure of direct impact of these new developments (acquiring PRM Cloud Solutions and tie-up with IBM for IoT etc) but it is clear that management is aggressively focusing on new technologies and trends in areas of SMAC and IoT. My thought is that if these initiative succeed then it could generate excellent returns for investors but otherwise also it is available at industry comparable valuations and good dividend yield so Risk Reward seems favorable at these valuations.
Disc : Invested and accumulating so views could be biased.
Guys as per isprit and data quest this is only company having more than 70% revenue from digital space ie smac Infy and tcs less than 8% and they are serving the important retail space and also they are not using the old platforms like oracle or sap there is completely new platform with good mobility and now with IBM uv for Internet on things they will cover the entire value chain of SMAC space I think even basant Maheswari was talking about this space even thou he did not mention the name of the company that hAs caused the recent spurt but as pouted out the risk reward ratio is high
Most of the revenue comes from US and demand scenario may remain challenging.
I am working in IBM india and on the IOT Watson . There has been a big opportunity in this space and they way IBM is marketing Watson it definitely going to rule the next decade. Currently we are deploying Watson platform for many of our prestigious clients.
[Discloser:- Invested in Persistent System at the current level also holding IBM shares as well. Views might be biased. Any employee from Persistent system could have shed some more light into this area]
IBM tie-up to contribute 15-20% to revenue in FY17: Persistent
Since you work for IBM, can you throw some light as to why IBM would offer such a deal to Persistent. IBM has over 1.5 lac employees in India. What does it get from this deal? IBM is sharing some revenues with Persistent and hence the upside for Persistent is huge if the product is successful.
IBM has 1.5 lac of employees in India but they are not trained in cloud or IOT platform . Since training and hiring cost is lots higher than go for a strategic alliance so IBM will provide the cloud infra support on their Bluemix platform and application development responsibility will lies with there partner like Persistent who already have insight and knowledge base of developing on i-smac platform. As of now we are working on AMS part of it and the development part has been outsourced to US based companies but since the development cost is much higher than to execute it from India hence they now has gone for partnership with Persistent.
Note :- Any more details I can not share due to Non Disclosure Agreement.
Does anyone knows apart from Persistent,Is there anyother IT majors (TCS,Infy,Wipro etc) as Integration partners for IBM Watson IOT platfrom from India or overseas ? As that will help to ascertain how much it will be profitable for persistent revenue in coming years.
Does IBM going to add more integration partners or Persistent is ONLY EXCLUSIVE partner -which i dont think its feasible as IBM want to grow IOT as much as possible hence it might add other Integration partners as well in future.
Based on my talk with the management (investor relations) and Analysts who cover PERSISTENT post concall, following are the takeaways:
- Persistent has been asked to work on two products of the IBM Watson. The name of two products is not disclosed. Persistent is given the launch roadmap of these two products and shall be doing the continuous engineering for these products.
- These two products are already being used by customers and have revenue. Persistent gets a revenue share from IBM. Persistentās share of revenue on a trailing 12 month basis is USD 50 mil and itās cost in FY17 would be USD 60 mil.
- If revenues grow 25%, Persistent breaks even on the deal as the costs are 85-90% fixed. In FY18, Persistent can make good profits. However, the real game is post that when margins can improve meaningfully as there will be huge operating leverage as costs are more on Product development side and thus non-linear with revenue. Basically, incremental revenues going forward flow 80-90% to the profits.
- Persistent cannot offshore employees for 12 months (or may be 24 - I donāt remember this perfectly). Post that Persistent can offshore which can reduce costs.
- 400 employees to come from IBM and 100 to be hired.
- Opportunity for being a system integrator as well for implementation of IBM Watson platform. This gives Persistent entry to enterprises it could never have entered on its own like Honda, Kone. These revenues not factored by the management. However, system integration per se is a low margin and high variable cost business.
- Revenue % share of Persistent is locked in for the long term.
Thus, key questions are:
How much will the product revenue grow. If is going to grow from USD 50mil today to USD 100 mil in FY19 (possible given the growth rates in this area), Persistentās costs are not going to grow by much (say from 60 in fy17 to 70 in fy19) and thus it can have a USD 30 mil in PBT in FY19. So, the success of the product is the key variable.
On the other hand,Persistent is taking product risk. If product fails, Persistent can lose money. It will have to fire employees. Do not know what the contract requires Persistent to do in case of failure (may be it might have to persist with costs as per contract)
Let me know if you can share your view on the growth rate of Watson? And can IBM match the innovation of Google, Amazon, Apple in the development of Watson? Like some videos suggest Watson is still being developed in collaboration with its prospective customers (like GEICO, Softbank, Hilton, etc). Do you think it can make it big in the next 5 years? IBM has not yet disclosed its Watson revenues. They say they want to nurture it.
All said I think the deal for Persistent is "Heads I win a lot; Tails I donāt lose muchā.
Discl: Invested
Hi Rohan,
Very well placed analysis. Let me try to give you the answer you required[may be not sufficient but informative].
- Watson is the make or break thing for IBM if it will succeed IBM will prevail otherwise not. It is not merely a cloud based IOT platform or something like that. It is the AI part of IBM which is hosted on IBM cloud platform Bluemix. Watson is still in its nascent stage and it is learning a new thing every day. The reason why IBM is yet give any revenue guidelines is because WATSON is yet not mature enough to operate independently as it is intended to but as per the guideline by FY18 it will be ready and then onwards IBM may provide the revenue guidelines. As of now WATSON has been implemented in few academic and medical sector only and the results is successful. IBM also have engaged few of their clients with WATSON. So once done it cloud have been the game changer for the next decade.
- About the competition only Facebook is engaged with such AI thing not other MNCs but on cloud platform like blue mix Amazon is a better one with AWS. To cater the challenges IBM has gone with partnership with SAP and Apple for using their cloud based service as well as ownership of Apple Swift.
So in a way I can say IBM is on a right track of consolidation the cloud platform.
But about Persistent I do not have all the information as how much the risk to reward ratio is and as you have rightly pointed out they have not yet discussed about the product may be due to intellectual asset risk and neither I have any idea of it so it is a cause of concern.
Hope this post able to answer few of your queries.
How Performance Management Software Will Change the Way You Do Business
by Stuart Hearn March 25, 2016
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Performance management software is changing the way companies do business. Large companies are embracing new software to create a more collaborative workplace, to enable constant feedback and recognition between co-workers and to keep up with the fast-pace of business today.
Organizations including Adobe, Accenture and Cargill have become trailblazers in the performance management arena, making bold decisions to cull their annual performance appraisals in favour of continuous performance management processes. Considering that the average manager spends an astounding 200 hours each year on performance management, itās no surprise that big companies are tackling the issues head on.
Performance management is undergoing a transformation and trends in the sector have been all the talk in 2016. Feedback and coaching have taken precedence over rankings, development-based conversations and personal development plans are coming into play, and the emphasis is firmly on forward-focused approaches.
None of these transformations would be possible without innovative, new performance management software systems.
Performance Management Software in 2016
Performance management software will be part of a major trend toward a design-centric, digital focus within HR in 2016. Performance management software tools are improving business productivity and increasingly replacing outdated HR software.
In his research report on Predictions in 2016, Josh Bersin predicts that: āApps will become king, the cloud will sit behind the scenes, and traditional software will seem less and less relevant. We will learn online, onboard and communicate through our phones, and wear devices that feel like the Internet of Things.ā
Well-designed performance management tools are shaping the way that organizations do business, focusing on streamlining processes for efficiency and motivating employees to excel. Hereās how performance management software systems are already impacting businesses:
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Simplification in HR
By using software, HR teams and managers are able to simplify performance management processes and cut down on paperwork in favour of an online, cloud-based system which collects information. Some software also analyses data in order to highlight trends and problem areas relating to performance.
Collating Performance Insights
These performance insights enable HR to collate training and development needs for the whole organization instantly by simply running a report. Organizations using a paper-based system will be left in the dust if they continue to manually sift through appraisal documents to pull out training and development needs in order to create their training plans for the year.
User-Friendliness
In order to be successful, new technology has to be user-friendly. Performance management software is modelling itself on social media with interfaces that are designed to be highly user-friendly and that have real-time updates just like we have on Facebook, Twitter and Instagram.
Improving Collaboration
By making performance management software user-friendly and easily accessible by employees across the company, software is driving collaboration amongst teams. Team members can interact with one another at any time and from any device, requesting feedback, updating personal development plans and communicating new ideas.
How Large Companies Are Using Performance Management Software
A number of notable companies who have revamped their performance management processes in recent years have embraced performance management software as a way forward.
General Electric use a performance management software app to track goals. Employees and their managers can access the app through their mobile phones to review their goals and add progress updates. The app records feedback and comments, making the process collaborative and constructive.
Some companies have introduced pulse surveys. These anonymous surveys arrive once a week in each employeeās inbox and ask quick questions relating to how engaged and happy employees are at work and what they think could be improved. Karl Waldman, senior vice president at Retail Solutions, has commented that insights gained this way can be invaluable.
Improved learning management systems are being used by companies ā including Abbott Laboratories and Constellation Research Inc. ā to give employees more autonomy over their training and what they want to learn. However, many systems in this area are still considered to be in their developmental stages.
Other companies are taking performance software a step further. Persistent Systems, a company specialising in business software, gamified their performance appraisals. The missions and achievements within the game system encourage employee engagement and managers can give virtual gifts to recognise employee performance.
Performance management is an area undergoing massive growth and transformation, and technological solutions will continue to develop to support those changesā¦
[3/27, 6:26 PM] dr mehul shah: The Internet of Things Is Far Bigger Than Anyone Realizes
[3/27, 6:28 PM] dr mehul shah: WHEN PEOPLE TALK about āthe next big thing,ā theyāre never thinking big enough. Itās not a lack of imagination; itās a lack of observation. Iāve maintained that the future is always within sight, and you donāt need to imagine whatās already there.
Case in point: The buzz surrounding the Internet of Things.
Whatās the buzz? The Internet of Things revolves around increased machine-to-machine communication; itās built on cloud computing and networks of data-gathering sensors; itās mobile, virtual, and instantaneous connection; and they say itās going to make everything in our lives from streetlights to seaports āsmart.ā
But hereās what I mean when I say people donāt think big enough. So much of the chatter has been focused on machine-to-machine communication (M2M): devices talking to like devices. But a machine is an instrument, itās a tool, itās something thatās physically doing something. When we talk about making machines āsmart,ā weāre not referring strictly to M2M. Weāre talking about sensors.
A sensor is not a machine. It doesnāt do anything in the same sense that a machine does. It measures, it evaluates; in short, it gathers data. The Internet of Things really comes together with the connection of sensors and machines. That is to say, the real value that the Internet of Things creates is at the intersection of gathering data and leveraging it. All the information gathered by all the sensors in the world isnāt worth very much if there isnāt an infrastructure in place to analyze it in real time.
Cloud-based applications are the key to using leveraged data. The Internet of Things doesnāt function without cloud-based applications to interpret and transmit the data coming from all these sensors. The cloud is what enables the apps to go to work for you anytime, anywhere
[3/27, 6:29 PM] dr mehul shah: Letās look at one example. In 2007, a bridge collapsed in Minnesota, killing many people, because of steel plates that were inadequate to handle the bridgeās load. When we rebuild bridges, we can use smart cement: cement equipped with sensors to monitor stresses, cracks, and warpages. This is cement that alerts us to fix problems before they cause a catastrophe. And these technologies arenāt limited to the bridgeās structure.
If thereās ice on the bridge, the same sensors in the concrete will detect it and communicate the information via the wireless internet to your car. Once your car knows thereās a hazard ahead, it will instruct the driver to slow down, and if the driver doesnāt, then the car will slow down for him. This is just one of the ways that sensor-to-machine and machine-to-machine communication can take place. Sensors on the bridge connect to machines in the car: we turn information into action.
You might start to see the implications here. What can you achieve when a smart car and a smart city grid start talking to each other? Weāre going to have traffic flow optimization, because instead of just having stoplights on fixed timers, weāll have smart stoplights that can respond to changes in traffic flow. Traffic and street conditions will be communicated to drivers, rerouting them around areas that are congested, snowed-in, or tied up in construction.
So now we have sensors monitoring and tracking all sorts of data; we have cloud-based apps translating that data into useful intelligence and transmitting it to machines on the ground, enabling mobile, real-time responses. And thus bridges become smart bridges, and cars smart cars. And soon, we have smart cities, andā¦.
Okay. What are the advantages here? What are the savings? What industries can this be applied to?
Hereās what I mean when I say people never think big enough. This isnāt just about money savings. Itās not about bridges, and itās not about cities. This is a huge and fundamental shift. When we start making things intelligent, itās going to be a major engine for creating new products and new services.
Of all the technology trends that are taking place right now, perhaps the biggest one is the Internet of Things; itās the one thatās going to give us the most disruption as well as the most opportunity over the next five years. In my next post in this two-part series, weāll explore just how big this is going to be.
Daniel Burrus is considered one of the worldās leading technology forecasters and innovation experts, and is the founder and CEO of Burrus Research. He is the author of six books including the New York Times best seller āFlash Foresight.ā
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