Lending to the Irish tech sector to increase as Bank of Ireland bolsters its technology sector team.
The Irish technology sector is one of the most dynamic areas of the economy. At a recent event hosted by Bank of Ireland and supported by Technology Ireland and Gartner, Adrian Mullett, head of the technology sector at Bank of Ireland said lending to the sector in 2017 grew by 150% supporting the growth of software and services companies, including Roomex.com, Propylon, vStream and Storm Technology.
“Projected revenues of indigenous tech firms are set to grow by 20% in 2018 to €3.5bn,” says Mullett.
A dedicated technology team
“Given this growth, we are expanding our dedicated technology team, with two key appointments, so we can continue to provide the right guidance to our customers,” says Mullett. “A larger technology team will help us to serve technology companies better and capitalise on the growth in lending we have delivered.”
The technology sector team in Bank of Ireland has a strong relationship with Gartner to glean deep regional and global insights into every significant business function of the market.
At the event, the keynote speaker Sandra Notardonato, research vice president with Gartner, gave a global market overview that included the paths for Irish firms that want to break into other markets.
“For the first time in nearly a decade we see worldwide end-user IT spending in the technology sector increasing,” says Notardonato.
“Our annual CIO survey shows an increase in IT budgets in 2018, of which 25% is dedicated to digital initiatives.”
The spend on IT services is showing healthy growth, especially in Europe with Ireland, Switzerland and Germany leading the way, followed by southern Europe where countries are playing catch up after years of underinvestment.
“Automation is the most meaningful change to the IT services business model since off-shoring,” explains Notardonato.
IT outsourcing is also showing definite signs of growth as is the world of IT consulting.
“Digital skills are scarce,” says Notardonato, “and hiring at scale is difficult for firms, so we are seeing acquisitions playing a larger role as IT Consulting firms reposition themselves for new areas of opportunity to drive growth.”
Have a clear and early growth strategy
Katherine Byrne, a corporate finance partner in BDO, discussed financing and funding and the mistakes some companies make as they attempt to scale.
“The challenges we see facing IT services firms as they transition from a proprietary software business to the word of SaaS is that the landscape is so fast moving some find it difficult to scale in the right way. We advise that businesses adapt to change as early as possible and be aware of the funding options available. Businesses need a clear strategy to scale and the earlier they put one in place, the better chance they have to grow in the right way.”
IT Alliance CEO, Philip Maguire, described what it’s like to rebuild a business after a recession and the lessons he learned.
“We have learned that cash is king when it comes to growth and innovation. After an economic crash, you will need cash to innovate and catch the next wave. Innovation burns cash so make sure you have the proper funding structures in place.”
Jack Donaghy, CEO of Roomex talked about the challenges that growing a tech business at pace brings and what factors are driving revenues in his sector.
“For us, it’s about speed and acquisitions, and this is what a SaaS model allows us to do. At Roomex we have a 99% ‘bookability’ which means that 99% of people who arrive on our platform make a booking. If we keep our customer retention costs at 20% of the total, then we are in a good position to have the means to invest and continue to scale. In our business, it’s all about the metrics, and that’s the same for any SaaS business in growth mode.
Pictured are Adrian Mullet, head of technology sector at Bank of Ireland and Sandra Notardonato, research vice president with Gartner.