Bank of Ireland UCC survey of Irish technology sector reveals
58% of companies experienced growth in revenue in the last 12 months
- Survey conducted to establish the indigenous technology sector’s market approach and banking needs
- Of those who sought financing over the past 12 months, 38% sought bank financing, 25% sought financing through venture capital, while 38% sought both
- Market analysis and pricing can be a challenge for technology companies
Issued 15 September, 2014. Bank of Ireland today announced details of a survey conducted on the indigenous technology industry. The in-depth phone survey, which was conducted on behalf of the bank by the Financial Services Innovation Centre (FSIC) at UCC, covered 142 Irish technology companies. The survey looked at how technology companies evaluated their markets and price their products and services. 98% of the survey companies are classified as SMEs with over half of respondents employing between 5 and 20 employees. 35% of the companies surveyed had turnover of €1m+, and over 75% of the sample had over €100k in turnover per annum.
The research reveals a sector that continues to grow revenues with 58% of respondents reporting growth in the past 12 months. When asked to identify growth opportunities in the next two years, 17% said moving to a mobile platform would provide additional opportunities, 15% cited data analytics and 14% said increased device and sensor connectedness would present the opportunities for growth.
When asked what banks could do to better support the sector, respondents wanted greater supports for early stage companies and improvement in online platforms. Respondents also said they would like to see banks demonstrating more understanding of the sector, and using the services of more indigenous technology providers.
After cash flow (24%), the competitive landscape and pricing policy were highlighted as two key challenges facing the industry. When asked about analysing their market, over 50% highlighted the lack of availability and the cost of accurate market data. As a direct response, the Bank is partnering with the Irish Software Association to sponsor a number of companies to attend a work shop on strategic pricing in November.
Paul Sweetman, Director of the Irish Software Association commented: “We welcome Bank of Ireland’s support for the sector by enabling companies to learn about best practice in pricing and also through their sponsorship of the ISA awards”.
Speaking about the survey, Mark Cunningham, Director of Business Banking Bank of Ireland, said “We welcome the insights this survey has given us into the Irish indigenous technology sector, one of the strongest growth sectors of the Irish economy. Bank of Ireland has always been a strong supporter of the sector, committing €150 million in equity across 150 companies through our funds with Delta Partners, Kernel Capital and the BDO Development Capital Fund. In addition, we are banking partner for some of Ireland’s leading technology companies including Openet, Escher and Fineos. We have recruited external industry expertise and have the benefit of a leading global technology research house to further enhance our capabilities in this sector.
“We have experienced a c. 50% increase in applications for working capital and development finance over the past twelve months, broadly reflecting the revenue growth from this important sector. We continue to make significant investments in our digital channels with work already underway to enhance the functionality of our Business on Line platform, details of which we will communicate with our on-line users as they are developed. Furthermore, our innovation and product teams are evaluating a number of proposals and technologies from early stage Irish technology companies with a view to adoption”, concluded Mark Cunningham.
Other Key Findings from the survey include:-
- Only 11% of respondents experienced a decrease in revenue
- The cost of running technology companies is declining
- The most commonly used banking product is a business credit card
- The cost of doing business in Ireland was cited by 13% as the biggest challenge facing them
- Product features identified as the most significant source of competitive advantage but references also feature highly
- There is no industry consensus around pricing strategy with most basing pricing on competitors offering
- Over 72% use a direct route to market