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Posts Tagged ‘PWC’

SaaS, cloud IT, mobile reshaping the software industry

Tuesday, May 21st, 2013

PwcThe emergence of software-as-a-service (SaaS), cloud, IT consumerization and mobile are expected to advance the future of the software industry, finds PwC U.S. in its annual Global 100 Software Leaders report. The report, in its fourth year of publication, highlights a deeper understanding of the underlying forces and trends that are influencing the industry.

The PwC study finds that the effects of globalization and consolidation are changing the landscape of the software sector and how companies develop, market, sell, distribute and support their products. Acquisitions are viewed as an R&D strategy as well as a key way to acquire talent and build SaaS capabilities more effectively and efficiently.

“Software companies and vendors are especially beginning to feel the effects of the software-as-a-service (SaaS) technology on their business models,” said Patrick Pugh , PwC’s U.S. software and Internet leader.

“Vendors need to continually evaluate both the changing priorities of customers and the industry because these evolving sentiments are causing deep structural changes and fundamentally shaping business models.”

SaaS racked up 40 percent of revenues

According to the report, SaaS revenue accounted for at least 40 percent of software revenue for 10 companies on the Global 100, in which nine of the top 10 are U.S.-based.

While U.S. companies lead revenue share on both the global and North American lists of software vendors, PwC finds that powerful newcomers, as well as companies from emerging markets, will increasingly challenge the dominance of the large North American vendors.

“To drive future growth, North American software vendors must prioritize transforming their business models to address the realities of the SaaS environment and incorporate social enterprise, IT consumerization and data analytics.  Furthermore, U.S. companies can find new opportunities to expand globally by tailoring their software to specific vertical markets and geographic regions,” added PwC’s Pugh.

Key industry drivers include:

  • Priority on pricing: Pricing is the paramount issue for the entire sector. With the rise of IT consumerization via low and no cost online platforms, software companies are already struggling to explain the difference in value between a low-cost mobile app and a full-strength, licensed enterprise software package.
  • SaaS is gaining traction: Although SaaS represented only 4.9 percent of total software revenues in 2011, a consistent and significant shift towards SaaS is occurring. Roughly half of 800 North American organizations confirmed they evaluate cloud based solutions when buying software. Perpetual license revenue has been shrinking since 2004 while subscription revenue (including SaaS) is forecast to grow at a 17.5 percent compounded annual rate, reaching 24 percent of total software revenue by 2016. Software companies are now closely evaluating aspects of their business models, including delivery methods, pricing strategies and sales compensation options.
  • Customer is king: With the adoption of intuitive cloud services, mobile devices and low-cost apps, CIOs are no longer the sole decision makers in the software purchasing process; end users must be satisfied in order to retain and grow enterprise sales. Additionally, customer perception of the value of software has changed dramatically.  Vendors must develop strategies to counter the expectation that software should be free.
  • Emerging hybrid models bring new challenges: There will be a range of business models, from traditional licensed software, to pure SaaS, to hybrid approaches, all of which will pose challenges for vendors in the foreseeable future.
  • Vendors will need to identify and adopt new business models while trying to maintain revenues and profits during a time when overall industry pricing is under pressure. Industry executives also worry that the new subscription-based business models will increase dependency on renewals and risk of customer turnover.

Top performing companies share this trait, study says

Tuesday, February 12th, 2013

PwcWant to out perform your competitors and claim a top spot in your industry? If so, you should make sure your C-suite executives and you Chief Information Officer have strong, collaborative relationships.

Companies with strong, collaborative relationships between the CIO and other C-suite executives are four times as likely to be top performing companies as those with fragmented relationships, according to the fifth annual Digital IQ survey from PwC.

According to PwC, a strong Digital IQ—which is a measure of how well companies understand the value of technology and weave it into the fabric of their organization—entails more than adopting the latest tools or having a large IT budget.

CIO orchestrates rather than owns conversations

It is about consistently linking IT investments to business strategy to improve speed, agility and competitive advantage. It is about integrating ‘digital conversations’ into every aspect of the business. Those with the strongest Digital IQ look to information technology for its power to alter business models and create new ones.

“It is no wonder that those firms that have a better Digital IQ can deliver and innovate in a world where the rapid pace of technology is fundamentally reshaping global commerce,” said Chris Curran , a PwC principal and Chief Technologist for the US firm’s Advisory practice.

“Digital IQ is about the CIO orchestrating rather than owning conversations. Social media, mobile channels and data analytics, along with the cloud, are making new business and operating models possible. Because enterprise responsibility lives across the C-suite for these issues, collaborative digital conversations are critical to bring it all together and evaluate and adopt these technologies.”

The survey findings show companies with strong, collaborative C-suite relationships act differently and think together from strategy through execution. These ‘Strong Collaborators':

  • Have a single multi-year roadmap for the business strategy, and an explicit process to link the business strategy to the IT roadmap
  • Are more aggressive in IT capital spending to support strategic corporate initiatives, such as new geographic markets, new product and service development, M&A, joint ventures and strategic alliances
  • Have more aggressive investment in emerging technologies including: mobile, social, big data and cloud
  • More likely have everything on a mobile platform
  • Are more aggressive in leveraging mobile and social technologies for employees and customers
  • Often have more explicit approaches to organize, manage—and measure—innovation
  • Recognize differences in IT needs, e.g. among different generations of employees

They think differently

“Companies with higher Digital IQs think differently about their IT strategy, opportunities, and risks,” said Tom DeGarmo , principal and US and Global Technology Consulting Leader at PwC. “Organizations with collaborative C-suite relationships have a shared understanding of corporate strategy between IT and business leaders and understand costs to implement that strategy.”

“Strong Collaborator” organizations generate better results across the company, according to PwC. Their IT initiatives are more likely to be delivered on time, at or below budget, and within 100 percent of the planned project scope. They also more frequently cite 2012 total revenue growth of more than 25 percent and are more likely to be confident in revenue growth, profitability, and market share. Organizations identified as top performers reported revenue growth of more than 5 percent and said that their companies are in the top quartile for revenue, profitability and innovation.

“Top performers view their CEO as a champion of IT who remains actively involved from strategy through execution and more often view capital IT investments as a means to support growth initiatives and leverage emerging technologies,” commented John Sviokla , principal at PwC.

2012 IPO market topped 2011, and activity bodes well for 2013

Wednesday, December 19th, 2012

PwcTotal volume and proceeds raised in the 2012 IPO market increased over 2011, despite the slowdown in activity during the fourth quarter, according to IPO Watch, a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC US.

PwC says the IPO market continued to outperform as a sector in the fourth quarter, despite a pullback. And, despite a pause in Q4 IPO pricings, a considerable number of companies are filing under the JOBS act, which “bodes well for the IPO market” in 2013.


Following a strong performance in October, the market pulled back as companies waited for clarity on U.S. fiscal policy, PwC said.

138 companies completed IPOs

For the full year, the IPO market saw 138 companies completing their IPOs as of December 13, 2012, raising total proceeds of $40.7 billion, compared with 134 companies that had completed their IPOs for all of 2011 raising $35.5 billion, according to the survey.

Although the 2012 volume of IPOs surpassed 2011, the value raised — when excluding the $16.0 billion Facebook IPO — was only $24.7b, which was a 30% decrease in proceeds raised.

Average IPO size decreased

FacebookThe current year lacked the large number of billion dollar plus IPOs in 2011, and saw the average IPO size in 2012 decrease to $180 million when excluding Facebook, which was a reduction of 32% from the average IPO in 2011 of $265 million.

The IPO market began robustly in the fourth quarter, with October IPO volume equaling that of March – both months were the highest of the year with 21 IPOs. IPO proceeds during October reached the second-highest monthly level of the year, after May, which included the Facebook IPO.

Retreat began in November

IPO activity began to retreat in November as investors turned their attention to the Presidential election and fiscal outlook.

All told, there were 33 U.S. IPOs in the fourth quarter of 2012, surpassing the 29 IPOs in the third quarter of 2012, and 28 IPOs in the fourth quarter of 2011.

Total proceeds raised in the fourth quarter were $6.3 billion, down 5 percent from $6.6 billion the third quarter of 2012, and down 3 percent from $6.4 billion in proceeds in the corresponding quarter in 2011.

IPOs outperformed as a sector

Wall St. signIPOs continued to outperform as a sector in the fourth quarter, with stock price gains exceeding broader equity market returns.

On a quarter-to-date basis, all 33 IPOs that priced in the fourth quarter of 2012 increased their price by an average of 11 percent on their first day of trading, and averaged a return of 12 percent after one week.

In addition, on a quarter to date basis, all 33 IPOs are on average 21 percent above their issue price, again outperforming the S&P500, which showed a quarterly decline of approximately one percent.

According to PwC, despite the pause in IPO pricings during the fourth quarter, the runway for entering the public markets is active as reflected by the considerable number of companies that are filing under the JOBS act.

This underlying volume of activity bodes well for the IPO market as we enter 2013.

New York, London top Cities of Opportunity rankings

Wednesday, October 10th, 2012

New York City Though New York and London lead cumulative scoring, emerging cities, including Beijing and Shanghai, are narrowing the gap within key economic indicators, according to the fifth edition of Cities of Opportunity released today by PwC and the Partnership for New York City.

While New York officially edges out London by one point across 10 economic indicators, the city wins in no individual category. Toronto, which finishes third, also shows great balance yet wins no category.

London, however, takes the lead in “city gateway,” an indicator introduced this year that measures global interconnectedness and international attraction.

Rounding out the leaders are Paris, which advances four spots from 2011 to number four, and Stockholm at number five.

City employment analyzed

In addition to looking at the current performance of 27 cities that are global capitals of finance, commerce and culture, the study for the first time analyzes city employment in the most significant and telling job sectors and projects the trajectory of the cities in jobs, economic output, and population to 2025.

“Cities succeed when they invest in core needs important to both people and businesses,” said Bob Moritz, PwC’s US Chairman and Senior Partner. “When a city invests continuously and aggressively in critical areas, including education, healthcare, safety and infrastructure, it creates a healthy urban environment. Entrepreneurs and businesses thrive, the city economy grows, and long-term resiliency follows.”

“The Cities of Opportunity report is a detailed and insightful analysis of how leading global cities stack up against one another,” said Partnership for New York City President and CEO Kathryn Wylde.

“New York City and London, along with other established cities, maintain their top status because of a depth and diversity of strength across all measures. But the true value of this report is not just the rankings; it is that every city can learn from one another about what works when building a 21st century city.”

The Cities of Opportunity key indicators and top three cities within are:

  • Intellectual capital and innovation: Stockholm, Toronto, Paris
  • Technology readiness: Seoul, San Francisco, New York
  • Transportation and Infrastructure: Singapore, Seoul/Toronto (tied for second), Tokyo
  • Health, safety and security: Stockholm, Toronto, Sydney
  • Sustainability and the natural environment: Sydney, San Francisco/Toronto (tied for second), Berlin
  • Economic clout: Beijing, Paris, London/New York (tied for third)
  • Ease of doing business: Singapore, Hong Kong, New York
  • Cost: Berlin, Seoul, Kuala Lumpur
  • Demographics and livability: Paris, Hong Kong/Sydney (tied for second), San Francisco
  • City gateway: London, Paris, Beijing

The full report, along with in-depth video interviews with leaders who offer their analysis of its findings, including E.O. Wilson, emeritus professor of entomology at Harvard, and Bill Bratton, former New York and Los Angeles chief of police, is available at

Emerging Cities Advance
Beijing advanced to the top spot in “economic clout” while Shanghai placed fifth behind Paris, London, and New York. This is the first time two emerging cities appeared in the top five of this indicator category.

Beijing and Shanghai are also in the top five in a new category, “city gateway,” along with London, Paris, and New York. Balanced progress across a range of social and economic indicators represents the next step for these cities in transforming exceptional growth into sustainable performance for these emerging cities.

Where the Jobs Are
For the first time, the 2012 report provides an in-depth look at some of the most significant and telling job sectors, now and looking ahead to 2025. The financial and business services, manufacturing, and wholesale and retail sectors anchor many city economies in 2012.

Financial and business services when grouped together account for more than a third of the jobs in Milan, Paris, London, Beijing, San Francisco and Stockholm. One in three Shanghai jobs today is in manufacturing, although the study projects the city shifting to a more diversified economy by 2025. Wholesale and retail make up more than 20 percent of the workforce in Hong Kong, Kuala Lumpur, Moscow, Mumbai, Mexico City and Istanbul.

New York leads the world in healthcare employment with nearly 16 percent of its workforce in the field, while Abu Dhabi takes the lead in hospitality and tourism.

Our Cities Tomorrow
Future employment and economic risks for the 27 cities are pinpointed in a new section that projects a 2025 baseline scenario and several “what if” models, including:

  • If knowledge, technology and travel connections determine future success—placing London, Tokyo, New York, Seoul and Paris among the leaders;
  • If protectionism spreads as a way to counter lingering slow growth, where all cities suffer; and
  • If quality of life drives city economies, the beauties of Stockholm, Sydney, Paris and San Francisco fuel strong growth

The study’s baseline scenario projects that by 2025 an additional 19 million individuals will live and 13.7 million will work in the cities. They will generate an additional US $3.3 trillion in gross domestic product—all predicated on a world of modest growth.  At the same time, the wealth divide will remain much the same in 2025 as it does today. Population and employment will surge in cities like Beijing, Mumbai, Istanbul and Sao Paulo. Mature cities will maintain greater spending power and the consumer and corporate demand that drives emerging economies. Mutual self-interest would logically unite emerging and mature cities as one side continues to need the other.

Despite the rise of emerging cities in key indicators, Cities of Opportunity details some of the long-term challenges facing developing cities due to rapid growth.

For example, both Beijing and Shanghai will need to devote roughly 42 percent of GDP to infrastructure between now and 2025 to accommodate growth while cities like London and New York only need to invest 17 percent and 20 percent, respectively.

IPO market expected to gain momentum in Q4

Tuesday, October 2nd, 2012

PwcAlthough IPO activity slowed in the third quarter, a number of signs point to increased momentum in the fourth quarter, says  IPO Watch, a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC US.

It cites ontinued strength in the equities markets, a healthy registration pipeline, a decrease in market volatility and the second largest U.S. IPO of 2012 are all expected to contribute to a more robust IPO quarter, it says.

The quarter finished strongly with eight IPOs pricing in the last two weeks of September, including the quarter’s largest IPO of Banco Santander’s Mexican unit dual listing $4 billion IPO on September 25, which raised $2.9 billion in the U.S. markets.

(Logo: )

There were 29 U.S. IPOs in the third quarter of 2012, compared to 31 IPOs in the second quarter of 2012, and 21 IPOs in the third quarter of 2011.

Q3 proceeds total $6.6B

Total proceeds raised in the third quarter were $6.6 billion, compared to $21.8 billion in the second quarter of 2012 (which included the $16 billion Facebook IPO), and $3.2 billion in the third quarter of 2011.

During the third quarter of 2012, the financial and the technology sectors, which had eight IPOs each, were the leading sectors with 58 percent and 13 percent of the proceeds, respectively. Financial sponsors continued their history of strong presence in the IPO market, backing 69 percent of IPOs in the third quarter of 2012, generating 43 percent of total proceeds.

Click here to view: Value and volume of Financial Sponsor-backed U.S. IPOs

On a year-to-date basis, 104 companies have completed their IPOs, raising total proceeds of $34.1 billion, compared with 106 companies that had completed their IPOs in the first three quarters of 2011 raising $29.1 billion.

“The IPO market continued to demonstrate discrete periods of activity in the third quarter, reflecting the continued compression of IPO windows of opportunity,” said Henri Leveque, leader of PwC’s U.S. Capital Markets and Accounting Advisory Services.

Activity picked up in September

“The markets started well in July, became fairly muted in August, and showed a substantial pickup in activity in September to close out the quarter. As volatility decreased and the equity markets climbed to levels not seen since 2007, we’ve seen well-prepared companies able to execute on their IPO plans.”

Click here to view: Value and volume of IPOs by quarter

Click here to view: Q3 comparison: Value and volume of IPOs

IPOs continued to outperform as a sector in the third quarter, with stock price gains handily exceeding the broader equity markets returns.

IPOs outperformed S&P 500

On a quarter-to-date basis, all 29 IPOs are, on average, 26 percent above their issue price, again strongly outperforming the S&P500 which showed a third quarter gain of approximately 5.8 percent. Also, all 29 IPOs, when combined, increased their price by an average of 10 percent on their first day of trading and averaged a return of 13 percent after one week.

During the third quarter of 2012, 38 companies entered the SEC public IPO registration process, exceeding the 32 companies that filed in the second quarter of 2012.

The LTM (last twelve months) SEC IPO pipeline had 95 companies seeking to raise $19 billion. The pipeline was led by the financial and energy sectors, followed closely by the technology and consumer sectors.  Combined, they accounted for 55 percent of the total proceeds being sought.

According to PwC, the actual pipeline is likely to be higher due to the Confidential Filing provisions provided by the JOBS Act – Emerging Growth Companies (EGC’s) are only required to publicly disclose their filings within 21 days of their anticipated IPO roadshow.



Past security models no longer effective, new strategies needed

Friday, September 21st, 2012

PwcThe rise in global security incidents, diminished budgets and degrading security programs have left organizations to deal with security risks that are neither well-understood nor consistently addressed, according to The Global State of Information Security Survey 2013 released today by PwC US in conjunction with CIO and CSO magazines.

Executives around the world feel confident that they’re winning the high-stakes game of information security despite the growing number of obstacles – but their confidence may be misplaced.

“Security models of the past decade are no longer effective. Today’s rapidly evolving threat landscape represents a danger that shows no signs of diminishing, and businesses can no longer afford to play a game of chance,” said Mark Lobel, a principal in PwC’s Advisory practice.

New strategy and advanced skills needed

“Companies that want to be information security leaders should prepare to play a new game – one that requires advanced skills and strategy to win against emerging threats.”

According to the tenth annual survey, the general mood among global executives is largely optimistic. The majority of respondents said they are very or somewhat confident their organizations have instilled effective information security behaviors into their culture (68 percent), and are very or somewhat confident their information security activities are effective (more than 70 percent).

Yet, while nearly half of respondents (42 percent) view their organization as a “front-runner” in information security strategy and execution, the survey finds that only 8 percent actually qualify as true information security leaders.

According to PwC, “leaders” are defined as companies that have a chief information security officer (or CISO equivalent) who reports to the organization’s top executives, have an overall information security strategy in place, have measured and reviewed the effectiveness of their security in the last year, and understand exactly what types of security events have occurred.

Confidence is security largely unfounded

“Clearly, many executives have unfounded confidence in their security capabilities,” said Bob Bragdon, publisher of CSO.

“In order to strengthen security practices, organizations must embrace a new way of thinking in which information security is both a means to protect data as well as an opportunity to create value to the organization. Security strategies and security spending must be well-aligned with business goals.”

Increase in incidents not met by increase in budgets

Despite an increase in the number of respondents reporting 50 or more incidents (13 percent), fewer than half (45 percent) expect an increase in their budgets in the next 12 months – down from 51 percent and 52 percent in 2011 and 2010, respectively. While multiple factors shape security budgets, the primary determinant is the economic environment, with information security concerns far down the list.

Also, senior executives are frequently seen as understanding the problem, with half of respondents – including 86% of the security “leaders” – pointing to top-level leadership as the greatest obstacle to improving information security effectiveness.

The survey shows that a winning security practice is often hindered by decreased deployment of basic information security and privacy tools. Among the categories taking a hit are malicious code detection tools for spyware and adware, down to 71 percent after topping out at 84 percent in 2008, and intrusion detection tools, once in use by nearly two-thirds of respondents and now used by just over half.

Looser tabs on data

In today’s world of “big data,” the survey also finds that most organizations are keeping looser tabs on their data today than in years past.

While more than 80 percent say protecting customer and employee data is important, far fewer understand what that data entails and where it is stored. Fewer than 35 percent of respondents said they have an accurate inventory of employee and customer personal data, and only 31 percent reported they had an accurate accounting of locations and jurisdictions of stored data.

The decreased deployment of security and privacy tools is like playing a championship game with amateur sports equipment,” continued PwC’s Lobel.  “Intruders are exploiting business ecosystems, leaving reputational, financial and competitive damage in their wake.

Today’s information security leaders must acknowledge that playing the game at a higher level is required to achieve effective security. The very survival of the business demands that they understand, prepare for, and quickly respond to security threats.”

Addressing Security Threats in Social, Mobile and the Cloud
As mobile devices, social media, and the cloud become commonplace inside the enterprise and out, technology adoption is moving faster than security.

PwC has found that 88 percent of consumers use a personal mobile device for both personal and work purposes, yet only 45 percent of companies have a security strategy to address personal devices in the workplace and 37 percent have malware protection for mobile devices.

Despite an increase in the number of respondents reporting safeguards in place for mobile, social media, cloud computing, and policies covering the use of employee-owned devices, only 44 percent report having a mobile security strategy and less than 40 percent have strategies for the cloud and social media. These numbers lag the adoption rates of the technologies themselves.

To learn more about the survey, including industry specific highlights and further regional information, please visit:

Is Google the world’s most attractive employer?

Thursday, September 20th, 2012

GoogleIs Google the “World’s Most Attractive Employer?”

It is for the fourth consecutive year according to the preferences of over 144,000 career seekers, with a business or engineering background from the world´s 12 greatest economies. So says the Universum  global talent attraction index: “The World’s Most Attractive Employers 2012″.’

KPMG keeps the second place and Procter & Gamble is now on the third position.

Here at the TechJournal, we find it interesting that Apple shows up on in the 8th spot on the engineering employer list.

“The Google fever is still hot! Students are attracted by Google´s relaxed and creative work environment, international atmosphere and innovative products. Google offers great benefits and opportunities that are hard for other companies to match.” says Petter Nylander, Universum’s CEO.

Also in the engineering category, Google takes the first position for the fourth consecutive year and is followed by IBM and Microsoft.

“The giants in the software industry are seen as great places for the launch of an engineering or IT career. They offer training, networking and future career possibilities. Moreover, they are global,” says Nylander.

World’s Top 10-Business

  1. Google (1)
  2. KPMG (2)
  3. Procter & Gamble (7)
  4. Microsoft (6)
  5. Deloitte (5)
  6. Ernst & Young (4)
  7. PwC (3)
  8. J.P. Morgan (9)
  9. The Coca-Cola Company (12)
  10. Goldman Sachs (10)

World’s Top 10-Engineering

  1. Google (1)
  2. IBM (2)
  3. Microsoft (3)
  4. BMW (4)
  5. Intel (5)
  6. General Electric (8)
  7. Siemens (9)
  8. Apple (7)
  9. Sony (6)
  10. Procter & Gamble (10)

In parenthesis is the company’s position in 2011. For the full ranking, go to

Following strong 2012 start, IPO market pulls back

Wednesday, June 27th, 2012

PwcFollowing very healthy levels of IPO activity during the first five months of the year, the number of IPO pricings slowed following Facebook’s fumbled debut in mid-May, according to PwC US.

Overall, the number of U.S. IPOs in the second quarter of 2012 declined to 27, from 44 in the first quarter.  The second quarter started strongly with 17 IPOs pricing in April, and ten IPOs pricing in May, but IPO activity stalled due to ongoing global macroeconomic concerns that have increased investor uncertainty and market volatility.

Consequently, no pricings have been completed in the U.S. since the Facebook IPO in mid-May.


Despite a slowdown in IPO pricings, the registration pipeline remains at high levels and there is optimism that pricing activity will return as some of these concerns are resolved, according to IPO Watch, a quarterly and annual survey of IPOs listed on U.S. stock exchanges by PwC.

Fewer IPOs, slightly larger returns in first half of 2012

Year-to-date, 71 companies have completed IPOs raising total proceeds of $26.9 billion, compared with 85 companies that completed IPOs in the first half of 2011 raising $25.8 billion.

The slowdown in pricings in June led to a 39 percent decrease in volume compared with the first quarter of 2012, and a 48 percent decrease compared to volume in the second quarter of 2011.

Including the $16 billion in proceeds from the Facebook IPO, total IPO proceeds raised in the second quarter of 2012 amounted to $21.2 billion, 66 percent higher than the comparable period in 2011 and the third highest quarterly proceeds since 2007.

“The IPO market entered the second quarter with considerable momentum and with confidence levels supported by the high registration pipeline,” said Henri Leveque, leader of PwC’s U.S. Capital Markets and Accounting Advisory Services.

“However, pricing activity proved unsustainable as volatility increased along with renewed concerns over global uncertainty and other market dynamics.

Companies ready if window-reopens

That said, as the markets are seeing increasingly compressed IPO windows of opportunity, our clients are now more than ever focused on readying themselves to be able to execute deals when, and not if, the windows re-open.”

Excluding Facebook, second quarter IPOs raised total proceeds of $5.2 billion, at an average value of $200 million per IPO, representing an increase of 53 percent over the first quarter average IPO size of $131 million.

Total proceeds, excluding Facebook, were only 10 percent less than the first quarter of 2012, illustrating the strength of the IPO markets earlier in the quarter.

Continuing on the positive IPO pricing trends of the first quarter, IPOs in the second quarter produced an un-weighted average return of 8 percent since IPO date, which again exceeded the S&P500 quarterly loss of 6 percent.

Click here to view: Value and volume of IPOs by quarter

Click here to view: Q2 comparison: Value and volume of IPOs

Unresolved macroeconomic concerns decreased investor confidence

Unresolved U.S. domestic, European and Chinese macroeconomic concerns have led to a broad decrease in U.S. investor confidence in the near term, as evidenced by a quarterly 11 percent increase in the VIX measure of market volatility.

Resolution of some of these issues may return some stability to the markets in the coming months.

Despite the slowdown in pricing activity, the IPO registration pipeline has remained at a high level.  During the second quarter of 2012, 29 companies filed for IPOs.

As of June 21, 2012, the number of companies that had publicly filed for an IPO in the last twelve months was 121, seeking to raise $23.7 billion. This represents a decrease from the 157 companies in the pipeline at the end of the first quarter, partly due to lower filings and the confidentiality filings provisions of the JOBS Act.

The pipeline by value is led by the financial services and REIT sectors, followed closely by the energy, technology and consumer sectors, and which combined account for 80 percent of the total proceeds.

Click here to view: Value and volume of U.S. IPOs by industry

“The solid registration pipeline remains a positive forward-looking indicator for the IPO market in 2012 and beyond given that historically the majority of companies that file will ultimately price their IPOs,” added Leveque.

Registrations may be higher than reported

“In addition, actual registrations may be higher than reported given the impact of the JOBS Act, which allows emerging growth companies to file confidentially with the SEC with the requirement that they publicly disclose their filings within 21 days of their anticipated IPO road shows.

There is a lot of interest around this new piece of legislation and while it’s too soon to predict its ultimate impact, we expect a number of companies to explore this new avenue as a vehicle to go public.”

Financial sponsors continued their history of strong presence in U.S. IPOs, backing 70 percent of IPOs in the second quarter of 2012 and generating 90 percent of total proceeds.

This high level of sponsor involvement remains consistent with the comparable quarter in 2011 which also saw two-thirds of the quarter’s IPOs backed by financial sponsors, representing 74 percent of proceeds.

Click here to view: Value and volume of Financial Sponsor-backed U.S. IPOs


Emerging markets, consumer demand leading adoption of mobile in healthcare

Thursday, June 7th, 2012

PwcWidespread adoption of mobile technology in healthcare, or mHealth, is now viewed as inevitable in both developed and emerging markets around the world, but the pace of adoption will likely be led by emerging markets and lag consumer demand, according to a new global study conducted for PwC Global Healthcare by the Economist Intelligence Unit (EIU).

The ground breaking study, Emerging mHealth: paths for growth, found that consumers have high expectations for mHealth, particularly in developing economies as mobile cellular subscriptions there become ubiquitous.

In emerging markets, consumers perceive mHealth as a way to increase access to healthcare while patients in developed markets see it as a way to improve the convenience, cost and quality of healthcare.

According to the report, if the promise of mHealth is realized by consumers, the impact on healthcare delivery could be significant and fundamentally alter traditional relationships within the healthcare industry.

The use of mHealth and speed of adoption will be determined in each country by stakeholders’ response to mHealth as a disruptive innovation to overcome structural impediments and align interests around patients’ needs and expectations.

“Despite demand and the obvious potential benefits of mHealth, rapid adoption is not yet occurring. The main barriers are not the technology but rather systemic to healthcare and inherent resistance to change,” said David Levy, MD, global healthcare leader, PwC.

“Though many people think mobile health will be ancillary or bolted on to the healthcare industry, we look at it differently:  mHealth is the future of healthcare, deeply integrated into delivery that will be better, faster, less expensive and far more customer-focused.”

In the report, the EIU examines the current state and potential of mHealth (defined as the provision of healthcare or health-related information through the use of mobile devices) and the barriers to adoption and opportunities for companies seeking growth in the mHealth market.

The report includes findings of two surveys conducted by the EIU:  one of consumers and one of physicians and government and private payers in 10 markets, including Brazil, China, Denmark, Germany, India, South Africa, Spain, Turkey, the UK and the US.

The consumer survey found:

  • Roughly one-half of consumers predict that within the next three years, mHealth will improve the convenience (46 percent), cost (52 percent) and quality (48 percent) of their healthcare.
  • Fifty-nine percent of emerging market patients use at least one mHealth application or service, compared with 35 percent in the developed world. Nearly half of consumers said they expect mHealth will change the way they manage chronic conditions (48 percent), their medication (48 percent) and their overall health (49 percent).  Six in ten consumers (59 percent) expect mHealth to change the way they seek information on health issues and 48 percent expect it to change the way they communicate with physicians.
  • Among consumers who already are using mHealth services, 59 percent said they have replaced some visits to doctors or nurses.
  • The top three reasons consumers want to use mHealth is to have more convenient access to their doctor or healthcare provider (46 percent), to reduce out-of-pocket healthcare costs (43 percent) and to take greater control over their health (32 percent).
  • Sixty percent of consumers said they believe doctors are not as interested in mHealth as patients and technology companies are.

The study found that physicians and payers are more cautious than consumers in their outlook for mHealth. Specifically:

  • Nearly two-thirds (64 percent) of doctors and payers said that mHealth offers exciting possibilities but there are too few proven business models.  In addition, the effectiveness of mHealth changing patient behaviour is evolving.  For example, more than two-thirds of consumer respondents who have used mHealth wellness or fitness applications with manual data entry discontinued it after the first six months.
  • Only 27 percent of physicians encourage patients to use mHealth applications to become more active in managing their health, and 13 percent of physicians actually discourage it.
  • Forty-two percent of doctors surveyed worry that mHealth will make patients too independent.
  • Payers appear to be far more supportive of mHealth than physicians. Forty percent of payers compared to 25 percent of physicians encourage patients to let doctors monitor their health and activities using mHealth services and devices.
  • Payers and providers both cited multiple barriers to the adoption of mHealth, notably the complexity and scope of change associated with mHealth. Public sector doctors and payers cited lack of existing technology as the biggest barrier to greater use of mHealth adoption.  Sixty-three percent of physicians in the private sector versus only 40 percent in the public sector have access to wireless connectivity at work.
  • Forty-five percent of doctors and payers said that the application of inappropriate regulations originally developed for earlier technologies is slowing the adoption of mHealth.
  • More than one quarter – 27 percent of doctors and 26 percent of payers – cite an inherently conservative culture as a leading barrier to the adoption of mHealth.

“The adoption of mobile health in emerging markets versus developed markets is a paradox,” said Christopher Wasden, EdD, global healthcare innovation Leader, PwC. “In developed markets, mHealth is perceived as disrupting the status quo, whereas in emerging countries it is seen as creating a new market, full of opportunity and growth potential.  In younger, developing economies, healthcare is less constrained by healthcare infrastructure and entrenched interests. Consumers are more likely to use mobile devices and mHealth applications, and more payers are willing to cover the cost of mHealth services.”

According to PwC, innovators seeking opportunities in mHealth, including telecommunications and technology companies, must work to overcome the barriers slowing widespread adoption of mHealth.

They can help to alleviate healthcare’s resistance to change by focusing less on the technology and more on effective, customer-focused solutions that add value for health organizations and patient quality of life.

Healthcare consumers using social media whether providers are or not

Tuesday, April 17th, 2012

PwcSocial media is changing the nature of healthcare interaction, and health organizations that ignore this virtual environment may be missing opportunities to engage consumers, according to a new report by the Health Research Institute (HRI) at PwC US entitled, “Social media likes healthcare: From marketing to social business.”

The report found that social media activity by hospitals, health insurers and pharmaceutical companies is miniscule compared to the activity on community sites.

While eight in 10 healthcare companies (as tracked by HRI during a sample one-week period) had a presence on various social media sites, community sites had 24 times more social media activity than corporate sites. The finding holds significant implications for businesses looking to capitalize on social media opportunities.

“The power of social media for health organizations is in listening and engaging with consumers on their terms. Social media has created a new customer service access point where consumers expect an immediate response,” said Kelly Barnes, US Health Industries leader, PwC.

“Health organizations have an opportunity to use social media as a way to better listen, participate in discussions and engage with consumers in ways that extend their interaction beyond a clinical encounter.”

“Savvy adopters are viewing social media as a business strategy, not just a marketing tool.”

PwC’s report includes findings from a recent HRI social media survey of more than 1,000 U.S. consumers and 124 members of the eHealth Initiative (eHI), a national association of industry organizations focusing on health information and technology.

HRI also interviewed more than 30 industry executives and tracked the social media activity of a number of hospitals, insurers, drug manufacturers, and online patient communities to create a Week-in-the-life of Social Health snapshot.


The consumer survey found:

  • One-third of consumers now use social media sites such as Facebook, Twitter, YouTube and online forums for health-related matters, including seeking medical information, tracking and sharing symptoms, and broadcasting how they feel about doctors, drugs, treatments, medical devices and health plans.
  • Four in 10 consumers say they have used social media to find health-related consumer reviews (e.g. of treatments or physicians); one in three have sought information related to other patients’ experiences with their disease; one in four have “posted” about their health experience; and one in five have joined a health forum or community.
  • When asked how information found through social media would affect their health decisions, 45 percent of consumers said it would affect their decision to get a second opinion; 41 percent said it would affect their choice of a specific doctor, hospital or medical facility; 34 percent said it would affect their decision about taking a certain medication; and 32 percent said it would affect their choice of a health insurance plan.
  • While 72 percent of consumers said they would appreciate assistance in scheduling doctor appointments through social media channels, nearly half said they would expect a response within a few hours.
  • As is the case more broadly, young adults are leading the social media healthcare charge. More than 80 percent of individuals between the ages of 18 and 24 said they were likely to share health information through social media channels and nearly 90 percent said they would trust information they found there. By comparison, less than half (45 percent) of individuals between the ages of 45 and 64 said they were likely to share health information via social media.

Evolution from Social Media to Social Business Strategy

While some health businesses have started listening and participating in the social media space, they have not fully connected it to business strategy.

The HRI report found that organizations that are strategic about their use of social sites are beginning to differentiate between social media and social business.

Social media is the external-facing component that gives and receives customer input. Social business is where core internal operations, such as customer service, data analytics and product development could use social data. Additionally, patient-reported data on social networks could offer new insights on behavior and lifestyle to help inform care plans and improve the quality of life for patients with chronic conditions.

HRI’s survey of eHealth initiative members found:

  • Eighty-two percent said their organization’s social media efforts are managed by marketing/communications. Few organizations said their IT departments and digital teams owned social media strategies.
  • One-half said they are concerned about how to integrate social media data into business strategy and processes.

PwC says that hospitals, insurers and pharmaceutical manufacturers can benefit from the interactive nature of social media.

Social media provides instant feedback

Insights from social media offer instant feedback on products or services along with new ideas for innovation that could lead to higher-quality care, more loyal customers, efficiency and even revenue growth.

“Social media is another source of business intelligence that provides information at the aggregate level, not only about what consumers ‘like,’ but what they need, how they behave and when their experiences demand an immediate response,” said Daniel Garrett, US Health Information Technology leader, PwC.

“Health organizations can engage IT to integrate social data intelligence with existing systems and processes, yet most are still struggling with how to manage the data from their own clinical systems.”

The HRI report Social media likes healthcare: From marketing to social business provides research on new and emerging relationships between consumers and the biggest health companies that serve them.

It examines how individuals use the social channel; how some leading healthcare firms are responding, and outlines strategies for taking advantage of this new view into the 21st century patient. A copy of the full report is available at

Most private companies expect growth, plan upswing in hiring

Wednesday, February 8th, 2012

PwcIs the recovery finally gaining steam? We’re seeing multiple signs that increased hiring is finally a priority for companies large and small. Growth projections remain strong among executives surveyed for PwC US’s Private Company Trendsetter Barometer.

It reports that 78% expect positive growth over the next 12 months, with 35% projecting double-digit growth and 43% forecasting single-digit growth. The rate of expected growth for Trendsetter companies overall has risen 18%.

Hiring projections are also on the upswing. More than half (54%) of private companies say they intend to add to their workforce over the next 12 months (up from 48% the prior quarter), and only 3% plan to reduce headcount, with an overall 2.0% increase projected for private companies’ composite workforce.

This focus on growth is in spite of private companies’ ongoing ambivalence about the economy. Forty-five percent ofTrendsetter executives say they remain uncertain about US economic prospects, while 39% voice optimism — up 12 points from last quarter, though still well below the 63% voicing optimism a year ago.

Fewer Pessimists

The percentage expressing outright pessimism dropped to 16%, down eight points. Private companies’ view of the world economy is comparatively dimmer, with nearly as many Trendsetter executives expressing optimism (24%) as pessimism (22%). Over half (54%) of private companies that sell abroad say they are uncertain about global economic prospects.

Against this backdrop, internationally active Trendsetter companies nonetheless forecast a 9.6% revenue growth rate for the next 12 months. The rate is highest (11.1%) for companies that sell in China, India, and Brazil.

The average 12-month revenue growth rate for Trendsetter companies generally (both international and domestic-only) is 8.5%, with domestic-only companies projecting a 7.5% growth rate. Sales abroad are expected to contribute to 20% of total revenue for international Trendsettercompanies overall and 28% for companies selling in China, India, and Brazil.

“After considerable economic misgivings in the third quarter of 2011, Trendsetter executives are increasingly optimistic,” saysKen Esch, a partner with PwC’s Private Company Services practice. “But even in the late summer and early fall, when anxiety ran high about Congressional gridlock and the potential effect of the S&P downgrade of US debt, private companies didn’t abandon their growth agenda.

Strong revenue forecasts

Instead, they maintained strong revenue forecasts and spending plans. Clearly, though, they’re still concerned about the Eurozone’s sovereign debt crisis — not just about its impact on European growth, but also the impact on the growth of emerging markets, which still rely a good deal on foreign direct investment and strong export revenue. And so we continue to see Trendsetter executives give a lukewarm assessment of the world economy.”

US Private Companies in Emerging Markets Plan Greater Spending Than Their Peers

In the final months of 2012, planned expansion into new markets abroad surged among Trendsetter companies that currently sell in emerging markets — rising to 60% (up 20 points from last quarter) — whereas 41% of international Trendsettercompanies overall have such plans (up 8 points from last quarter). The percentage of domestic-only companies that intend to venture into international markets inched up 5 points to 7%.

“Although emerging markets are not immune to the effects of slow growth in Western economies, increased domestic consumption is providing a very solid buffer,” says Esch. “As they see their wages and disposable income rise, emerging markets are growing less dependent on exports to the West. They’re also exporting more to one another. Recognizing the tremendous growth potential in these markets, US private companies that have had success in one country are gradually fanning out into others.”

International Trendsetter companies lead their domestic-only peers both in planned capital spending (53% versus 29%) and in planned increases in operational spending (83% versus 62%). Among Trendsetter companies selling in emerging markets, the numbers are higher still: 64% are planning major capital investments, and 88% plan increased operational spending.

Taken as a whole (international and domestic-only businesses combined), Trendsetter companies that plan major capital investments (40%) and increases in operational spending (72%) have remained essentially the same percentage-wise since the prior quarter.

Forty percent of Trendsetter companies cite information technology as their top area of planned operational spending, followed by new products/services (29%), marketing and sales promotion (25%), business acquisitions (16%), and R&D (14%). Planned IT spending is higher among Trendsetter companies selling in international markets (48%) than among domestic-only companies (34%).

IT increasingly important

“Information technology is increasingly important to companies that want to penetrate and compete effectively in fast-growth markets,” says Esch, “especially as the Internet is becoming a key sales channel there, via mobile devices in particular.

For US companies to be as nimble as their emerging-market competitors — many of whom are unencumbered by legacy systems and can therefore leapfrog straight to ultra-high-speed mobile — they’ll need to be more strategic about their IT investments going forward.”

Research and development is another area where planned spending by international companies outstrips that of their domestic-only counterparts (25% versus 5%). Planned increases in R&D spending are highest among Trendsetter companies that sell in emerging markets (33%).

“Reduced R&D spending at home doesn’t mean that private companies have abandoned developing new products and services for US customers,” notes Esch. “Some of them may simply be going about it differently than before.

“For instance, we’ve begun to see international Trendsetter companies engage in reverse innovation — test-driving products and services in emerging markets first and then rolling them out to their home markets at a later date. In light of this, domestic-only Trendsettercompanies that have halted or capped their spending on R&D may want to rethink that decision rather than risk losing ground to their reverse-innovating peers.”

The breakout of spending by international versus domestic-only companies is shown below (including a breakout of higher spending in key fast-growth markets abroad):

  International Marketers Domestic-Only Peers Marketing

in China/

Plans over the Next 12 Months: 4Q11 3Q11 4Q11 3Q11 4Q11 3Q11
Major Capital Investments 53% 51% 29% 27% 64% 56%
Expansion to New Markets Abroad 41% 33% 7% 2% 60% 40%
Increased Operational Spending (Net) 83% 83% 62% 63% 88% 89%
New Products/Services 43% 43% 17% 26% 43% 51%
Information Technology 48% 44% 34% 35% 48% 51%
Sales Promotion 31% 25% 21% 21% 33% 25%
R&D 25% 24% 5% 10% 33% 31%
Business Acquisitions 23% 21% 10% 11% 36% 22%

Concern About Gross Margins Drops
Though concern about lack of demand remains high, with 71% of private companies citing it as the chief potential barrier to growth, concern about profitability and decreasing margins has decreased to 30% — 7 points lower than the prior quarter.

Gross margins, however, haven’t changed for the majority of private companies (59%). Twenty-two percent of Trendsettercompanies report higher margins (up one point from last quarter), and 19% report lower margins (down 3 points), resulting in a net 3% of companies reporting higher margins. Only a net 9% report higher costs (down 8 points from the prior quarter). Similarly, just 6% (net) report higher prices (down 4 points). Private companies that sell in emerging markets are reporting negative gross margins (net negative 5%), cost increases (net plus 19 percent), and price increases (net plus 22%).

“While private businesses continue to focus on cost-containment at home — where consumers are reluctant to pay higher prices — Trendsetter companies in emerging markets have greater pricing power,” observes Esch.

“That’s because consumers are purchasing more in those markets, as wages and the standard of living improve. Higher wages, however, also mean higher production costs — a concern for private companies that also manufacture and source materials in emerging markets, making the ability to raise prices for the products and services they sell particularly important to those businesses.”

Limited Bank-Loan Activity

Banking activity for private companies remains limited, with only 7% reporting new financing. Just 6% are reporting new bank loans, with more loans being made to product firms (8%) than to service firms (2%). Concern about lack of capital as a barrier is down 8 points, at 18%, but is notably higher among small private businesses than large ones (22% versus 13%).

“The low percentage of new loans is not surprising,” says Ken. “What we’ve generally seen among our private-company clients over the past several years is an emphasis on liquidity, with companies leveraging banks less and funding investments out of current cash flow.”

Top performing firms show greater mastery of digital tech

Wednesday, February 1st, 2012

PwcTop-performing U.S. organizations show greater mastery in how they leverage digital technologies by offering mobile tools for customers, measuring data through social media, mobilizing applications to the public cloud and the innovative use of business intelligence, according to the fourth annual Digital IQ survey, from PwC US.

Top performing companies are defined as those rated in the highest quartile for annual revenue, growth, profitability and innovation as well as revenue growth of more than five percent in the last 12 months.

PwC defines a company’s Digital IQ as a measure of how well companies understand the value of technology and weave it into the fabric of their organization.

Raising a digital IQ

“Raising a firm’s Digital IQ means improving the way it leverages digital technologies and channels to meet customer needs,” said John Sviokla, principal at PwC.

“The core of the ecosystem for innovation has moved from inside the firm to out in the marketplace. Customer and employee expectations are being shaped by this new, dynamic and exciting environment — if you miss this trend you will be increasingly irrelevant to the market.”

The CIO plays a critical role in the planning process for increasing a company’s Digital IQ. According to the report, CIO’s must be excellent at managing the internal factory, but also excel at mobilizing new plans into action.

A high Digital IQ requires the CIO to find better ways to sift through and drive insight from the increasing torrent of data streaming from every manner of device and interaction, and to create a platform that can deliver these capabilities across a varied set of changing mobile devices.

According to the survey, 63 percent of respondents revealed their greatest challenge is the inability to gather, understand and act on customer data. Fifty-eight percent cite an inability to quickly understand and adopt new information technologies needed to be competitive.

Survey results point to four technology-related truths of the digital enterprise that organizations can build upon to increase their Digital IQ:

  • Everyone is now a mobile consumer. Executives must recognize that the expectations of employees and customers are largely affected by consumer-driven technologies. Employees want the tools they use for work to be as good as those they use in their personal lives, and customers expect to interact with firms on the platform and device of their choice. The survey shows that while many firms are focused on developing better mobile tools for their workers, they are under-investing in solutions for their customers: Only 45 percent of all respondents say they interact with customers significantly using mobile channels, and less than one-third are currently investing in mobile technologies for customers.
  • social mediaSocial media is a critical data source. Social media creates a channel to engage clients and build loyalty. The real value is its ability to add a new dimension to the entire product lifecycle and create more regular interaction across the lifespan of a product or service. This information can be instrumental in wringing greater value out of existing products while providing invaluable insight as new products are developed. Despite this, most companies have yet to embrace the benefits these tools can provide: Among the total pool of survey respondents, only 37 percent have invested in social media tools to reach customers.  Industries who have invested more significantly on engagement customer through social media include the Retail and Consumer sector (51 percent) and the Industrial Product sector (50 percent).
  • cloudMoving business applications to the public cloud can make your organization more competitive. The development of the cloud is arguably the strongest driver of the consumerization of IT. Cloud computing not only allows consumers to access information on the internet, it also empowers them to solve complex problems, organize events on the fly and perform hundreds of complicated tasks, all from their mobile phones. In an age of outsourcing, the cloud increasingly is an important consideration. This is perhaps the reason why investment in public cloud applications is on the rise. Among respondents that identify their organizations as top performers, 30 percent are investing in public cloud applications and 87 percent expect that investment to increase in 2012. Private cloud investments still outweigh the public realm, however, suggesting that companies are embracing a hybrid approach is a positive step toward raising the organization’s Digital IQ.
  • You can gain greater insight from business data by working from the outside in. The wealth of information created outside the organization is quickly outpacing that of the corporate world. As a result, executives must think more broadly about how to use external data to provide critical insight into operations, product development and customer strategies. Top performing companies report investing more to manage their data than organizations whose performance does not stand out. Out of all the companies surveyed, 55 percent say they will be investing more in the coming year to collect customer data and 43 percent say they will invest more to measure operational performance.

The Digital IQ findings call for business leaders — and, in particular, today’s CIOs — to lead their organizations to change and innovate from the inside out. The report findings suggest that excellence in IT has not been commoditized and is still differentiating as a competitive advantage.

Indeed, IT-enabled, multi-channel connections with customers can make a marked difference to business results. But to succeed, today’s CIOs — and the C-suite more broadly — must excel at not just managing internally, but also mobilizing new plans into action.

Global cyber security spending to grow 10 percent a year

Thursday, December 1st, 2011

PwcGlobal cyber security spending is expected to reach$60 billion in 2011 and is forecast to grow at 10 percent every year during the next three to five years.

The U.S. accounts for more than half of all deals globally, triggered by growing cyber threats and increasing awareness among both organizations and consumers of accelerating breaches and attacks, according to a new report from PwC titled, Cyber Security M&A: Decoding deals in the global Cyber Security industry.

Total deal activity since 2008 has exceeded $22 billion globally.  In the first half of 2011, there were 37 deals accounting for over$10 billion in deal value, representing a 70 percent increase compared to full year 2010.

Since 2008, the total investment in global cyber security deals has exceeded $22 billion, an average of over $6 billion in each year.

Deal activity in cyber security expected to grow

“Deal activity in cyber security is expected to continue to grow given the fragmentation of the market and the attractive growth outlook,” said Barry Jaber, PwC’s security industry leader. “Technology and IT companies are making acquisitions to differentiate their offerings while defense firms continue to do deals to diversify away from shrinking defense budgets.”

“Against the backdrop of heightened awareness of hacks and deliberate attacks on institutions by semi-organized groups, the cyber security market is undergoing significant change and attracting investment from sectors that span technology, telecommunications, defense, professional services and financial investors,” said Rob Fisher, PwC’s U.S. technology leader for transaction services.

In most regions, the private sector accounts for the majority of cyber security spending, while the U.S. is the notable exception where government spending is almost equal to the private sector.

The strong U.S. technology industry combined with the fact that the U.S. defense and intelligence budgets are significantly larger than in any other country are key market drivers.

“The U.S. is a unique market with significant cyber security spending in the public sector, particularly by intelligence and defense agencies,” said PwC’s Jaber.

The U.S. market leads in value with the majority of deals (over 50 percent) involving acquirers or targets based in North America.  By comparison, Europe accounted for approximately a quarter of deal value and a third of deal volume over the same period.

“Growing threats and awareness, and changes in technology such as mobile devices and cloud computing are key drivers of spending growth in the cyber security market,” added PwC’s Jaber.

Personally, we think it is past time for major corporations to spend serious money, time and thought on protecting digital assets, including customer information. If nothing else, the rash of high level cyber-security breaches this year seem to have heightened awareness that current security measures not sufficient to meet increasing threats.

Other key drivers underpinning growth in cyber security spending include:

  • Increasing cyber threats, both from new actors and new threat vectors (the paths that attacks can take).
  • Greater vulnerabilities due to the more pervasive use of technology, particularly mobile devices and cloud computing.
  • Increasing awareness by organizations and consumers of the threats and potential threats.
  • Changes in technology driving product and service innovation of security solutions.
  • Increasing regulation, particularly those enforcing the requirement to secure personal data.
  • Changes in outsourcing; some organizations are increasingly relying on partners for security, while others are growing internal security spending to maintain greater levels of control.

Five key shopper experiences that drive sales growth

Friday, November 18th, 2011

PwcWith economic conditions heightening consumer sensitivity around purchasing decisions, retailers that design differentiated ‘experiences’ around their products and services can drive growth, profitability and lasting consumer loyalty, while also maintaining a price premium over competitors, according to a new report from PwC US, titledExperience Radar 2011: Retail Insights.

The study, based on PwC’s Experience Radar methodology, measures the experiences of more than 6,000 U.S. consumers across 11 industries.

The PwC Retail Insights study finds that consumer loyalty is born from shopping experiences that create strong psychological connections, rather than from points or rewards programs alone.

Looking at five core consumer experience attributes — accessibility, support, quality, presentation and social belonging — the PwC study is aimed at helping retailers identify what’s most important to consumers, and then to develop and deploy an action plan to deliver a great customer experience.  This experience-focused approach can help attract new profitable customers, keep existing customers and increase margins.

Identify new ways to set yourself apart

“In today’s economy, retailers must identify new ways to set themselves apart, and that begins with a clear focus on customer experience,” said Susan McPartlin, PwC’s U.S. retail & consumer industry leader.

“A single purchase experience can leave a lasting impact on how the consumer identifies with the retailer, so it’s imperative that retailers enhance how they serve customers to minimize potential hurdles from beginning to end.”

PwC suggests that retailers focus on enhancing service through investing in knowledgeable staff and leveraging front-line employees.  According to the study, product knowledge and recommendations accounted for almost one third of good experiences related to support, while only one percent of shoppers cited rewards programs alone as influencing their purchase decisions.

According to PwC, retailers should consider developing an experience action plan built upon their loyalty program’s customer knowledge that strives to achieve five key ‘experience enhancers.’

  • Focus first and foremost on shopper experience:  Use front-line staff to create experiences that result in psychological connections with consumers.  Invest in service by training knowledgeable staff to help affirm consumer purchase decisions and to prevent buyers’ remorse.
  • Make customers brand ambassadors: Consumers who experience a positive shopping experience can be the best marketers for retailers, while a single, bad experience can cause widespread damage.  Identify, incentivize and promote brand ambassadors.
  • Help consumers avoid risk: Attract new customers by helping them overcome psychological hurdles. Overcome shoppers’ worries about losing money on shipping, and press the emotional hot-button of free things.  Reduce consumer purchase anxiety with flexible return policies.
  • Embrace the anytime, anywhere economy: With consumers shopping both online and offline, understand their shopping preferences before the competition does. Develop a multi-channel strategy that makes it easy for consumers to shop online, offline, at home or in stores.
  • When something bad happens, fix it: Provide customers with feedback channels as it may not be obvious that they are unhappy until they leave. Make sure that they are happy with the results — an apology may be enough to create an evangelist

“Customers, like all of us, are social beings, seeking connection and community,” said Lisa Feigen Dugal, PwC’s U.S. retail & consumer practice advisory leader.  “When retailers move beyond solely relying on points and develop experiences based on what’s most important to consumers, you not only drive loyalty, but you create ultimate brand ambassadors who spread the word on their positive experiences.”

Venture capital investments decline in both dollars and deals in Q3

Wednesday, October 19th, 2011

Venture capitalists invested $6.95 billion in 876 deals in the third quarter of 2011, falling in both dollars and deal volume, according to the MoneyTree Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

The software industry saw the highest level of funding and was one of the few to see an increase in dollars invested. Early stage funding deals represented nearly half the total dollars invested, although first time financing deals fell 22 percent.

Quarterly venture capital (VC) investment activity fell 12 percent in terms of dollars and 14 percent in the number of deals compared to the second quarter of 2011 when $7.9 billion was invested in 1,015 deals. For the first three quarters of 2011, venture capitalists invested $21.2 billion into 2,725 deals, representing 20 percent more dollars and three percent more deals as the first three quarters of 2010.

Life sciences industries see marked decline in dollars and deals

The Life Sciences (biotechnology and medical device industries combined) and Clean Technology sectors saw marked decreases in both dollars and number of deals while the Software sector enjoyed its strongest quarter in almost 10 years.

“Challenges in the regulatory environment for Life Sciences companies are prompting VCs to look to other industries to put their money to work for a faster return on their investment as indicated by the notable increase in Software investments,” remarked Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US.

“Accordingly, over the past two quarters, we’ve seen a clear shift in Life Sciences investments from Seed/Early Stage companies over to more Later Stage companies. VCs are continuing to support the companies in their pipeline but appear to be curbing their investments in new Life Sciences companies.

Despite the dip in Life Sciences and in the overall investment total for Q3, 2011 is still on track to exceed the $23.3 billion invested in all of 2010.” “Given the tremendous impact that venture capital has on company creation, it is easy to forget that our industry is small and highly susceptible to the many market forces presently at work,” said Mark Heesen, president of the NVCA.

“Public policy challenges in the life sciences and clean technology sectors are impacting investment levels this quarter as is the IPO market that basically came to a screeching halt in August.

Venture fundraising levels are the lowest they have been in nearly a decade so it is reasonable to expect investment levels to decline in the coming years. Yet despite the challenges, the industry continues to fund new companies because history has shown us that innovation always prevails and there remains significant promise across all industry sectors for these emerging growth companies.”

Software industry received highest level of funding

The Software industry received the highest level of funding for all industries with $2.0 billion invested during the third quarter of 2011. This level of investment represents a 23 percent increase in dollars, compared to the $1.6 billion invested in the second quarter, and the highest quarterly investment in the sector since the fourth quarter of 2001.

The Software industry also had the most deals completed in Q3 with 263 rounds, which represents a one percent decrease from the 267 rounds completed in the second quarter of 2011. The Biotechnology industry was the second largest sector for dollars invested with $1.1 billion going into 96 deals, falling 18 percent in dollars and 20 percent in deals from the prior quarter.

Medical device industry sees decline

The Medical Devices and Equipment industry also experienced a decline, dropping 18 percent in Q3 to $728 million, while the number of deals declined 21 percent to 74 deals.

Overall, investments in the Life Sciences sector (Biotechnology and Medical Devices) fell 18 percent in dollars and 21 percent in deals, dropping to the second lowest quarterly deal volume since the first quarter of 2005.

To the contrary, Healthcare Services investments surged with $152 million going into 11 deals, a 200 percent increase in dollars and 38 percent increase in deal volume over the second quarter. Investment in Internet-specific companies fell in the third quarter to $1.6 billion going into 231 deals. This level of investment represents a 33 percent decrease in dollars and a 21 percent decrease in deals from the second quarter when $2.4 billion went into 292 deals, a ten-year high.

Internet-specific is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category.

The Clean Technology sector, which crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies and conservation, saw a 13 percent decrease in dollars to $891 million in Q3 from the second quarter when $1.0 billion was invested.

The number of deals completed in the third quarter also declined nine percent to 80 deals compared with 88 deals in the second quarter Fourteen of the 17 MoneyTree sectors experienced decreases in dollars invested in the third quarter, including:

Telecommunications (49 percent decrease), Semiconductors (44 percent decrease), Consumer Products & Services (51 percent decrease), and Media & Entertainment (11 percent decrease).

Stage of Development Seed stage investments fell 56 percent in dollars and 26 percent in deals with $179 million invested into 89 deals in the third quarter. Early stage investments also fell seven percent in dollars and six percent in deals with $2.0 billion going into 341 deals.

Seed/early stage deals nearly half the total

Seed/Early stage deals accounted for 49 percent of total deal volume in Q3, compared to 48 percent in the second quarter. The average Seed deal in the third quarter was $2.0 million, down from $3.3 million in the second quarter. The average Early stage deal was $5.7 million in Q3, down from $5.8 million in the prior quarter.

Expansion stage dollars increased two percent in the third quarter, with $2.5 billion going into 260 deals. Overall, Expansion stage deals accounted for 30 percent of venture deals in the third quarter, up from 26 percent in the second quarter of 2011. The average Expansion stage deal was $9.6 million, up from $9.2 million in the prior quarter. Investments in Later stage deals decreased 20 percent in dollars and 30 percent in deals to $2.3 billion going into 186 rounds in the third quarter.

Later stage deals accounted for 21 percent of total deal volume in Q3, compared to 26 percent in Q2 when $2.9 billion went into 265 deals. The average Later stage deal in the third quarter was $12.5 million, which increased from $11.0 million in the prior quarter and represents the largest average deal size for Later stage companies since the third quarter of 2001.

First-time financings fell 22 percent

First-Time Financings First-time financing (companies receiving venture capital for the first time) dollars decreased 22 percent and the number of deals fell 18 percent with $1.2 billion going into 269 deals. First-time financings accounted for 17 percent of all dollars and 31 percent of all deals in the third quarter, compared to 20 percent of all dollars and 32 percent of all deals in the second quarter of 2011.

Companies in the Software, Media & Entertainment, and IT services sectors received the most first time rounds in the third quarter. There was a significant decline in the number and dollar level of first time rounds in the Life Sciences sector.

The average first-time deal in the third quarter was $4.5 million, down slightly from $4.7 million in the prior quarter. Seed/Early stage companies received the bulk of first-time investments, garnering 74 percent of the deals. MoneyTree Report results are available online at and

Evolving threats driving security strategy & investing globally

Friday, September 16th, 2011

PwcThe 2012 Global State of Information Security Survey reveals that 43 percent of global companies think they have an effective information security strategy in place and are proactively executing their plans, placing them in the category of information security “front-runners.”

Twenty-seven percent of respondents identified themselves as “strategists” while the remaining identified themselves as “tacticians” and “firefighters” (15 and 14 percent respectively). The study, the largest of its kind, is conducted by PwC US in conjunction with CIO and CSO magazines.

The 9th annual survey of more than 9,600 security executives from 138 countries found that 72 percent of respondents report confidence in the effectiveness of their organization’s information security activities – however confidence has declined markedly since 2006.

The findings of the survey have helped carve a new definition of an information security leader. Even though 43 percent see themselves as “front-runners,” according to the survey only 13 percent made the “leader” cut. Those identified as leaders have an overall information security strategy in place, a CIO or executive equivalent who reports to the “top of the house,” measured and reviewed security policy effectiveness, and an understanding of the security breaches facing the organization in the past year.

“Companies now have greater insights than ever before into the landscape of cyber crime and other security events – and they’re translating this information into investments specifically focused on three areas: prevention, detection and operational web-related technologies,” said Mark Lobel, a principal in PwC’s Advisory practice.

Security breaches raised awareness

“Just a few years ago, almost half of this survey’s respondents couldn’t answer the most basic questions about the nature of security-related breaches; now approximately 80 percent or more of respondents can provide specific information about the frequency, type and source of security breaches their organizations faced this year.”

Since 2007, there has a been a dramatic leap in organizations’ awareness and insight into the types and frequency of attacks, particularly in the industries of aerospace & defense, financial services, technology, telecom and the public sector.

“After three years of cutting information security budgets and deferring security-related initiatives, respondents are bullish about security spending. What is evident, however, is that many of the vulnerabilities that began emerging last year — two years after the global economic downturn — are still present and require attention,” said Mr. Lobel.

This year, a significant percentage of respondents across industries agreed that one of the most dangerous cyber threats is an Advanced Persistent Threat (APT) attack.

A number of survey respondents found that the threat of an APT is driving their organization’s security spending. These included 64 percent of respondents from the industrial manufacturing sector, 60 percent of technology respondents, 49 percent of entertainment and media respondents and utilities respondents, 45 percent of financial services respondents and 43 percent of consumer products and retail respondents. Only 16 percent of respondents say their organizations are prepared and have security policies that are able to confront an APT.

Funding climate remains conservative

“As Advanced Persistent Threats and other cyber security challenges continue to emerge and the funding climate remains conservative, it’s impossible to avoid the conclusion that business and IT personnel across the world are less sure that their organization is prepared to confront these threats to their information, operations and brand,” added  Lobel.

According to the survey, the rise of cloud computing has improved but also complicated the security landscape. More than four out of ten respondents report that their organization uses cloud computing: 69 percent for software-as-a-service, 47 percent for infrastructure-as-a-service and 33 percent for platform-as-a-service.

Fifty-four percent of organizations say that cloud technologies have improved security; while 23 percent say it has increased vulnerability. The largest perceived risk is the uncertain ability to enforce provider security policies.

Mobile devices and social media represent a significant new line of risk – and a demand for prevention. Organizations are beginning to amplify their efforts to prevent mobile and social media based attacks. Forty-three percent of respondents have a security strategy for employee use of personal devices, 37 percent have a security strategy for mobile devices and 32 percent have a security strategy for social media.

Increased awareness of attacks may correlate with organizations mobilizing in certain areas of IT spending. Investments in application firewalls increased from 72 percent last year to 80 percent this year and malicious code detection tools have increased 11 percentage points—from 72 percent last year to 83 percent this year.

Managing security-related risks associated with partners, vendors and suppliers has always been an issue – according to this year’s survey it is getting worse. Seventeen percent of respondents identify customers as the source of security breaches, up slightly from last year (12 percent) and 15 percent have identified partners or suppliers as the source.

“For years the most commonly suspected source of breaches has been employees, both current and former – and this has remained constant,” commented Mr. Lobel.

Asia spearheads investments and strategy while the world’s information security arsenals age
For several years, Asia has been firing up its investments in security. This year’s results reveal just how far the region has advanced its capabilities. The number of Asian respondents who expect security funding to increase over the next 12 months has leapt from 53 percent in 2009 to 74 percent this year – an expectation rate far higher than any other region. Meanwhile, growth expectancies in North America continue to lag behind.

“In sharp contrast to the trends evident in Asia, North America’s long-term track record of advances in information security have begun to erode,” said Bob Bragdon, publisher of CSO.

“There are a few signs of new strength to be sure, especially with respect to some detection, prevention and web-related technologies. Adoption rates for malicious code detection tools, for example, surged from 78 percent in 2009 to 86 percent this year. Yet for the second year in a row, many of North America’s capabilities appear to be slipping, particularly in areas of strategy, identity management and access control, data protection, third-party security and even security-related compliance capabilities.”

According to the survey, South American organizations are more likely today than in 2009 to have a CISO at the helm and have an overall information security strategy in place. South Americans reported a tremendous decline in confidence in the effectiveness of their organization’s information security (71 percent vs. 89 percent in 2009) and in that of their partners and suppliers (70 percent vs. 86 percent in 2009).

To learn more about the survey, including industry specific highlights and further regional information, please visit:

Dollars up, number of deals down in Q1 venture investing

Friday, April 15th, 2011

NVCAWASHINGTON, DC – Venture capitalists invested $5.9 billion in 736 deals in the first quarter of 2011, according to the MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

Quarterly investment activity increased 5 percent in terms of dollars but fell 11 percent in number of deals compared to the fourth quarter of 2010 when $5.6 billion was invested in 827 deals.

The quarterly deal count represents the lowest number of deals in a single quarter since the third quarter of 2009. However, the first quarter of 2011 marks the first time in four years that the amount invested in the first quarter has shown an increase over the fourth quarter investment amount.

“The first quarter investment total is setting us on a path for a solid level of investing in 2011. While we did see a drop in deal volume, the dollars invested remains strong,” noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US. “Accordingly, we’re seeing an uptick in average deal size, which hit $8.0 million in Q1for the first time since the first quarter of 2007.”

She added, “And, in the first quarter, 14 companies received funding rounds of $50 million or more, with four of those deals worth more than $100 million. We haven’t seen this many deals worth $50 million or more in a single quarter since the third quarter of 2001. This is a clear indicator that VCs are seeing innovative companies walk through their doors and that the entrepreneurial spirit of America is alive and well and thriving.”

“Despite recent hype about both funding gaps and bubbles within the venture capital industry, the first quarter demonstrates an investment pace that is reasonable, rational and relevant to the long term nature of our business,” said Mark Heesen, president of the NVCA. “What we are not seeing this quarter is just as critical as what we are seeing.”

He expalined, “We are not seeing venture capital dollars flooding any particular sectors, including the Internet or clean technology. And we are not seeing a mass exodus from sectors, such as life sciences, where significant challenges lie.”

Also, he said, “What we are seeing is a commitment to funding companies through the various stages of their lifecycles, even in the later stages when capital needs intensify substantially. What this deliberate and prudent pace of investment lacks in hype, it makes up for in sustainability, and we are very encouraged for the coming year.”

The software industry received the highest level of funding with $1.1 billion invested in the first quarter. Clean Tech saw a 26 percent increase in dollars over the fourth quarter last year, reaching $1 billion and the number of deals increased by 11 percent.

Internet-specific companies also received more than one billion dollars with $1.2 billion going into 171 deals in the first quarter, a 19 percent decrease in dollars and an 18 percent decrease in deals from the fourth quarter of 2010 when $1.5 billion went into 208 deals.


As economy improves, CEOs see talent as a top priortity

Wednesday, March 9th, 2011

PwcWith their renewed optimism about the economy and intention to focus on strategic growth over the next 12 months, US private-company CEOs are making talent management a top priority.

Trendsetter Barometer tracks the business issues and standard industry practices of leading privately held US businesses. It incorporates the views of 243 CEOs/CFOs: 131 from companies in the product sector and 112 in the service sector, averaging $287.0 million in enterprise revenue/sales, and including large, $300 million-plus private companies.

The majority (51%) of Trendsetter chief executives say that they need to fill certain skill gaps to meet their business objectives over the next one to two years, while 49% believe they have the right skills in place.

While 79% of all companies surveyed plan to hire new talent, more than three-quarters (80%) intend to develop existing talent. Hiring talent is more of a focus for companies with skill gaps (91%), with 52% of those companies considering it a major initiative. Slightly fewer (89%) of companies with skill gaps plan to develop existing talent; only 42% of them say it’s a major initiative.

Firms with skill gaps focused on several areas

Notably, more international marketers reported that they have skill gaps than their domestic-only peers (57% and 46%, respectively. Among private companies overall, the largest skill gaps identified were in middle management (53%) and skilled labor (48%).

Those companies with skill gaps will focus on several areas over the next one to two years, including marketing and sales (65%), information technology (36%) and engineering/design (35%).

“Over the past two years, CEOs were focused on cost containment, making deep workforce cuts in anticipation of a protracted recession,” says Ken Esch, a partner in PwC’s Private Company Services practice.

Companies shifting their focus

“Emerging from the recession, companies are now shifting their focus, with growth being top of mind these days and executives repositioning their companies for the long term. For many firms, this means making strategic hires in areas that will drive growth, as well as looking carefully at current people and pivotal roles that create value.”

Private-company leaders who say their businesses have skill gaps expect to grow at a rate of 11.4% over the next 12 months (compared with a rate of 8.5% among companies claiming to have no skill gaps). They’re also planning major new investments (40%, compared with 29% of companies without skill gaps) and plan to hire new employees over the next year (69% with gaps vs. 45% without).

Attracting and retaining talent is clearly a concern for the vast majority of Trendsetter executives. To address that concern,  three-fourths of all private companies surveyed are investing (or planning to invest) in two key areas over the next two years: in-depth training programs (77%) and healthcare/benefits programs (75%).

Firms with skill gaps are also investing (or planning to invest) in special incentive programs (74%), formal mentoring/coaching programs (73%) and formal career-path development (70%).

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VC investments up 34 percent in Q2 says PWC/NVCA report

Friday, July 16th, 2010

NVCAWASHINGTON, DC – Venture capitalists invested $6.5 billion in 906 deals in the second quarter of 2010, according to the MoneyTree Report from PricewaterhouseCoopers  (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

Quarterly investment activity increased 34 percent in terms of dollars and 22 percent in number of deals compared to the first quarter of 2010 when $4.9 billion was invested in 740 deals.  In the first half of 2010, venture capital (VC) investments totaled $11.4 billion going into 1,646 deals, a 49 percent increase in dollars and a 23 percent increase in deals from the first half of 2009 when $7.7 billion was invested in 1,340 deals.

Clean energy investments break record

Dollars invested in the Clean Technology sector doubled in the second quarter compared to Q1 of 2010, breaking the quarterly record for the sector.

The Life Sciences sector (biotechnology and medical device industries combined) saw a notable increase in VC investing during the second quarter, jumping 52 percent in dollars and 36 percent in deals from the prior quarter to $2.1 billion going into 234 deals.

Seed and early stage deals also increased notably in Q2 from prior quarters, accounting for a greater percentage of total deals.  Mark Heesen, NVCA President said, “As the exit market begins to show signs of life, venture capitalists are now able to look increasingly at new investments outside their existing portfolio.

“This dynamic translates into momentum in the seed and early stage sectors where valuations remain reasonable and opportunities are great.  Investment in the clean technology and life sciences sectors, which are generally longer term and more capital intensive in nature, are balanced by smaller deals within the information technology sectors creating a diversity of opportunities for success for entrepreneurs, VCs and limited partners alike.”

Total over $6B first time since 2008

“Venture capitalists are feeling more positive about the economic outlook for investment, based upon the jump we saw in VC funding this quarter,” noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers.

“The quarterly investment total surpassed the $6 billion mark for the first time since Q3 2008 and the number of deals was the highest we’ve seen since Q4 of 2008.

“The rise in companies lining up to go public in the Life Sciences space in Q2 was also a likely driver of the strong rebound we saw in investing in this sector during the quarter.

“And, a $350 million deal, the biggest deal in the second quarter, pushed the Clean Technology sector to its highest total on record. If the markets remain positive, we’ll likely continue to see robust investment levels for the remainder of the year, with VC funding in 2010 poised to surpass 2009 levels.”

North Carolina saw 14 deals worth more than $130 million. In South Carolina, two deals were worth $4.2 million.

Georgia saw 17 deals that totaled $34 million in investments.

Full reports and regional breakdowns are available at NVCA.

Contact Tech Journal South Editor and writer Allan Maurer: Allan at TechJournalSouth dot com.