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IT FIRMS MERGE TO TAKE ON COMPETITION

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Computer companies serving the local government market are merging and forming new alliances in an effort to cope w...
Computer companies serving the local government market are merging and forming new alliances in an effort to cope with growing competition.

Last week saw the launch of one new computer group targeting the local government market and an alliance between two established companies hoping to take on the market's larger players.

These come just weeks after Capita announced the launch of Academy, which brings together the company's existing software operations including West Wiltshire Software, Sherwood and Dataflow Information Systems.

Capita claimed the portfolio of products, which includes software for council tax, housing and planning, makes Academy the second largest player in the local government market after ICL.

John Serle, spokesman for the Society of Information Technology Managers said the trend to merge, re-group and form alliances showed how tough the market was getting.

Heath Computer Services was launched last week by insurance company CE Heath with claims it was targeting the local government market.

CE Heath has merged its two computing concerns - payroll suppliers Peterborough Software and payroll bureau service Datasure. The new group has also acquired Saffron Computer Services which supplies housing systems to 20 councils including five London boroughs.

HCS claims it has a turnover of £60

million and hopes to expand rapidly into the local government market.

Two existing players, International Business Systems, which mainly supplies council tax and revenue software running on IBM AS400 machines, and Compass Software Systems - which specialises in Informix 4GL database applications and CCT software - said they were forming an alliance to take on 'the might of ICL'.

Mr Serle said the motive behind such moves is often to reduce the costs of infrastructure and running a sales team. He said it was also common for small companies to merge as sales for their products drop off and revenue from support services decline.

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