Allocate Software: optimising health and other sectors

Allocate Software specialises in developing work and business optimisation systems for organisations that have large, multi-skilled workforces. Founded more than 18 years ago, today its clients range from public sector organisations such as the UK’s National Health Service to, blue-chip businesses including Danish shipping and energy conglomerate AP Moller–Maersk Group and governmental bodies like NATO.

Allocate’s software is an enterprise-level platform that is designed to help organisations manage tasks performed by a wide variety of employees with different skills. According to the company, there are more than one million people worldwide who are managed with Allocate’s software.

The software uses an easy-to-follow graphical user interface, which presents a broad range of information on a single screen. This gives managers and analysts a central tool to plan and view workforce resources alongside commitments and demand.

Allocate claims that its software is unique in its ability to provide workforce optimisation over a period of time. This means that an organisation’s changing operation requirements can be matched by an up-to-date picture of workforce supply and demand, which in turn means that Allocate’s customers can manage how their workforces are used in the very short term as well as schedule and plan for the long term. By moving the time bar it is also possible to review historical information about organisational structure and demands

Allocate’s route to market involves alliances with some key firms in the software implementation industry. For example, the firm has Worldwide  partnerships with PwC and CSC.

Allocate is focused on three key markets: defence, maritime, and healthcare, as well as other emerging sectors such as construction

In the defence sector, it supplies not only NATO but the British Army’s HQ Land Forces organisation, t, the Royal Navy, Royal Australian Navy, The Royal Australian Army and the Royal Fleet Auxiliary. NATO uses MAPS in a number of areas, but a key task the organisation uses the software for is ‘predictive force generation’ – which enables NATO to balance ‘Combined Joint Statements Of Requirement’ (CSJORS) with capabilities offered by member nations. The Royal Australian Navy uses MAPS to help it deliver its ‘flexicrewing’ concept, where mechanisms are identified to balance ships’ crew requirements between training, leave and operational activities.

In the maritime sector, Allocate’s clients include cruise lines (e.g. Cunard and P&O) as well as shipping businesses and marine engineering companies. CMA-CGM, France’s number one shipping company which operates some 380 ships on more than 150 shipping lines, and uses MAPS to handle both its shore-side and shipboard activities as well as share workforce data between to the two.

Allocate main focus is health and it has over 400 clients from the healthcare industry, supplying healthcare clients in both the public and private sectors. In the UK, there are more than 200 NHS Trusts who used the Health Suite of work optimisation software, including 1200 Acute NHS Trusts, 38 Mental Health NHS Trusts and 34 Primary Care Trusts.
Recently, Allocate announced that an additional four NHS Trusts - East Cheshire NHS Trust, Mid Yorkshire Hospitals NHS Trust, Shrewsbury and Telford Hospital NHS Trust and Leeds Teaching Hospitals NHS Trust – had signed new agreements to use its Healthroster e-Rostering module for doctors and other medical staff.

The module will be used to streamline the rostering process for doctors’ rotas, which can be difficult to manage due to issues such as the European Working Time Directive. Allocate claims that Healthroster is the only fully integrated system that is proven to be able to accommodate and manage the complexity of rota development for medical staff both at junior doctor and consultant levels.

In the construction sector, Allocate is helping firms like Australia’s Leighton Contractors to ensure they have the right staff, with the right skills, available to deliver current and future projects. Leighton has more than $3.8bn worth of work in hand and employs 6,000 people, but the firm is using Allocate’s MAPS software to help it address every area of construction and engineering workforce planning.

As well as achieving growth through the building of a strong, blue-chip client base, Allocate has also been pursuing growth through acquisitions. Last year, it bought Swedish firm Time Care – a supplier of workforce management software with a strong focus on the healthcare market.

Paying £12.4m for the company, Allocate’s management made the acquisition in order to attain a strong footprint in the Nordic countries, particularly in Sweden where Time Care has relationships with 57 hospitals and 110 of the country’s 290 municipalities. The acquisition transformed Allocate into the leading provider of workforce management software for the healthcare sector in Europe.

More recently, in May this year, Allocate acquired Dynamic Change – a leading provider of regulatory compliance, corporate governance, risk and performance management software for the UK healthcare market.

Dynamic Change supplies clients with the automated systems they need through ‘Software as a Service’ (SaaS), where users access the software remotely through the Internet. SaaS is a convenient, and increasingly common, way to use software since it reduces the time and cost spent on the installation and maintenance of software.

Allocate bought Dynamic Change partly because the SaaS nature of the firm’s business model, with high levels of recurring revenue, would provide the enlarged group with improved visibility on revenues. Approximately 70% of Dynamic’s total revenues of £3.2m for last year came from contractually recurring subscriptions.

Meanwhile, there are opportunities to sell Dynamic Change’s ‘Performance Accelerator’ product into Allocate’s existing customer base.

Allocate will pay up to £9m for Dynamic over three years, depending on certain growth targets being achieved.
Allocate’s financial year end is 31 May, so final results for 2010 will be out this summer. Interim results, released in January, showed that it had increased revenues by 38% to £9m during the six months to 30 November 2009, while its H1 pre-tax profit increased to £674,000 from £658,000 in H1 2009.

A third-quarter update in March informed investors of a series of contract wins for Allocate in the healthcare sector, including 17 new contracts for Time Care in Sweden. Meanwhile, the group won another major contract with NATO.
And in  late May, Allocate was selected as preferred supplier to an e-Rostering project with the State Government of New South Wales. The deal will see Allocate’s Healthroster software deployed across the entire state public health system, covering more than 90,000 staff.

For the financial year just ended, analysts are forecasting revenues of £20.3m and pre-tax profits of £3.3m at Allocate. For the current financial year, which will end on 31 May 2011, they estimate turnover of £28.6m and pre-tax profits of £5m, which should translate to earnings per share of 5.8p.

Allocate’s share price at the time of writing – 70.75p – is trading not far off its high for the year of 76.5p.

http://www.proactiveinvestors.co.uk/companies/news/17818/allocate-software-optimising-health-and-other-sectors-17818.html