Commenting on the announcements from Iress (ASX:IRE) after their Investors Day in Australia, Ian McKenna Founder of Financial Technology Research Centre and sees the bigger story than job cuts on the structural changes the business is making:

“From a UK perspective the changes proposed are logical and in fact long overdue. It’s great to see Iress giving more autonomy to their international business units. UK customers should be pleased to see a more formalised UK leadership structure, based along product lines. Simon New is an experienced player in the UK market as indeed are each of the individuals leading the trading, wealth, sourcing, and mortgages units.

“While Iress has a dominant position in Australia historically, far too much priority has been given to the domestic market, while other jurisdictions where they have far more potential for growth have been neglected. In the past, the management has been overly focused on satisfying a predominantly domestic shareholder base.  An “Australia first” attitude has repeatedly hurt the business over the extended period of time. It’s good to see the new management, recognising this and devolving control.

“For some time Iress have been a global business, behaving as a local one. While today’s announcement makes a great deal of sense, ideally, I’d like to see them listed in a second market, perhaps London, but sadly it has to be recognised that London is not a great place for tech companies to list so probably New York is the ideal. I think this could provide significant comfort to existing customers by reinforcing their long-term commitment to international markets and potentially enhance share value.

“Australians should be proud of Iress as a strong International business, but to achieve its full potential it needs to recognise the need to understand and address the requirements in different jurisdictions. The job losses are unfortunate but any business has to be lean.

“Marcus Price has said that the new Digital Advice and NexGen advice software is in development is to meet a global need, so it will be interesting, given the relative size and opportunity of the UK market, compared to Australia if in practice the solutions are prioritised proportionate to market size. This will be a strong indicator of if the business is genuinely moving away from the “Australia first” mentality that constrain the previous management. We are seeing significant demand for digital advice services from UK organisations driven substantially by their need to provide more streamlined low-cost solutions for clients as a result of consumer duty. We are actively assisting a number of firms in finding suppliers now and it will be interesting to see how quickly Iress can join this market, which is where much of the opportunity for growth in the next five years lies.

“It is notable that the rule of 40, a measure by which Software as a Service (SaaS) businesses are benchmarked is being applied to performance, however, at least in the UK portfolio several of the propositions have not historically been SaaS for example, the Advisor Office proposition, where they currently have all, but completed the migration of these customers to XPlan and the Trigold mortgage sourcing platform, which is currently operated in parallel with XPlan mortgages.

“There are a lot of positives to be taken from these announcements, the plan is now going in the right direction. This now needs to be delivered.”