London is getting ready for a wave of public protests. Activists are gearing up for the biggest union protest in more than 20 years – with a recent survey suggesting that half of public-sector workers would consider taking industrial action.
Almost 650 coaches have been hired from towns across the UK, according to a Press Association report. And ten trains have been chartered to ferry people from Scotland and the North West.
Yes, it will be difficult for you to avoid this story over the next few months. While politicians have been debating the details of public sector cuts, local councils and health authorities have already been going about it with a vengeance. Right across the country, an almighty overhaul of the public sector is well underway.
Why should that interest penny investors? Well because there is actually a very exciting story here for us.
Last week I attended a packed seminar held by a penny share company that could play a major role in overhauling the UK’s public sector. This is a company that could literally save the government millions as it helps to radically improve the way the public sector is run. And they are not alone.
The message I took from the seminar was pretty clear: the public sector can prevaricate no longer. Change is starting to happen fast. And there could be a serious opportunity here for investors.
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Why half the City rushed to see this talk last week
The seminar was run by Advanced Computer Software Group (LON:ASW). The company is probably best known as the latest vehicle of charismatic Chief Executive Vin Murria, who described the group’s latest sales conference as a “stonker”. Murria also expressed indignation at the low rating of the shares – “which trade on a PE of a flipping eight, for goodness sake!”.
That leaves Advanced Computer Services at a considerable discount to Emis Group (LON:EMIS), another provider of software to the NHS, which trades on a lofty multiple of 22. But assuming the assembled City suits were not just there to admire Murria and guzzle their way through a free lunch, this session may just get the share price moving again. Public sector bosses are clearly setting about cost-cutting. And Advanced Computer Software can help in two major ways.
This penny stock could save the country millions
The first area where ACS can help clean up the public sector is in the effective use of IT in order to allow shared services. The public sector seems to consist of hundreds of small fiefdoms, each running its own little show and staffing itself accordingly.
In London, for instance, there are 32 borough councils, each with its own HR department and finance team.
Given the political necessity to protect those beloved ‘front-line services’ a pooling of back-office functions seems like a good place to start. Dean Dickinson, Managing Director of ACS’s Public Sector and Enterprise Division, reckons that councils could save millions by sharing back-office functions, replacing laborious manual functions with slick IT, and reducing the need to employ temporary staff.
But the most striking example of cost-saving was presented by Carrie Goodbourn, who is Business Development Director of the Advanced Health & Care unit. She told me that the cost of picking somebody up from home and taking them to hospital is £1,800. And that is before anything is done to the patient when they arrive!
This is just one reason for the widely accepted view that treatment should be carried out not in expensive hospitals but back in the patient’s own home. Key to this is an army of nurses and care workers travelling around from house to house, equipped with modern diagnostic devices and able to dispense basic treatment. But the way in which this is done today could hardly be less efficient. A nurse will typically first drive to the medical centre, pick up the paper file, visit the patient, drive back to the medical centre, and write her notes before embarking upon a second trip.
This wastes an awful lot of time, petrol and money. But thanks to modern IT a much better system is available. Nurses need to be armed with internet-connected phones upon which they can call up patient records, and receive details of their appointments schedule along with driving instructions. In a recent proposal to one authority employing 300 visiting nurses, ACS conservatively calculated that the adoption of this technology would enable nurses to make two extra calls each day, save £158,000 in mileage costs and permit 28,500 more patient visits each year.
The huge opportunity in mobile Nursing
Last year the number of nurses using this ‘iNurse’ system grew from 600 to 4,450 and another 4,250 are in the pipeline. Each one is worth over £100 in revenue to ACS and with 465,000 visiting health and care workers this looks like a major opportunity for ACS.
Like Capita (LON:CPI) amongst the stock market’s bigger fish and Idox (LON:IDOX), and @UK (LON:ATUK) amongst the far more interesting minnows, Advanced Computer Software is showing the public sector how it can slash costs in a big way. I’ll be following its fortunes closely in the troubled months ahead.
• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
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