Business Outlook: Challenge of the US giants beckons for Misys

If you haven't already heard of Misys, it's time to wake up. This is Britain's very own Microsoft. It may not yet be a household name, but its stock market value is pounds 2.8bn, which means that when the committee that decides on these things sits down next month, it's likely that Misys will become the first information technology company to be granted a place in the FTSE 100 index.

True, joining the Footsie is a largely symbolic event. But nothing could more elegantly describe the changing face of the British economy. Misys - a company which is less than two decades old and joined the stock market as a pounds 10m tiddler 11 years ago - is now worth more than such stalwarts of British industry as British Steel and Blue Circle. The company that is most likely to drop out of the Footsie to make way for it is Sir Stanley Kalms' Dixons. Misys is no exception; thrusting rival software groups such as Sage, Sema and Logica are only a few steps behind.

So how has Misys done it? The answer is a combination of acquisitions and growing demand. One part of its growth was as a consolidator in the banking software market, hoovering up a number of small niche players and selling their products to banks around the world. At the same time, however, it has also had the benefit of expanding markets as banks have rushed to automate every conceivable aspect of their businesses.

Careful management of cash has been a hallmark, a technique Kevin Lomax the chairman, must have learnt at the feet of his previous employer Lord Hanson. Then there's the following wind of a very generous share price rating. Misys shares now trade on a multiple of 38 times next year's forecast earnings.

Still, let's not get carried away. Viewed from the US, Misys and the rest of the British IT industry are small fry, dwarfed by Microsoft, Intel and a whole raft of companies you've never even heard of. To be a force in the global software industry, Misys is going to have to become many times larger. Even so this is something of a defining moment for the British stock market. At last, an IT company in the FTSE 100.