OneNeck IT Services is acquiring the assets of Virtual ESI, an application service provider that supports J.D. Edwards' outsourcing and consulting business, for an undisclosed amount. The move strengthens OneNeck's position in the J.D. Edwards managed application solutions space, and could add as much as 20% to the company's revenue this year.
OneNeck CEO Chuck Vermillion says the acquisition should add $3 million to $4 million in revenue to the company this year, brining the privately held company's total to around $22 million. "We've been looking for growth opportunities for the last year or so," he says. "This was the first opportunity that made a lot of sense, but we will continue to look, and are currently looking, at other opportunities."
A key to the acquisition was creating an operations center in the eastern United States to compliment OneNeck's existing center in Phoenix, Vermillion says. "We do have a number of customers or potential customers located on the East Coast that are concerned about having their data center toward the West Coast," he says.
The acquisition of J.D. Edwards by PeopleSoft Inc. does provide some long-term concern for OneNeck's efforts in support of J.D. Edwards, Vermillion says, but for the next five to six years, there's little indication PeopleSoft will discontinue support of J.D. Edwards.
"Their stated objective right now is to continue to offer (J.D. Edwards) and not force anyone to migrate," Vermillion says. "We also consistently get the message from customers that when they make an investment in applications, unless a product is going to be immediately discontinued, they are unlikely to move to some other platform. They don't have a compelling business case as long as the product is working for them."
Vermillion said all indications are that it would be at least two or three years before PeopleSoft would discontinue support of J.D. Edwards, which provides applications geared to the midmarket customer that makes up the bulk of OneNeck's customer base. If PeopleSoft were to announce at some point its intention to migrate customers, he adds, there would likely be another two or three year phase-in program.