IBM Adds Security To Its IT Services Menu With ISS Buy

The deal lets IBM offer security services as part of a more complete outsourcing package.
Share Of Wallet

IBM spent August rounding out other parts of its software portfolio with an eye to enriching its services toolkit. On Aug. 1, the company bought privately held Webify Solutions, a developer of service-oriented architecture software, which helps companies link business applications without messy, manual integration projects. On Aug. 10, it announced a $1.6 billion offer to purchase content management software vendor FileNet. And last week, it completed the $740 million acquisition of MRO Software, an enterprise asset management specialist.

Buying smaller niche players means that IBM needs fewer partners to fulfill a services engagement, and that means less revenue sharing. And it could use the revenue. The company's services sales have been flat in recent years and software has grown only modestly. IBM is adding a lot of homegrown software to the services mix as well. Earlier this year, it rolled out a number of enhancements to its Tivoli line aimed at automating routine IT management processes.

Services deals also mean IBM can leverage its offshore delivery centers in lower-cost India. The company is adapting many of the management tools needed to keep a close eye on IT infrastructures so they can be operated from offshore.

It's all meant to help increase so-called share of wallet at big-business customers like Ingersoll-Rand. IBM already hosts and manages the company's Siebel and Oracle systems, but Libenson wants to hand off a lot more to an outsourcer--everything from manufacturing applications to supply chain systems is up for grabs. He says he'll choose a vendor in 60 to 90 days for a multiyear contract worth $40 million annually. IBM's not a shoo-in: he's also taking a close look at Hewlett-Packard. Libenson says vendors that lack in-house technology--including CSC and EDS--need not apply. "If there's a problem with one of the boxes running my systems, I want to know that some of the best hardware minds in the industry are on it," he says. IBM's given him a lot to chew on, including one fine 13-ounce filet at McIntosh's.

Shopping Spree
IBM this month bought or announced plans to buy:
Company Price Products
Not disclosed
SOA software
MRO Software
Asset management software
$1.6 billion
Content management software
Internet Security Systems
$1.3 billion
Network and data center security software

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