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IBM Buys Schlumberger Assets for Data Safety

IBM added 40 data centers to its disaster recovery portfolio Tuesday with the purchase of the business continuity services unit of oil industry tech provider Schlumberger , bringing the total to 160 sites worldwide.

Financial terms of the contract were not made public, though Big Blue officials expect the acquisition to close in the second quarter. Officials say all 260 employees from the Schlumberger unit will stay onboard with the expanded IBM Business Continuity Services division.

Schlumberger, with offices in the U.S. and Europe, is known for its telecom, ground assessments and point-of-sale services for customers in the gas and oil industry, and has lately been shedding some of its divisions to drum up cash. For the first quarter of 2004, the company announced Monday it had $151 million in after-tax charges and said they were selling off two other business units.

Officials predict more and more businesses will buy into off-site services to prove to regulatory bodies in the U.S. and Europe that their data won't disappear in the event of an outage from a natural or man-made diaster. Stipulations in both America's Sarbanes-Oxley Act and Europe's Basel II require businesses to have a back-up plan in place to keep financial data safe.

Disaster recovery, officials from Armonk, N.Y.-based IBM said, has moved beyond being just an IT problem to a business-wide issue: large corporations can lose an average of $1 million an hour from network outages and other downtime factors.

Pat Cocoran, an IBM director of business development, said he was surprised by the number of attendees at a recent business continuity trade show recently, most of them employees sent by their CFOs to assess the need for the service in their business.

"The value is really going up to the business people," he told internetnews.com. "From the old days with IT being the focal point for recovery, now it is truly in the business side of operations. I think what's driving that is Sarbanes-Oxley and other regulations."

Research from IDC seems to back up this claim. According to the Framingham, Mass.-based research company, services in the worldwide business continuity and disaster recovery industry will ballon from $400 million from 2002 to 2007, to $2.9 billion in the U.S. European figures follow U.S. growth rates, with Western Europe expected to bring in $2.2 billion this year.

The data bunkers are more than just storage sites: after the phone call to move information is handled by IBM, companies can also temporarily move their employees to the recovery sites to continue customer support calls and normal business operations.

Officials at IBM's Global Services unit expect to add 10,000 new seats to these sites worldwide, a combination of the company's own expansion and Schlumberger's own seats.

The acquisition bolsters IBM's own Global Services philosophy, which is to provide more services to go with software and hardware backup. The 160 centers around the world will be managed by the 60,000-employee organization created after IBM bought PricewaterhouseCooper Consulting for $3.5 billion in 2002.

In other IBM news, officials say the company is gaining traction among animation studios for its on demand and open standards technology to create digital content like graphics, visual effects and rendering. Recent customer adds include: C.O.R.E. Feature Animation, LUMIQ Studios, The Moving Picture Company and Vanguard Animation.

IBM claims its digital media platform reduces production costs by as much as 40 percent.