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IBM Acquires Corio in On Demand Play

IBM threw more of its weight into the software "on demand" movement Tuesday with a deal to acquire applications management firm Corio for $182 million in cash, or about $2.82 per share.

IBM said the acquisition is expected to strengthen its application services portfolio by adding Corio's capabilities and technologies, which specialize in rapid application deployment and automated application management for clients.

In addition, IBM said the combination would enhance its application services capabilities for clients using business software from Ariba, Concur, E.piphany, Oracle, PeopleSoft, SAP and Siebel.

Corio is seen helping IBM customers get applications up and running in a hurry via hosted applications, especially customer relationship management applications through Big Blue's partnership with Siebel.

George Kadifa, Corio CEO, is expected to take over as general manager of IBM's on demand group, which helps IBM manage strategic outsourcing arrangements with clients.

The deal would add about 300 Corio employees to IBM's global services division at a time when business consultants are looking to grab new business customers in the aftermath of Oracle's acquisition of PeopleSoft.

A spokesman for IBM said the timing of the acquisition, coming as it did after Oracle succeeded in its hostile takeover of rival enterprise application provider PeopleSoft, was coincidental, and that the deal was in the works long before Oracle took over PeopleSoft.

But the uncertainty among customers of both companies has rivals, such as SAP and now IBM, looking to take advantage of PeopleSoft customers that are uncertain whether they would like to continue with Oracle. Oracle CEO Larry Ellison has already mentioned that Oracle is preparing for some customer drop-off as it integrates PeopleSoft customers.

By combining Corio's Applications on Demand platform with IBM's global reach and deep application hosting capabilities, IBM has created an unmatched combination to increase its level of client service, said Kadifa.

IBM officials say a marketplace shift is under way, because clients of all sizes are under pressure to do more, faster with application software in order to improve business performance.

The deal comes as more SMBs are warming up to ordering up applications in a hosted environment.

As internetnews.com has reported, IBM helped add currency to the term "On Demand," which it describes as part of its business transformation approach to helping customers. HP uses the term "Adaptive Enterprise." Sun's version is "N1."

IBM's term encompass a utility-style approach that offers computing services that a customer can use "by the drink." But it also means that more customers are deploying applications in hosted utility models, IBM executives explained. That would explain why the company is taking those capabilities and scaling them across IBM with the latest acquisition.

In addition, IBM said Corio's capabilities complement IBM's strategy to offer more technology-based services, which help clients by automating inefficient manual IT tasks.