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 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.

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