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Volume 13, Number 21 -- May 24, 2004

But Wait, There's More

DataMirror Stops Pursuing Vision Solutions Acquisition

DataMirror has dropped its pursuit of a majority stake in rival Vision Solutions and has sold all of its shares in Vision's parent company, IDION Technology. DataMirror launched its unsolicited bid for IDION in 2002 and managed to accumulate 42 percent of the South African company's stock, which is traded on the Johannesburg Stock Exchange, before selling all of its 48.3 million shares to a group of investors led by VenFin Limited of South Africa at a price of ZAR 2.10 per share. DataMirror says that, based on current exchange rates, it expects to gain $6 million Canadian after taxes on the sale of the stock. "At this point in time we thought it was in the best interests of the shareholders of both companies that we conclude our investment in IDION," said DataMirror's president and CEO, Nigel Stokes. "This is a good day," said Vision CEO Nicolaas Vlok, who commended Vision's customers, partners, shareholders, and employees for remaining committed to Vision's strategy in the face of a "disruptive competing shareholder." VenFin Limited, which has owned IDION stock for two years, now owns almost 35 percent of the company's stock, while IDION's managers' share of the company remains at 40 percent.

COMMON to Outsource Some Operations

The COMMON midrange user group is outsourcing some of its operations to an association management company with 50 years of experience in managing trade associations, professional societies, technology user groups, and government agencies. Its new relationship with SmithBucklin, which COMMON describes as a "hybrid business partner model," instead of a full outsourcing contract, will cut COMMON's costs and reduce its exposure to lawsuits, while allowing the organization to maintain its own dedicated staff, as well as its position as an independent user's group, said COMMON's president, Bob Boyson, in an e-mail to volunteers last week. As part of the move, COMMON's headquarters will be moving to SmithBucklin's Chicago offices, at 401 North Michigan Avenue, just a few blocks away from its old headquarters. COMMON says the decision to outsource a portion of its operations to SmithBucklin was prompted by the fact that the lease for its old headquarters was set to expire at the end of the year. After taking five months to examine various options, the organization decided SmithBucklin's offer was the most attractive. Among the benefits, COMMON will have access to SmithBucklin's association resources on an "as needed, as consumed" basis, and it will mitigate COMMON's risks because it will no longer have to enter into long-term contracts with landlords and other vendors. "This is an excellent offer for COMMON, giving us access to extensive association-industry and user-group resources while allowing us to maintain our independence. It's the best of all worlds!" said COMMON's executive director, Lynne Schwartz, in a prepared statement. It is unknown to what extent COMMON is outsourcing its operations or whether there will be additional layoffs associated with this move. COMMON did not respond to a request for additional information by press time.

Offshoring Grows Quickly in 2004, but Analysts Say It Won't Last

IT analysts at Gartner and Forrester Research released new reports on offshore outsourcing last week that highlight some interesting changes underway in the burgeoning global market for outsourced services. Gartner says offshore business process outsourcing (BPO) of IT-intensive jobs will increase by a whopping 65 percent this year, amounting to $3 billion in spending by the end of this year. Gartner says, however, that the market will not be able to sustain such high revenue increases in the coming years. "Offshore BPO is an emerging, but immature, opportunity," said Robert Brown, principal analyst for Gartner's sourcing group. "There will be slower adoption of offshore BPO through 2007." Meanwhile, Forrester last week bumped up its projections of American job losses over the next 18 months by 40 percent. Forrester originally projected that 588,000 U.S. jobs in the services sector would be outsourced by the end of 2005, but last week the company said new research indicates the figure will be closer to 830,000. Forrester said it bumped up its projections because of accelerating outsourcing activities, which it attributes to recent publicity given to the trend, from new services available from top-tier Indian outsourcing providers, like Satyam Computer Services, Wipro Technologies, and Infosys Technologies Limited, and from a rapid expansion in offshore outsourcing facilities by U.S. vendors IBM and Accenture. Forrester barely boosted its outsourcing projections for the long term. It now says about 3.4 million U.S. services jobs will be lost by 2015, up from its previous estimate of 3.3 million.

ERP Spending to Grow in 2004

The global market for ERP applications is expected to grow by nearly 7 percent this year, according to a new study by IT analyst IDC. The Massachusetts firm said last week that $26.7 billion will be spent on ERP software this year, up from the nearly $25 billion spent in 2003. And by 2008, IDC said, ERP spending will increase by almost 35 percent, to $36 billion. Considering that many people thought ERP was dead, in lieu of the new era of e-business, just a few years ago, this has to be very promising news for ERP vendors. IDC also said market consolidation will continue this year, although it won't produce any jaw-dropping numbers. The top-10 ERP vendors secured 46 percent of the market in 2003, compared with 44.5 percent in 2002 and 42 percent in 2001, IDC said. Though the firm said it released a list of the top-10 ERP vendors, the press release only listed the top five: SAP, PeopleSoft, Oracle, Microsoft, and Sage. IDC had not provided the rest of the top 10 list at press time, so we decided to take a stab at numbers six through 10 ourselves and came up with Geac, with $456 million in fiscal year 2003 revenue, Intentia, with $384 million (2927 million SEK), Lawson Software, with $344 million, IBS, with $315 million (2,400 million SEK), and SSA Global, with $285.4 million. (These revenue figures are for the companies' fiscal 2003 years, which vary and therefore aren't direct comparisons, but this gives you an idea of how the rest of the ERP market shapes up.)

IBM, PeopleSoft Extend Partnership with New Bundles, Reseller Agreement

IBM and PeopleSoft last week announced an expansion of their global alliance that will see hundreds of new resellers in IBM's small and midsized business channel offering PeopleSoft's World and EnterpriseOne application pre-loaded on IBM hardware and running IBM middleware. Earlier this month, the two companies announced a bundle that includes a pre-loaded version of PeopleSoft's World ERP application running on a new eServer i5 Model 520, starting at $50,000 (see "PeopleSoft Attacks Wintel ERP with World Express Bundle"). Last week the companies announced the results of performance tests that indicate this bundle can support 60 percent more users at 40 percent less cost than the same configuration on previous iSeries boxes. What's more, the companies say tests show the i5 can deliver sub-second response times at the level of 97 percent system use while running a mixed workload, including World, Web serving, and collaboration software. The companies say they will perform new tests with EnterpriseOne running on Linux-based xSeries servers in preparation for a new bundle that will include EnterpriseOne, WebSphere, DB2, and a Linux-based xSeries box, which, the companies say, at first will be sold to customers in the Asia/Pacific and European regions. The companies also announced a new IBM Automotive Solution, which bundles EnterpriseOne with xSeries technology and will be targeted at tier-2 and tier-3 automotive suppliers.

IDC Says Grid Sales to Hit $12 Billion by 2007

There has been a lot of talk in the past two years about how grid computing will change the way we do computing. But there has not been any hard evidence that anyone is actually buying grid technology, nor have there been any forecasts of the investment that corporations, governments, and other institutions will make in grid computing over the next several years.

That is why IDC has taken a stab at sizing up the grid market. Chris Willard, the analyst who follows the workstation and high-performance-computing markets for IDC, says the company thinks the grid computing market will grow to $12 billion by 2007. While that may sound like a lot of money, the entire IT industry was about $1.1 trillion in 2003. So this is just a small trickle of business. It also should be noted that IDC counted the value of any server or device connected to a grid as revenue for grids. So this is not simply the value of the software and other devices that go into making up a grid. This is a reasonable way to calculate the value of the grid market, to be sure, but it is not the same thing as counting money in the pockets of grid vendors; this number will be a lot smaller.

OS/400 PTF Guide Moves to Four Hundred Guru Newsletter

For many years now, our partner DLB Associates has been creating the OS/400 PTF Guide to help you suss out the patches to OS/400. The OS/400 PTF Guide has appeared in this last section of this newsletter, and we hope it has been useful to you. The guide will now appear in Shannon O'Donnell's "OS/400 Alert" column in Four Hundred Guru on Wednesdays.

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Editor: Timothy Prickett Morgan
Managing Editor: Shannon Pastore
Contributing Editors: Dan Burger, Joe Hertvik, Kevin Vandever,
Shannon O'Donnell, Victor Rozek, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
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