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Hosting Grows In Wake of Oracle Acquisitions
By John Moore, Ziff Davis Internet


Contract Watch: The software giant's acquisitive ways seem to have given a boost to the growing software-hosting market.


NaviSite Inc. reports an uptick in its PeopleSoft business as the one-year anniversary of Oracle Corp.'s acquisition of that company nears. WTS Inc., meanwhile, has grown its JD Edwards practice. Oracle inherited that software line through the purchase of PeopleSoft, which had acquired JD Edwards in 2003.

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Mark Clayman, senior vice president of hosting services at NaviSite, said the company's PeopleSoft implementation and application hosting businesses have expanded in recent months. He said the company has seen more PeopleSoft-related sales in the past two quarters than in the prior 18 months.

Clayman cited "pent-up demand" as a factor behind the growth in business. He said customers were "nervous about making a commitment to PeopleSoft" prior to the closing of Oracle's acquisition, which took place in early January.

Ward Quarles, senior marketing manager with WTS, pointed to Oracle's On Demand sales force as an important element in application hosting sales. Oracle's On Demand service refers JD Edwards and PeopleSoft customers who seek hosting help to external service providers.

WTS, for example, is Oracle's exclusive hosting partner for JD Edwards' EnterpriseOne and World applications. The companies have an agreement that establishes standard pricing and predefines the delivery model, Quarles said. When an Oracle salesperson sells a JD Edwards license via the On Demand model, the hosting order is delivered to WTS.

NaviSite also has a hosting arrangement with Oracle. That deal stems from an earlier pact between PeopleSoft and Surebridge Inc., an application outsourcing company NaviSite acquired in June 2004. In that relationship, PeopleSoft referred hosting customers in the $100 million to $1 billion revenue range to Surebridge.

The arrangement continues under Oracle, with the exception that the software company has removed the $1 billion ceiling, according to Clayman.

"That is a tremendous channel for us—Oracle On Demand reps on the street selling hosted solutions," Clayman said. "Oracle brings us into deals we may not have been brought into before," he added, noting that NaviSite generates about $120 million in revenue.

Clayman said NaviSite plans to craft a similar hosting arrangement for Siebel Systems applications. Oracle's acquisition of that company is expected to close in the first quarter of 2006.

Accenture, SAP Net Chinese Bank Deal

Accenture and SAP's Chinese subsidiary are pooling resources to tackle a core banking system for the China Minsheng Banking Corp. Ltd.

CMBC, the first privately owned nationwide commercial bank in China, will replace its current banking system with SAP's SAP for Banking solution. The solution includes deposit and loans, treasury management, and general ledger processing among other components.

A project summary provided by Accenture and SAP described the substitution of a core banking system as a "large and complex project." CMBC seeks to build the new system to "accelerate product customization, regulate operations, reduce costs, win customers and perform international business expansion," according to the companies.

Earlier this year, an Accenture/SAP study indicated that 35 percent of banks in the Asia/Pacific region plan to replace core banking systems within the next five years.

Accenture and SAP have teamed on previous banking projects in China, according to an Accenture spokeswoman. Those include an enterprise resource planning implementation with China Everbright Bank.

St. Bernard Software Seeks 200 Resellers

St. Bernard Software Inc., a maker of security appliances, has launched a reseller program as it seeks to more than double its VAR roster by the end of next year.

The company's ProPartner Program, announced Monday, pursues resellers focused on security. "We've identified security to be an area of continued growth, and the channel will be one of the big keys to success in our growth," said Craig Smith, St. Bernard Software's director of channels. A large segment of the company's customer base, he added, consists of small to midsize companies that tend to use reseller partners to address their security needs.

Smith said St. Bernard Software currently has 150 resellers and plans to sign 200 additional companies in 2006. Makers of security appliances and security service providers have been pursing resellers in a big way in the past 12 months as the market heats up.

St. Bernard started out a decade ago with open file management software, but has since broadened its product line. The company's wares include its iPrism Web filtering appliance and ePrism e-mail filtering appliance. The company also offers a patch management solution called UpdateExpert.

The ProPartner program lets resellers register deals to receive additional margin protection on top of the company's standard discount. In the crowded security arena, margins erode as numerous security partners bid the same manufacturer's product on a given deal.

"There are lots of people bidding on potential sales," Smith said. "But what we are doing here is rewarding VARs who generate demand for St. Bernard Software's product line."

Renewal protection is another program component. St. Bernard Software's products have an annual subscription service element. Smith said the company will protect the VAR who first sold the software, preventing situations in which multiple resellers compete for the annual renewal. Renewal protection helps resellers preserve an annuity stream and provides an opportunity to sell additional value-added services, Smith explained.

The company also offers what Smith termed cross-marketing protection. In this case, St. Bernard Software provides marketing support to help resellers expand their sales with existing customers. When a reseller sells one brand of the company's software to a customer, St. Bernard Software markets its full product line to that customer. If the customer expresses interest in another product in its line, the lead is passed to the reseller.

IKON Launches Partner Program

IKON Office Solutions has launched a partner program focused on document management solutions.

The Premier Partner Program, unveiled Monday, operates within the company's Professional Services unit. The program's members include Captaris, EFI, EMC, eCopy, IBM, Kofax, Notable Solutions Inc., Objectif Lune, Rochester Software Associates, and Westbrook Technologies.

The program, according to IKON, affords access to the company's customer base.

     
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