It's hip to focus on outsourcing during an economic slowdown. But this tune isn't
for everyone. Industry pundits, such as Mark D'Annolfo, an analyst at Deutsche
Banc Alex.Brown, say businesses are eager to outsource costly IT operations to
service providers and data-center experts. D'Annolfo predicts companies like EDS
Corp. and FIServ will benefit greatly from the trend.
Naturally, data-center specialists like Exodus Communications are singing a
similar tune. Exodus chairman and CEO Ellen Hancock, speaking last week in Toronto,
predicted that Canadian businesses will need to outsource their Web sites to
keep up with foreign competitors. Almost on cue, she mentioned that Exodus recently
opened an Internet data center in Brampton, Ontario.
Savvy solutions providers are partnering with Exodus and other data-center
providers. But watch where you step. Many data-center providers have yet to
turn a profit. Digex and Exodus lost $142.9 million and $248 million last year.
I'm not suggesting that these companies will go out of business. But heed this
advice: Ignore the outsourcing noise and research potential partners' financial
standings before signing on the dotted line. Otherwise, you could wind up like
NorthPoint's partners and customers, which lost Internet service when the DSL
provider went under.
- J.D. Edwards has hired an executive search firm to find the company a senior
VP of consulting. CEO Ed McVaney concedes that J.D. Edwards has practically
"neutered" (his words, not mine) its consulting practice in recent
months. The company's services revenue fell 9 percent in its most recent quarter.
McVaney expects the slot to be filled within a few weeks.
- Meanwhile, J.D. Edwards' alliance with iPlanet has quietly faded. McVaney's
not sure what went wrong, but another source within J.D. Edwards says iPlanet's
application server lacked core components offered by IBM's WebSphere and Microsoft's
- IBM and Financial Fusion together are targeting the retail-banking sector.
IBM Global Services will provide integration and consulting services for Financial
Fusion's software. In return, Financial Fusion will push MQSeries, DB2 and
WebSphere software, along with IBM's eServer hardware. The deal is interesting,
because Financial Fusion is a wholly owned subsidiary of Sybase, which competes
with DB2, among other IBM products.