Schlumberger Business Recovery Buy Can Help IBM, VARs With New Opportunities

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IBM's agreement this week to acquire Schlumberger's Business Continuity Services unit is expected to boost its ability to sell disaster-recovery solutions to financial customers and government organizations, and should also give its services solution providers a new tool for tackling those markets.

IBM Global Services (IGS) provides business-continuity and recovery services via internal sales representatives and solution providers, said Pat Corcoran, director of business development for IBM's business continuity and recovery services. For example, solution providers can work with IBM's sales and design teams to determine which recovery center will best suit a particular customer's needs.

"IBM resellers help IBM reach a broader customer base," Corcoran said. "For those who focus on financial services, [the Schlumberger deal] is another tool in their toolbox."

Mark Wyllie, group manager for IGS at Mainline Information Systems, a Tallahassee, Fla.-based solution provider, said the purchase should help IBM compete against its main competitor in the business-continuity and recovery services market, SunGard Availability Services, Wayne, Pa. The acquisition "helps expand IBM's breadth of offerings," Wyllie said.

In the business-continuity space, Mainline works with customers to help set up hot sites in IBM recovery centers. "A lot of our work is to uncover an opportunity, and then IGS helps us size it, price it and implement it," Wyllie said.

The Schlumberger deal could also help partners such as Mainline do more business in the financial space, Wyllie said. "It won't be earth-shattering to our business, and we won't get hundreds of millions of dollars in new business tomorrow," he said. "But it will help us in a Wall Street kind of environment."

Under the deal, IBM Global Services will gain long-term services contracts with more than 750 clients worldwide, including several major financial institutions, government bodies and international corporations, as well as more than 40 modern recovery sites worldwide and about 260 employees.

In the event of a disaster, a customer's data is automatically routed to one of IBM's 130 business-continuity locations currently set up worldwide. Employees can also be moved to one of the centers on a temporary basis if needed, IBM executives said.

Before the acquisition, IBM had four huge primary recovery centers and 15 local access centers in North America, all linked together to let customers migrate operations wherever needed in case of a disaster, Corcoran said. The Schlumberger deal will add another three in North America.

The recovery centers include both hot sites, where customers have pre-positioned hardware and where data is either mirrored for instant access in a disaster or can be quickly loaded from tapes, and warm sites, where IBM can bring in data to run a customer's operations in an emergency.

Since 1989, these centers have supported more than 450 client recoveries, Corcoran said, with weather being the primary disaster culprit. For example, in September 1999 Hurricane Floyd alone triggered events at 46 clients with 96 different configurations, he said. The No. 2 trigger is power problems, but such incidents have been falling. "A lot of clients are putting in their own redundancy, including UPSes and diesel generators," he said.

Corcoran said the Schlumberger unit will also provide IGS with skills specific to trading floors. At the same time, IGS will gain access to 37 new business-recovery centers in Europe, a significant enhancement to its business in that continent, he said.

The acquisition, which follows IGS' $3.5 billion acquisition of PwC Consulting in July of 2002, is also important for IBM as customers look for help for a wide range of services, Corcoran said. "As we move up inside the customers, they are looking at higher value needs," he said.

The acquisition, which also brings new skills related to the Sarbanes-Oxley Act, will help IGS work with customers to deal with increased regulatory and compliance concerns, Corcoran said. "We work in all industries," he said. "Each has its own specific regulations. But across all industries, everybody is looking at Sarbanes-Oxley."

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