VARBusiness 500 Spreading the Services Love

IBM spent more than $3 billion in acquisitions in one month alone. And while most of Big Blue's acquisitions were positioned to beef up its software division, the Internet Security Systems is a different story. IBM is set to acquire ISS for $1.3 billion putting the security company, which offers security hardware and software technologies in addition to its services model, within its Global Services division (VARBusiness 500 No. 1).

IBM talked up the managed services side of the acquisition in a conference call announcing the acquisition. Val Rahmani, General Manager, Infrastructure Management Services, IBM Global Services, pointed to a $22 billion opportunity in the managed security services market as a key to its ISS acquisition. ISS will be an integrated operating unit within IGS' Global Technology Services group.

"Companies that haven't felt comfortable outsourcing security before now have a partner they can trust to take on this role," said Rahmani. "The market is clearly headed to demands of security as a service and ISS has been building towards this vision and is uniquely capable of managing the security process in a cost effective manner that also reduces risk."

Tom Noonan, president and CEO of ISS, echoed that sentiment when asked about the significance of ISS being incorporated into the IGS side of the business. "We've been driving the subscription model as the core to our business, I believe it's 50 percent of our revenue today," he explained. "We look at technology as an enabling platform, but the service delivery model, the technology platform and expertise such as our X-Force research comes together to fully protect a customers' network. Technology alone is incapable of doing that."

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Rahmani added that focusing on services, particularly software-based repeatable, scalable services is all part of IBM's transformation strategy. "The whole point is to move away from pure labor-based services into more scalable services," she said.

IBM isn't alone in its spending spree.

Hewlett-Packard's acquisition of Mercury Interactive in July for a whopping $4.5 billion was also telling. While mainly aimed at bolstering its software business, HP (HP Services VARBusiness 500 No. 4) said it will leverage Mercury's portfolio of IT management software and services for business optimization, an area that obviously signals a services push. EDS (VARBusiness 500 No. 2) also jumped on the bandwagon, internationally though, announcing a merger between EDS India and MphasiS, a provider of IT services and BPO solutions in India.

Accenture (VARBusiness 500 No. 3) has been on an outsourcing services tear lately, acquiring three companies aimed at business process outsourcing (BPO). Accenture acquired Advantium and Meridian Informed Purchasing, both focused on finance and accounting BPO services. In addition, Accenture is also positioning its services push at the midmarket, with the recent acquisition of Savista and the resulting formation of its Accenture BPO Services, Solutions for the Middle Market business.

Seems services and the VARBusiness 500 are going hand in hand these days, are more acquisitions to come?