In a move that will significantly strengthen its services business, IBM said Tuesday it has acquired the business continuity services unit of London-based Schlumberger, a project management firm specializing in the oil and gas industry.
Terms of the agreement were not disclosed.
The acquisition is expected to give IBM additional leverage in providing IT infrastructure and data recovery services to customers, particularly in Europe. It is the biggest consulting acquisition since IBM's $3.5 billion purchase of PwC Consulting in July of 2002.
"This move was driven by demands from clients in a number of verticals," said Stephen O'Grady, an analyst with Red Monk in Bath, Maine. "Schlumberger is very strong in Europe, in Basel II, in financial services and very focused on compliance regulations. This is a nice sort of support offering for IBM from a services perspective."
Schlumberger Business Continuity Services (SBCS) provides services to a number of major financial institutions, government agencies and international corporations and has more than 40 recovery sites worldwide. Among them is the largest business recovery site in Europe. Under the deal, IBM will add more than 10,000 recovery seats configured as financial trading rooms, call centers and workplaces. This acquisition brings IBM's total number of business continuity sites to 160 worldwide.
SBCS has long-term contracts with more than 750 clients around the world. IBM Global Services (IGS) intends to combine SBCS's sales organization and employees into one dedicated organization within IBM Global Services.
More than 260 SBCS employees are expected to transfer to IBM.
"This acquisition helps enhance our global capabilities [as a service provider]," said Pat Corcoran, director of business development and strategy for business continuity at IBM. "In addition, they're providing 10,000 additional workspaces -- some of it is specialized. We have a significant amount of non-IBM technology – [we] have to have a cross blend of technology. They have it and will strengthen it for us," he said.
Business continuity, which is about keeping things running and ensuring that the business will remain unaffected by all sorts of different events, such as blackouts, natural disasters and fire, is rapidly gaining attention beyond the IT department.
In fact, with approaching deadlines for government regulations such as Sarbanes-Oxley in the U.S. and Basel II in Europe, business continuity and recovery services have become more of a priority for businesses. As companies' business processes have grown increasingly dependent on IT, users are looking for integrated business continuity solutions that cover the full range from data centers via applications to business processes.
"Business continuity has really moved up the food chain," said Corcoran. "We're seeing a lot of customers looking at it from a business perspective. In the past year, I've seen a lot more C level people -- CFOs, CIOs -- getting involved in this process."
If a disaster makes a data processing center inoperable, a business using IBM's services can move all data processing operations to an IBM site. An IBM customer has the option of using a hot site, which has all the equipment needed for the enterprise to continue operation, including office space and furniture, telephone jacks and computer equipment.
IBM also has warm sites, which are similar to hot sites, but the customer (not IBM) provides and installs all the equipment needed to continue operations. A cold site is less expensive, but it takes longer to get an enterprise in full operation after the disaster.