Tough Times Call for Creativity

Good ideas and chutzpah go a long way in the game of survival.

It takes a creative mind to thrive during an IT spending slowdown. Just ask solutions providers like Hitachi Innovative Solutions, Information Strategies and software maker iWay Software. Each member of the trio has a different take on the IT market, but they share a common thread in how they approach new opportunities.

For some of these companies, opportunities arise out of their status as new subsidiaries, while others have created new alliances to target certain market niches.

Enjoy Your Freedom In some cases, spinning off a business unit is a clever solution. For instance, application developer and integrator Information Builders recently spun off iWay Software. The goal is to give iWay Softwares products—which help tie legacy systems to Web systems—more exposure. In a somewhat similar move, Hitachi Innovative Solutions has dressed itself as an independent solutions provider and last month merged with another Hitachi subsidiary, an e-business solutions provider, to target the midtier market.

Meanwhile, Jim Townsend, president of Information Strategies, a Microsoft certified partner, is adding to the companys duties as an integrator. The company will adopt the role of distributor by creating a channel for Peripherals Plus Technologies, which manufactures a portal software product aimed at state and local government agencies.

"We signed a distributor agreement with them, and we are creating a channel for them within the Microsoft partner community," says Townsend. That new role places Information Strategies in the position of finding resellers, training them on the product and also implementing the solution.

Portal Space Information Strategies, which is focused primarily in the federal government arena, found its latest opportunity in a conversation Townsend had late last year with Margie Reynolds, a member of Microsofts government team.

Reynolds told Townsend that Microsoft was involved in creating a portal for the state of Pennsylvania. The effort involved a product called Dynamic Site Framework, a scalable, dynamic, data-driven Web-application architecture framework developed by Peripherals Plus Technologies. The state of Pennsylvania portal manages 60 domains and 120 servers.

The Dynamic Site Framework sits on top of Windows 2000, and it provides a framework to create and manage government portals with easy-to-fill-in Wizards. The product leverages the Microsoft platform, so features such as BizTalk and Site Server can be used.

According to Townsend, the product has a $100,000 price point, making it attractive to state and local governments that need to move into e-government mode—whether its government-to-government, government-to-citizen, government-to-business or government-to-employee.

To clinch that new opportunity, Townsend acted fast. Once his curiosity about the product was piqued, he met with the companys executives. When he found they needed to expand through alliances, he jumped in.

"We got started in January, now we are looking at getting about a dozen Microsoft partners," he says.

Growth Plans In another development, a new systems integrator has popped its head onto the scene, with the midtier market in its crosshair. Hitachi Innovative Solutions, an independent solutions provider, and Virtualogic, an e-business solutions provider, are subsidiaries of Hitachi Ltd. and merged last month.

The two companies, both previously acquired by separate arms of Hitachi Ltd., were merged in order to get more synergies, says Ellen Manetti, senior VP of the North Atlantic region of Hitachi Innovative Solutions.

Hitachi Innovative Solutions, which has about 250 employees and an annual revenue of $30 million, is planning to grow through acquisitions of smaller firms with $5 million in revenue and skill sets focused on enterprise-application integration, notes Manetti.

Even in this climate, the company is looking at 20 percent growth over last year by targeting vertical markets like banking, insurance, telecom and hospitality.

"We are not looking for a firm that does massive Siebel installations, but one that does integration around and between those things," Manetti says.

Breaking Away The push into the midtier is a big step for Hitachi, says Jim Budkie, VP of strategic marketing at Hitachi Innovative Solutions. The companys previous name was Hitachi Data Systems Solutions and it was Hitachis professional-services arm. It broke off as a subsidiary last year and adopted its current name last November.

Stepping Out Information Builders is using a similar spin-off strategy for its iWay Software operation. John Senor, who founded both companies, is now president and COO of iWay Software.

The opportunity that Senor found grew out of a problem Information Builders faced. Its tools, which help integrate legacy systems with Web systems with minimal customiza-tion, were not getting enough traction under the Information Builders brand.

"The feedback from people was that there is a need for a company like [iWay Software]," says Senor, who spent six months putting the companys plan together. The iWay Software subsidiary was created in February.

Information Builders strategy isnt unique. AT&T, Cabletron Systems, Lucent Technologies and consumer giants like Pepsi have used spin-off strategies to polish their balance sheets and sharpen their business focus.

At iWay, Senor says he is hoping to widen the companys product penetration through channel partners. Roughly 15 percent of iWays products are sold through the companys Integration Alliance Program. Senor wants to raise that figure to 70 percent. He believes integrators will be eager to use tools that ease the process of application integration. In the meantime, Senor says the company is well-positioned and is in no hurry to launch an IPO in this weak IPO market.

With revenue of about $45 million, no debt, and the expectation of a 25 percent to 35 percent growth, Senor says he wants to expand the companys products to include integration tools for various databases, EDI and unstructured data.

In these competitive times, an inventive and disciplined approach can always help.