Deja vu for IBM with Logical CSI buy

IBM's purchase of networking and software company Logical CSI this week marks the second time Big Blue has, not entirely willingly, acquired the CSI business.

IBM's purchase of networking and software company Logical CSI this week marks the second time Big Blue has, not entirely willingly, acquired the CSI business.

This time round IBM bought the New Zealand and Australian operations of Logical CSI from South African company Datatec Ltd for $US65.5 million (about $101 million), but is clear that it is chiefly interested in the Logical networking side of the business.

CSI (Computer Systems Integration), the software, services and systems integration business, was founded in 1978. IBM bought it for the first time in the late 1990s.

"We divided it into two," says IBM spokesman Jeremy Seed. "The services part became the foundation of IBM Global Services in New Zealand. The other half was sold off and became an IBM reseller." It clearly made little sense for IBM to own one of its own channels.

CSI's business went into the doldrums, to the point where in 2002 IBM was about to seek to wind up the company or come to some other special creditor's arrangement to recover a substantial debt from it. Logical Networks stepped in and snapped the ailing company up.

Seed will not comment on whether, after the second takeover, the non-relevant part of Logical CSI will be spat back out again. "It's early days yet," he says.

IBM managing director Nick Lambert says Logical CSI is an “amazingly complementary” purchase. Big Blue bought Logical CSI because of its network management, network security and voice over IP experience, and its status as a Cisco gold partner, Lambert says. “It really does dovetail very well into our global services business,” he says.

“If you look at the history of our local business, the late 1990s was very challenging for IBM NZ.”

The purchase will allow IBM to provide a “much greater end-to-end solution” to customers, he says.

Lambert won’t say how much of the purchase price relates to the New Zealand business, but says IBM NZ was “directly involved” in the acquisition.

Logical CSI staff will join IBM Global Services. Lambert says it’s too early to know whether there will be redundancies, but he concedes layoffs are possible.

“They key to acquisitions is ensuring that we retain the right people,” he says.

IBM has bought several businesses in the past 18 months, including Rational Software, Informix and PriceWaterhouseCoopers Consulting, but Lambert won’t say whether the company has its eye on other targets. “We won’t speculate on any future acquisitions.”

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