Thoma Cressey Moves Seen as Boon for IBM

During the past several years, investment company Thoma Cressey Equity Partners has made its presence felt in the software world, and 2006 was no exception.

In just the last few months, the company acquired and merged Vision Solutions International and iTera. Then, Thoma Cressey entered into a recapitalization agreement with Sirius Computer Solutions. All totaled, the moves represent more than $100 million, and—company officials agree—gestures of support for IBM’s System i server.

“Our perspective has been that it’s a great platform,” said Scott Crabill, a partner at Thoma Cressey.

IBM officials appreciate the compliment. They lauded Thoma Cressey’s recent investments publicly earlier this week. “It’s a validation of the focus IBM has on small and medium businesses,” said Chip McClelland, senior marketing manager of System i.

System i is IBM’s premiere business computing platform and allows companies to run programs across the entire business—from accounting, supply chain, customer relationship management, e-mail and high availability—all on one open, integrated system that automatically backs-up and helps manage the data. To hear System i proponents say it, System i is the distinguished, elder statesman of business computing platforms.

During the last five years, Crabill said, Thoma Cressey has found System i to be a reliable, scalable solution for SMBs.

In November, Thoma Cressey announced that it would also acquire high availability solution provider iTera and merge it with Vision Solutions International, which the company purchased in September.

The merger made the newly formed company the world’s largest provider of high availability solutions for System i, Thoma Cressey officials said. By merging the two companies, Thoma Cressey plans to leverage Vision’s global reach and the companies’ innovative technology to penetrate the marketplace for high availability solutions.

Charles King, an analyst at Pund-IT, noted only 5 percent of the hundreds of thousands of System i customers are running high availability solutions—products iTera focuses on providing. The merger of the two companies will provide an opportunity to expose their new mutual customers to new high availability products, King said.

Less than a week after the purchase of iTera, Thoma Cressey announced a recapitalization agreement under which it acquired an equity interest in Sirius Computer Solutions—IBM’s largest System i business partner. At the time, Thoma Cressey officials said they expected the financial partnership to allow Sirius to continue its aggressive growth strategy in the System i arena and beyond.

Thoma Cressey’s capital investment should give Sirius the financial muscle the company needs to get involved in larger deals in overseas markets, King said.

McClelland is hoping the future for IBM’s System i platform is equally bright. In 2007, he said he envisions the marketplace taking advantage of the platform.

System i sales tend to be cyclical around the deployment of IBM’s new processors, King said, so market-watchers will likely see a jump when the POWER6 processors are released, which is scheduled to happen in 2007.

“A big bump in sales will probably be related to the POWER6 roll out,” King said.

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