System iNetwork

I was relieved that Thoma Cressey had a hand in the acquisition. Private equity companies are all about making a profit, of course, but at least Thoma Cressey's business model is based on growth rather than milking maintenance streams, booting employees, and eventually selling the empty husk of a building in a tidy real estate transaction. The new Vision Solutions may or may not be able to achieve greatness in the hearts and minds of System i customers, but at least it's not looking to cut and run.

Obviously, Vision has a lot of big questions to answer, not the least of which is what the company's product roadmap will look like, which Vision says it will announce by the end of the third quarter of this year. So, yeah, I'm inserting a reminder into my calendar to follow-up. What Vision needs is a public document come September — a map that anyone can read and understand. I hope Vision will provide a true map rather than say it has one internally, a private plan described in the nebulous terms of far-away galaxies. After all, this company is asking other companies around the world to trust their businesses with Vision's solutions, and while Vision is a private company, it has bitten off an even greater share of responsibility.

A Few Details Now

The new Vision boasts about 6,000 customers and has approximately 400 employees. The annual revenue and profit are bigger than many System i solution providers, but Thoma Cressey is holding those numbers close to the vest. I spoke to Vision CEO Nicolaas Vlok last week, and here are the most interesting points from him that we haven't already covered:

History and Who's Next?

Vlok first approached Lakeview in April of 2000 to discuss a merger/acquisition, and Vlok had been testing the waters ever since. Thoma Cressey, of course, was the catalyst that led to the deal.

"I believe in maintaining a relationship with the CEOs of many companies," Vlok noted. "We're constantly in outreach mode and believe in keeping good relationships with our peers and similar businesses. We are focused on integrating the acquisition and building a great company."

So who's next? DataMirror? You never know, but Vlok did not give me the impression that there are any other deals or ideas in the works. Who knows for sure, but most definitely there's plenty of work for the company to accomplish right now. DataMirror, by the way, is publicly traded on the Toronto Stock Exchange, so an acquisition could be much more difficult than the iTera or Lakeview deals.

Bringing the Strengths Together

There's a risk that whenever you remove your toughest competitors, you could get big, bloated, and lazy. Will Vision bloat? Will Vision get lazy?

"We might be one of the larger infrastructure companies for the System i, but we certainly know that no company completely drives an industry or shapes it," Vlok noted. "There are a lot of credible, successful players in regional markets."

Indeed, DataMirror is the next largest player in the market, with 2,200 customers in regions around the world. New Zealand's Maximum Availability offers *noMAX and has been expanding aggressively. It seems to have customers that number in the low hundreds. Also of note is France's Trader's, which offers its Quick-EDD HA/DR solutions. (If I'm missing any players with the potential to grow fast, do holler and post a comment.)

The point is, the HA/DR market remains a growing market, driven by regulations and more cost-effective solutions, including IBM's inexpensive CBU boxes.

Vision says the System i market is only 5 to 8 percent penetrated with HA-related solutions; I've also heard 10 percent bandied about here and there, but either way, there's still a lot of opportunity.

"The level of penetration is so low that anybody who now sits back in a comfortable position and feels they don't have to compete is making a mistake because anyone else can grow to another 5 or 8 percent in a short space of time," Vlok noted. "Our investments are totally focused on driving growth."

Cross Pollination?

The big question is if Vision can take the best of all three solution sets and create products that work well. Success in other industries with other products has been mixed, at best. (Oracle's acquisition of PeopleSoft and the J.D. Edwards World line appears to be doing remarkably well, I've heard, and if true, indicates that success is possible. Of course, Oracle is also maintaining and upgrading each product line. A true collision of solutions is yet to come.)

"Our solutions are going to be even better because we can sit down and look at the technologies in each of them and cross pollinate from one solution to another. Ultimately, we think there will be much less differentiation between our enterprise solutions," Vlok explained.

SMB Is Where It's At

I remember back in 1997 when all three of the big HA vendors were touting the SMB space as the next big growth area. You might argue that iTera was the only company that really capitalized on it in the System i world, and only recently at that.

Vision may or may not be able to find new enterprise-class accounts, but the company sees SMB as its biggest growth area. The main competition in the SMB space is price and convincing customers that they need a solution. If the SMB space tips, growth could outpace and expand beyond the current enterprise levels in the market.

Three Solutions

Lakeview's MIMIX, Vision's ORION, and iTera HA will be Vision's tri-solution product set for the future — at least until we get the roadmap. Vision said it's committed to developing and supporting MIMIX, and at least in the near term, differentiation at the enterprise level and SMB level will occur in pricing models. Vision will price iTera HA for SMB customers and MIMIX and ORION for enterprise customers. ORION and MIMIX be priced essentially the same, and business partners focusing on one or the other will not be forced to learn or sell the other solution, but you can expect to see traditional Lakeview business partners look to broaden their market opportunity and begin selling iTera HA.

All three solutions, of course, will still be sold to any size customer who has a specific preference that doesn't fit Vision's positioning.