SunGard plugs in to grow

WAYNE - SunGard Data Systems Inc. has reorganized a business group that employs more than 1,500 in the area and expanded another, adding 1,200 local employees.

Both moves are aimed at spurring additional growth in the $3 billion company, which spends $200 million a year on research and development, a little less on capital expenditures and about $500 million a year on acquisitions.

SunGard started off the year by combining the three units in its Availability Services group, which helps businesses plan for, prepare for and get through events, including catastrophies, that take down their computer systems.

Customers drove the change.

"As three separate units with three separate presidents, that's not the way customers wanted to buy," said James Simmons, chief executive officer of Availability Services, which is based in the same office park as SunGard's corporate headquarters.

Last month, SunGard acquired Systems and Computer Technology Corp., which develops administr

ative software for colleges and universities, for $590 million in cash.

Upon completing the deal, SunGard renamed the group it put SCT in. The group had been called Other Businesses. SunGard renamed it Higher Education and Public Sector Systems. SunGard SCT, as it is now called, is the biggest business in the group. Its revenue was $270 million in its 2003 fiscal year, which ended Sept. 30. The rest of the group only accounted for $179 million of SunGard's revenue last year.

SunGard has already started expanding its presence in higher education. On March 1, it bought Collegis Inc., a Maitland, Fla., company that, among other things, essentially functions as an information technology department for smaller colleges and universities.

"It's a highly regarded, widely known company throughout higher education," said Robert Clarke, CEO of Higher Education and Public Sector Systems.

The biggest of SunGard's three business groups remains its Investment Support Systems business group, whose companies' software, in one way or another, touches 70 percent of the trades involving Nasdaq stocks. Investment Support Systems provided 54 percent of SunGard's nearly $3 billion in revenue last year. The growth opportunity for its Availability Services segment, which insures continuity in company operations, comes from changes in how organizations view their computer operations.

"More people need more access to more information more quickly than they ever did before," Simmons said. As a result, the value organizations put on making that information available at all times has increased.

Along with improved access, the decisions involving how to keep that information available, not to mention secure, have become more complex.

Additionally, the terrorist attacks of Sept. 11 and last summer's blackout have made organizations aware that they have to prepare for many types of events that can take down their computer systems or make the systems inaccessible to their employees.

All those factors, Simmons said, mean that decisions regarding how to back up information and make sure it's available to those who need it are no longer just the province of organizations' information-technology departments. Top brass now gets involved, too.

Those people only have time to deal with one contact point at a service provider.

"There's one call to make, one throat to choke when something happens," Simmons said.

Much of the growth that Simmons feels the reorganization has positioned Availability Services to capture won't come from the group's competition, most notably IBM Corp. Instead, Simmons thinks, that growth will come as more organizations give up trying to do for themselves what Availability Services can do for them.

He thinks the cost of being prepared to keep information available during a disaster will drive firms to SunGard. Including its $850 million purchase of the availability solutions business of Comdisco Inc. in 2001, Availability Services has made $1.5 billion in capital expenditures over the past five years to keep its technology up to date.

"We have a very simple strategy," said Cristobal I. Conde, SunGard's president and CEO, who replaced the company's chairman, James Mann, as CEO in 2002. "We invest heavily in research and development ... and we also invest heavily in acquisitions."

SunGard's acquisitions are usually in areas with which it is familiar, he said. But sometimes, it will make an acquisition in a new area to see what that area is like.

"If we really like the space, then we try to get very big in it," Conde said.

SunGard did that in Investment Support Systems Availability Services was its first business area - and sees the chance to do that in higher education.

SunGard's roots in that area go back to a trust accounting business whose competitors were selling systems to endowment managers at colleges and universities, Clarke said. In 1998, it bought a business with products for that market. Over the next few years, it made more acquisitions in the higher education space. Those did well enough to convince SunGard of its promise and when SCT became available at the right price, it bought it.

SunGard likes higher education for several reasons.

"It has a higher historical growth rate in IT spending than other markets SunGard's involved with," Clarke said.

It's also somewhat counter-cyclical to SunGard's financial services software businesses, said Ron Yanosky, the research director of the Higher Education Group at Gartner Inc.

With SCT and Collegis, SunGard has significant presences in administrative software and IT consulting for higher education. Areas in which it could expand include e-learning software, as well as software used by college security departments and libraries, Clarke said.

"We're sorting out what types of capabilities we want to acquire," he said.

THE SHORT OF IT

Company: SunGard Data Systems Inc.

Local operations: Corporate headquarters and SunGard Availability Services, Wayne; SunGard SCT Inc., Malvern.

Total Employees: 12,000

Locally based employees: 2,720

President and CEO: Cristobal I. Conde

Type of company: Software, business continuity

2003 net income, revenue: $370 million, $2.96 billion

52-week high, low: $31.65, $19.30

Recent price: $26.66

Big development: Bought Systems and Computer Technology Corp. for $590 million in cash

Source: The company, Yahoo! Finance