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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004

Enterprise application outsourcer USi on Wednesday announced plans to acquire Appshop, an Oracle outsourcing and professional services specialist.

“This acquisition broadens USi’s services portfolio to include Oracle applications, while immediately enhancing our bottom line, expanding our blue chip client base, and strengthening our competitive position,” said Andrew A. Stern, Chairman and CEO at USi.

The move gives USi a dedicated Oracle presence complementing the company’s existing offerings from Ariba, BroadVision, Lawson, Microsoft, PeopleSoft and Siebel. Appshop adds more than 40 enterprise clients to USi’s installed base. The acquisition is expected to be EBITDA and operating cash flow accretive in USi’s current fiscal year. The acquisition is expected to close in the early part of the third quarter.

“Like USi, Appshop has demonstrated the ability to meet the needs of enterprise clients. Both companies share a culture of superb client service, a focus on Global 2000 businesses, and a commitment to helping clients derive greater business value from their technology investments,” Stern said.

USi has been adding to its substantial portfolio lately, with recent acquisitions of Enterprise Spend Management (ESM) consultancy Strong3 in May, and HR outsourcer Black Mountain Group in April. This comes only two years after USi emerged from Chapter 11 bankruptcy in May 2002.

This acquisition continues the growing trend of consolidation in the ASP industry. Not counting the ongoing Oracle bid for rival PeopleSoft, there has been an upsurge of activity lately. Siebel started the current wave with its acquisition of UpShot in October 2003. Netegrity added Business Layers in December. LivePerson took Island Data in January 2004. And in May, NaviSite acquired Surebridge.

Both USi and Appshop have been recognized as Top 25 Providers on the ASPnews.com Top 50.


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