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Misys looks to open source to boost business

24 July 2007  |  7603 views  |  0 Misys

UK banking-to-healthcare software vendor Misys is establishing an open source division, headed by IBM executive Bob Barthelmes, as it looks to boost its business by increasing revenues from consulting and maintenance.

Chief executive Mike Lawrie says the company is looking to harness "the disruptive forces we see in the industry to capture market opportunities".

The new unit will develop the firm's strategy for open source and software as a services and will be headed by Barthelmes who joins from IBM where he was vice president, global education industry for global business services. In this capacity, he also led IBM's strategy around open source applications.

Barthelmes' earlier career included various sales, business development and management positions within IBM focused on the public sector.

Misys says the new division will focus on developing ways of using open source technology internally and integrating open source code into its applications.

In an interview Lawrie says although any open source applications will be free to customers, money can be made from integration services, education services, maintenance and updates. Furthermore, the firm's development costs can be cut by tapping into the community of programmers around the world that contribute to open source.

Misys is already working on the development of a carbon trading platform based on open source technology, which is said to have attracted interest from banking customers. The vendor is also reported to be building a system for patient records.

Details of the open source initiative come as the vendor reports flat revenue and a heavy drop in earnings for the year ending 31st May, but Misys insists its turnaround programme is still progressing in line with expectations.

Revenues for ongoing businesses rose by just one per cent to £554 million in the year to the end of May, while pre-tax profit slipped from £38.5 million to £21.1 million, due to restructuring and other exceptional items. Misys says like-for-like operating profit rose 17% to £83 million.

The company's net income dived 93% to £15 million, due in part to the exceptional gain of £161 million from the disposal of its General Insurance unit last year.

Lawrie says the flat revenue is largely consistent with first half results, but cost cuts are proceeding to plan.

Revenue at the vendor's banking rose six per cent to £270 million. Initial licence fees (ILF) order intake at £82 million was marginally ahead of the prior year. Maintenance revenue at the division grew five per cent to £123 million, while professional services revenue was up 10% at £52 million.

"Operationally our treasury and capital markets and core banking businesses are making progress, particularly with our work around Misys BankFusion, but we still have much to do," says Lawrie.

But performance at the vendor's healthcare division remains poor, with revenue down three per cent to £284 million. ILF revenue at the unit was down 15% at £45 million, while ILF order intake decreased by 18% to £42 million.

Earlier this week Misys said it had raised £186 million by selling off two of its US healthcare businesses. Lawrie says the sell off demonstrates that the company is determined to "take the tough actions necessary to get focused and deliver increased shareholder value".

Update

In addition to the Barthelmes appointment Misys has recruited Cory Eaves as EVP, CTO and CIO to assist in the turnaround.

Eaves was previously CTO at enterprise software provider SSA Global where he had responsibility for the entire product lifecycle of the company's enterprise systems, including architecture, product management, research, development, maintenance and third-party alliances.

Before joining SSA Global, Eaves held technology and product management positions at a number of software and private equity firms, including General Atlantic Partners, Internet Venture Works, Lycos and Emerson Electric.

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