PhillyDeals: SunGard leaders fighting to catch up

Wayne-based Sungard Data Systems has had four straight years of falling sales.
Wayne-based Sungard Data Systems has had four straight years of falling sales. (MIKE MERGEN / Bloomberg News)
Posted: August 22, 2013

When Reza Hajebi, chief technology officer at Reply! Inc. in San Ramon, Calif., was looking for a specialized contractor to manage transactions through his firm's expanding data libraries, he talked to some of the biggest names in U.S. computing - Amazon, Google - then hired Wayne-based SunGard Data Systems.

"Everyone and their mother" is in the data business these days, said Hajebi, whose firm auctions targeted customer data he collects from online sites to Ford, Home Depot, and other big retailers seeking customers.

"But I was looking for more - for someone who would go through the pain and work with me through this new, distributive computer architecture, building what marketing folks refer to as 'cloud-based services,' the new generation of services on the Internet," he explained.

"Amazon, in terms of performance specific to databases, may not be able to accommodate certain custom builds, such as ours. For Big Data companies like ours, it doesn't work as well," Hajebi said.

"Google has probably the best infrastructure out there for the cloud. But it also has certain limitations for the languages they support.

"SunGard was hungry enough to go out of their way and get creative to build our environment, real-time, in a cost-effective way, so I could scale on demand without having to share my infrastructure. They've saved us millions."

SunGard, with 17,000 workers and more than $4 billion in yearly sales, needs a lot more clients like Reply.

At his quarterly conference call with investors Aug. 2, SunGard president Russell P. Fradin was pressed to explain the company's four straight years of falling sales.

Since SunGard was taken private by a group of buyout firms led by Silver Lake Partners for $10.6 billion back in 2005, "people thought the exit strategy would involve potentially spinning off the businesses that were lower-growth," then selling the more-successful Financial Services unit to the public through a stock offering, said JPMorgan analyst Thomas Egan during that call.

SunGard did sell one of its four main business units - its college software division - to Hellman & Friedman L.L.C., of San Francisco, two years ago for $1.8 billion.

But an expected sale of its large and ailing Availability Services computer backup services - that grew out of the original business SunGard developed as part of Sunoco in the 1980s - has lagged as sales slowed.

Fradin and SunGard CEO Andy Stern have sketched plans to catch up and start growing again. "How long is it taking to get there?" Egan asked.

Chief financial officer Charles J. Neral blamed a "tsunami" of business cancellations dating back to the 2008-10 financial recession that are still reducing sales as contracts expire, he said.

"This is not something we're looking to carry into 2014," Fradin told Egan.

The Availability Services business may yet be sold. But managers there are also developing services to keep customers and boost sales.

Bob DiLossi, director of crisis management, pointed to SunGard Recovery Services' improved weather alert system, which links federal storm data to alert customers in local zip codes to potential electrical grid interruptions and other hazards.

During Hurricane Sandy, SunGard hooked 1,500 customers into nine backup facilities to keep their systems running through the flood that wrecked services in lower Manhattan and along the Jersey Shore for days.

Like travelers stranded by Sandy, SunGard's owners "have shown inordinate patience," Fradin acknowledged on the conference call. In its emerging businesses, "the growth has been terrific," he promised.

We'll have to take that on faith, until the data catch up and break the downward pattern in SunGard's numbers.


Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.

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