AppNet buys Software Services of Mich. Bethesda firm to make unit a subsidiary

price undisclosed


September 01, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Acquisition-hungry AppNet Systems Inc., a Bethesda-based electronic commerce service provider, said yesterday that it had bought Software Services Corp. of Ann Arbor, Mich.

Software Services Corp., a profitable operation that employs 210 and had revenue of $20 million last year, will operate as a wholly owned subsidiary of AppNet, which employs about a dozen at its Bethesda headquarters and recently landed $100 million in venture funding.

Financial details were not disclosed. Both companies are privately held.

Ken S. Bajaj, chief executive officer and co-founder of AppNet, said the merger with Software Services moves AppNet a step closer to its goal of building one of the largest and best known full-service electronic commerce companies.

"This move blends the e-commerce and Internet expertise of AppNet with Software Services' proven experience in network services, application development and information technology consulting," Bajaj said.

The company expects revenue of $80 to $100 million in the next year, and more than $200 million by 2000, Bajaj said.

The company has its eye on the exploding market for helping medium to large companies design, launch and manage complex systems that allow them to conduct a wide range of business activities over the Internet.

Some industry experts estimate that within the next five years, company spending on Internet computing and e-commerce services will exceed $150 billion.

Jack G. Reinelt, who will remain as president of Software Services, said he believed the merger was important for the growth of his company.

Software Services, he said, expects customers to increasingly require help upgrading, designing and launching complex Internet systems to allow them to conduct diverse business activities over the fast growing communications medium.

"The marketplace for this is going to explode, especially after companies complete their Year 2000 projects," said Reinelt, referring to the effort to upgrade computer systems so that they can recognize and accommodate year references beyond 1999.

"Some of these jobs are just going to be too big. We didn't have all the capabilities to handle them and to build those capabilities would take too long -- we'd miss the opportunities," said Reinelt.

Reinelt said his company was courted by about a dozen emerging electronic commerce companies. The company settled on AppNet because AppNet's founders have deep experience working on complex, global corporate and government computer system design and integration projects, and because Bajaj's long-term view of what companies and other clients will demand is "visionary."

"The more we looked at AppNet, the more compelling they became," said Reinelt.

Reinelt said that AppNet and Software Services expect to hire more than 100 new technical professionals for the Michigan operation within the next 12 months.

The Software Services merger is the third major expansion deal AppNet has signed since March, when it acquired Ann Arbor-based Arbor Intelligent Systems Inc. The company specializes in what's known as "object technology", which involves upgrading and integrating complex computer systems using existing underlying operating programs.

In May, AppNet purchased LOGEX International, LLC in Falls Church, Va., a creator of online catalogs and payment processing systems. AppNet also operates an e-commerce service center in Seattle that provides electronic transaction processing over the Internet.

Pub Date: 9/01/98

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