On April 6, Sierra Atlantic Inc., an IT services provider recognized for outsourcing Oracle and product engineering solutions, announced that it has acquired Baytree Associates, a Charlotte, North Carolina-based consulting firm and Oracle solutions provider. The deal helps Sierra Atlantic, a Platinum Partner in the Oracle PartnerNetwork (OPN), further consolidate its already strong position as one of the top Oracle solutions and managed service providers.

But let’s look at the bigger picture. Sierra Atlantic’s strategy is a great example of how the service provider landscape is quickly changing – and why.

I talked with GK Murthy, Sierra Atlantic’s Executive Vice President. The company listens carefully to feedback from its 200 customers, and he says a lot of companies today want “the best of both worlds.” He adds, “In keeping with what our customers want, when we do an acquisition, we expand our geographic resources and specific vertical knowledge.”

Sierra Atlantic has acquired four companies in the last five years (three in the U.S. and one in Europe), and Murthy points out that each acquisition gave the company multishoring advantages – onshore, nearshore, and offshore. For example, one of the U.S. companies Sierra Atlantic acquired in 2007 had an offshore center in China. 

The need for solutions to be global in nature these days is especially evident in the manufacturing vertical. “Every company in North America that is very strong in manufacturing is looking more and more to sell products on the Internet to a global market. They now require solutions to be multicurrency and multiple continents,” says Murthy. And they specifically want service delivery capabilities in the emerging countries of China, Southeast Asia, and India, with their vast numbers of consumers. 

Today’s top service providers need to align their growth strategies with global needs. But Murthy explains that involves more than just having resources and expertise all around the world.

“Four or five years ago, the offshoring trend was really kind of a commodity approach,” he says. “But understanding a client’s business is now a requirement that has become a lot more important. We need to thoroughly understand their expansion plans and what makes sense for them to sustain for their own customers and do this from a global point of view.” 

The Baytree acquisition is strategic in that regard. Baytree has a team of consultants with expertise and domain knowledge in several verticals. Like Sierra Atlantic, it’s also known for its expertise in Oracle solutions and was one of the first companies accepted into the Oracle partner program.  

Where are the two companies headed together now? Look for them to expand their footprint in the financial services and healthcare sectors and in what Sierra Atlantic coined as the “New Oracle Economy.”

Sierra was a partner for several companies that Oracle acquired over the last five years. Murthy says Sierra Atlantic specializes in bridging the confusion in the fusion or convergence of bringing all those technologies and companies together and applying them to Oracle’s business. His company takes an approach that he believes is a paradigm shift in service delivery and management while leveraging Oracle’s vision. 

The Baytree acquisition enables Sierra Atlantic to also expand faster in the banking and financial services space. Several months ago, Sierra introduced to its global bank customers its BankON product, which solves a key problem for banks in reducing the cycle time for customer onboarding in areas such as treasury management. Combined with Baytree’s financial services domain knowledge, they expect to see strong traction in just a few months. Sierra is also strategizing with tier-one Indian providers (such as Infosys and Cognizant) on opportunities as resellers of the BankON product. 

And Baytree has healthcare domain expertise where, again, there are opportunities for its consulting group regarding how to fund the cost of the IT changes that U.S. medical providers and insurance companies must undertake to comply with the mandates of healthcare reform. “Our offerings address the pain points that the medical companies are dealing with regarding the changes over the next 18-24 months,” says Murthy. The Baytree acquisition gives Sierra Atlantic onshore and nearshore capabilities for the uptick in needs of healthcare companies. 

Sierra Atlantic is headquartered in Silicon Valley, California, and has Global Development Centers in Hyderabad, India, and Guangzhou, China. The media has reported for a couple of months that the need will be so great that the U.S. IT resources cannot handle the volume of work, and much of it will go to Indian service providers. Murthy agrees: “The spending we are seeing now in the name of healthcare reform will create an offshore opportunity in the coming months.” But he adds that the service provider decision “should not be not one way or the other” – offshore or onshore. 

“In my opinion, it is the brand that makes more business sense as opposed to shifting too much toward one particular shore,” says Murthy. 

And Sierra Atlantic is building a strong global brand. 

GK Murthy, Executive Vice President at Sierra Atlantic, is responsible for the company’s global sales team and is involved in strategic value assessment of IT solutions. He has over 18 years of experience in manufacturing systems in operations, systems planning, system design, integration, and implementation with process reengineering. He has worked with several Fortune 1000 and midmarket companies to provide IT solutions while working on leading enterprise software products. 

Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center  (whose  parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.

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