Lab's closure puts 140 IBM staff out of work

By ADAM GIFFORD

IBM staff feel betrayed and embittered by the ending of the New Zealand connection with ICMS, the telecommunications billing system developed here in the early 1990s in a joint venture with Telecom.

The Colorado-based utility billing software company CSG Systems, which bought the ICMS (Integrated Customer Management System) product in August, says it has no use for the 140 staff at IBM's ICMS development laboratory at Petone.

IBM will lay off 100 people by December 31 and the rest at the end of January, after the release of ICMS version 5.2, which it was contractually required to produce for AT&T Canada.

CSG public relations director Carrie Schafer said the Petone facility was solely responsible for developing the ICMS software product and did not provide global support.

"This move by IBM did not affect customer support or service in any way," she said.

CSG was looking for other firms (some in New Zealand and Australia) with expertise in telecom and ICMS software to continue development of the product.

An ICMS staff member said all third-level support - which means backing up local support centres and producing software patches - was done at Petone until the start of the year. During the year IBM shifted the work to India, where it can be done for US$23 ($46) an hour.

The staff member said several North American and European customers had expressed their dissatisfaction with remaining staff at Petone over slower response times and lower product experience.

He said that while CSG might indeed intend to develop further versions of ICMS, it was more likely it would extend the product's shelf life by hiring contractors to write custom code for clients.

Schafer said suggestions that CSG was not interested in continuing with ICMS, which runs only on IBM iSeries servers, were untrue.

"CSG acquired the ICMS technology and customer base because we feel it is a strong solution that meets the needs of telecommunications providers and complements our existing product portfolio."

She said CSG was asking customers what they wanted to see in future releases.

But the Petone source said CSG paid only US$12 million for ICMS - a product with 40 enterprise customers and guaranteed maintenance streams.

It has a bigger investment in the Kenan/BP billing suite it bought from Lucent a year ago for US$250 million. Kenan runs on Unix platforms, making it less hardware-vendor dependent than ICMS.

"CSG acquired ICMS to shelve it. They get the customer base and enough expertise to get the function migrated to Unix so they can sell ICMS users on to Kenan," the Petone source said.

While IBM hoped to make money though its contract with CSG to be sole development vendor for existing clients for the next couple of years, both faced the problem that ICMS management gave source code to some clients, who had been able to produce custom code without paying royalties to the product owners.

An IBM spokesman said this allegation was "a rumour that could not be substantiated" and the company would not comment.

IBM moved the ICMS business unit to the United States several years ago, so closure of the Petone lab will have little impact on the results of the New Zealand subsidiary.

But it will cast a pall over Big Blue's reputation as an employer.

"I doubt many people in the lab will be prepared to work for IBM again," the Petone staffer said.

He said IBM's disaffection with ICMS could be linked in part to the cancellation a year ago of a major contract when British cable and telecommunications company NTL went bankrupt after a debt-fuelled US$17 billion acquisition spree.