CGI takes major stake in Digital 4Sight

Digital 4Sight, adrift since the July bankruptcy of holding company Itemus, has found safe harbour in CGI Group Inc.

Montreal-based CGI invested an undisclosed amount in the research and strategic consulting firm which Digital 4Sight CEO Phil Hood said was close to a 50 per cent ownership stake.

Itemus, an Internet strategy specialist, merged with Digital 4Sight in late 2000 in a deal worth $22 million — less than a week after Compaq Canada Inc. invested US$10 million into Itemus to become the preferred hardware supplier for its client base. In mid-July 2001, the Toronto Stock Exchange investigated Itemus to determine if it still met listing requirements. Two weeks later the firm said failure to secure additional financing had forced its closure.

Itemus had invested diversely in IT prior to its demise, including a majority stake in Shooting Gallery, a New York-based digital firm and film production company which has since declared bankruptcy. It also bought the assets of incubator Name Inc. “I think when market conditions changed, their strategy certainly became really vulnerable,” said Hood.

Toronto-based Digital 4Sight, along for the bumpy ride, made efforts to reassure its customers that it would continue to operate and was shopping for a new partner.

The CGI announcement has given the company a firmer footing and will allow it to bring research products to market on a more timely basis, said Hood. “CGI’s very large compared to us, so in some ways they’re potentially a good channel.” Digital 4Sight will continue to operate independently, working with its customer base including IBM, EDS and Siebel Systems.

CGI doesn’t foresee any conflict of interest with Digital 4Sight working with some of its competitors. “Years ago, that used to be a big issue, but in today’s world, you compete in the morning, you partner in the afternoon,” observed CGI president for Canada and Europe Michael Roach. “They’re keeping their identity, their brand, their reputation.”

Hood is eager to put some distance between his company and the defunct Itemus, referring to Digital 4Sight as “the only positive light financially in Itemus.”

CGI is also quick to make the distinction. “Unless you follow this really closely, I think a lot of people can get confused between them and their holding company,” said Roach. “But their business model, customer base (and) services are all intact, so what we really saw, frankly, was an excellent opportunity to partner and secure access to some industry gurus and thought leadership.”

Among those industry gurus at Digital 4Sight is Don Tapscott, who serves on the board of directors. Tapscott, a noted author and visible public face for the IT industry, may garner some additional exposure in Ontario markets for CGI, said Roach.

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