While PeopleSoft Inc. battles a hostile takeover bid by Oracle Corp., two leading Des Moines information technology companies that represent these rivals are hoping a local marriage will bear fruit.

Last week Alliance Technologies LLC, the state’s biggest vendor of Oracle software, agreed to merge with Modern Solutions, Iowa’s biggest PeopleSoft consultant, in a combination that would create the state’s largest full-service IT firm.

Alliance Technologies Inc., as the combined firm will be known, employs more than 75 workers and expects revenues of $10 million in its first full year of combined operations. Its leaders hope the merger, which they anticipate will be completed by Aug. 1, will give them the heft to compete beyond Iowa’s borders.

“Our vision as a company has always been to grow,” said Jim Brandl, the chairman and chief executive of Alliance, who will retain those duties in the new company. “Now it’s a matter of where we grow. Our focus has always been Central Iowa. Now we’re expanding that to bigger and bigger concentric circles (including Nebraska, Illinois and Missouri).”

The two companies have been expanding quickly on their own.

Alliance sold $1.5 million of Oracle products in 2002. So far this year, the Des Moines-based company has already hit that mark and is on a pace to double its revenues over last year.

Then consider Modern Solutions of West Des Moines. After just five years in business, it was ranked last year as the nation’s 38th fastest-growing technology staffing firm by industry magazine Purple Squirrel.

The company, the only Iowa-based PeopleSoft consultant, derived about 70 percent of its $4 million in revenues last year from PeopleSoft consulting work.

To grow beyond Iowa, the company’s principals plan to target young companies that are outpacing their ability to handle their own technology needs, Brandl said. Ideally, Alliance will serve companies that can use the full range of services the new firm has to offer, he added.

Outsourcing IT services can be attractive to these type of companies, said Mike Lang, founder of Modern Solutions and Alliance Technologies’ new president. The old attitude that firms must control their own IT functions has changed, he said.

“Rather than having one person on your payroll for IT, you can hire our company and they can provide (whatever services are needed),” Lang said.

Outsourcing also allows businesses to scale back their IT spending when necessary, and eliminates the need to lay off staff when a project is completed, he said.

Though Brandl foresees strong regional growth, he doesn’t see the company entering the national market in the short term.

Neither is he considering a public stock offering in the future, Brandl said.

“Our concept is that the company will always remain privately owned,” he said.

The new company will be owned by 13 employees, who have signed an agreement to sell back their shares if they leave to keep the ownership within the company.

Alliance Technologies’ roots trace back to 1981, when it began as the IT department of the Weitz Co. of Des Moines. It spun off from Weitz in 1994, although Weitz retained a stake in the company until about two years ago. It was also partly owned by Life Care Services LLC until about a year ago, when Alliance Technologies bought out Life Care Services’ shares.

The company was originally located in the Weitz Building. It moved to its present location in Capital Square two years ago when Polk County officials condemned the Weitz Building to build the Iowa Events Center.

“We’ve been downtown and we have a commitment to downtown because many of our clients are here,” Brandl said.

The combined company plans to maintain Modern Solutions’ campus in West Des Moines, which is located at 4949 Pleasant St.

Alliance expects to succeed regardless of whether Oracle is successful in its bid for PeopleSoft, Brandl said.

“If it falls through, we’re the same as before,” he said. “If it goes through … ”    “We could be one-stop shopping for a (client) company,” said Steve Sikkink, the company’s chief operating officer.

Right now, Lang said Oracle’s takeover attempt could go either way.

“My hope is that Oracle will be successful,” he said. “But my guess is that they won’t be. Historically, hostile takeovers are very difficult to pull off. And once done, it’s hard to accomplish the earnings goals that were planned.”