BluePhoenix and MillenniuM Form Partnership to Bring
IT Modernization Services to the Government Market

 Partnership and Migration and Conversion Capabilities Showcased at FOSE Conference,
Washington DC,  March 23 - 25, 2004

 WASHINGTON, D.C. – March 23, 2004 - BluePhoenix Solutions (NASDAQ: BPHX), the leader in Enterprise IT Modernization, announced today that it has formed a strategic partnership with MillenniuM Information Systems, a leading developer of strategic IT systems for the government marketplace. Together, the two companies will deliver end-to-end remediation, modernization, integration, and conversion solutions to business, industry, and government agencies at the Federal, state, and local levels. The announcement was made during FOSE 2004 at the Washington D.C. Convention Center.

 The solutions will focus on using BluePhoenix™ IT Discovery, an automated software tool that can rapidly assess an organization’s IT infrastructure and provide a detailed understanding of the existing mainframe and server environments. This understanding is used to define solution paths that will reduce the cost of operating and maintaining the IT environment and enhance performance, reliability, and efficiency for applications and systems.

“MillenniuM's understanding of the Federal business environment offers insight for new and innovative uses of BluePhoenix technology,” said Terri Ghio, senior vice president of sales at

BluePhoenix. “In today’s reality of shrinking IT budgets and increasing costs for maintenance, this partnership will provide IT executives with cost-effective ways for achieving results by doing more with less through modernization.”

MillenniuM brings government market savvy, contract vehicle availability, and strong technical expertise in conversion and modernization while BluePhoenix provides the industry’s most advanced modernization tools and services.

“The culture of teamwork is an important part of who and what we are at MillenniuM,” said Christopher Yagesh, vice president of operations. “We recognize that same characteristic in BluePhoenix and we’re confident that as partners, we can deliver extraordinary results for our clients.”

The new partnership offers significant benefits based on proven technologies:

• provide accurate requirements and specifications for the RFP and proposal development process

• specify, and qualify approaches for more accurate and less costly IT Environment modernizations with earlier returns on investment and more accurate conversion cost justifications

• identify alternative methods for reducing costly modernization and transformation initiatives
• identify approaches to measure improvements and assure completeness of post modernization Enterprise IT Environments 

 In addition, the two firms will focus on leveraging the clients’ current investments by providing development services and products to support MANTIS to Java, MANTIS to COBOL migrations along with IDMS, VSAM, ADABAS and COOL:Gen conversions. The benefits of this technology partnership, as well as IT Discovery and the DBMS and Language Migration tools developed by BluePhoenix, will be among the topics of discussion during the 2004 FOSE Exhibition in Washington D.C., March 23-25, 2004.

About BluePhoenix Solutions

BluePhoenix Solutions leads the IT Modernization market by developing unique solutions that enable companies to automate the process of modernizing and upgrading their mainframe and distributed IT infrastructure, thus quickly and cost-effectively extending the ROI of their existing IT systems. The company's comprehensive suite of tools and services (including technology for Understanding, Migration, Transformation and Redevelopment) reduces the cost of renovation and speeds up the renewal process. BluePhoenix has 11 offices throughout the world, including locations in the US, UK, Denmark, Germany, Italy, The Netherlands, and Israel. The company's major shareholder is Formula Systems (NASDAQ: FORTY), an international Information Technology company principally engaged in providing software products, solutions, and services in various vertical markets. For more information, visit www.bphx.com

About MillenniuM Information Systems

MillenniuM Information Systems LLC is a Veteran-Owned Small Business that provides innovative solutions focusing on technology conservation and leveraging client investments. MillenniuM innovative solutions reduce operations and maintenance costs, provide more efficient access to data and information, and improve the management and organizational effectiveness of commercial and government organizations. The result of the innovative, problem-solving approach is that organizations become more effective, efficient, and productive at a lower cost in a shorter period of time. MillenniuM holds a GSA Schedule 70 IT Services contract as well as access to several other GWAC vehicles. For more information, visit www.mill-is.com. 

 Tamar Belkin
Director of Marketing
BluePhoenix Solutions
(919) 319-2270
tbelkin@bphx.com

Christopher Yagesh
Vice President of Operations
MillenniuM Information Systems, LLC
(703)-341-1402
cjyagesh@mill-is.com