IBM Makes Managed Security Buy

Purchase of long-time partner beefs up Big Blue's security services.

By Michael Hickins | Posted Aug 23, 2006
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UPDATED: IBM is bulking up security consulting services in a $1.3 billion all-cash deal that values the Atlanta-based ISS at $28 per share.

IBM said the deal would reinforce its position in the rapidly growing area of Managed Security Services and is an important addition to IBM's security and privacy services business. The plan is to add ISS to a business unit within IBM Global Services' Security division.

Indeed, IBM has enjoyed great visibility into ISS's operations thanks to the close working relationship the two companies have enjoyed since 1999, noted Val Rahmani, general manager of the infrastructure management services unit within IBM's global services division, during a conference call this morning.

"We saw the value of how they have integrated their products and services, and we don't want to disrupt their operations," Rahmani said in response to a question from internetnews.com.

Product lines and services within ISS include an automated security platform, services, software and consultants.

ISS president and CEO Tom Noonan will take charge of IBM's global managed security offering, but said his new title has not yet been decided.

While on-demand services have been the fastest-growing portion of ISS's business, half of its revenues have come from network security products, leading some analysts to question how IBM expects to manage the products it would be acquiring.

But Noonan told internetnews.com that products such as Proventia, ISS's flagship network security product, will indeed fit under the same services umbrella.

"The technology contained within ISS is as critical to the delivery of on-demand security as the services themselves," he said.

IBM has been on a shopping spree lately. Two weeks ago it agreed to acquire FileNet, a rival provider of enterprise content management (ECM) systems.

A week before, it agreed to buy software and services provider MRO Software for $740 million in cash.

Rahmani noted that, like the previous acquisitions, this deal reflects IBM's decision to focus on service and software based solutions.

"This is a true instantiation of that strategy," she said.

The companies said ISS has more than 11,000 customers worldwide, including 17 of the world's largest banks, 15 of the largest governments, 11 of the top public insurance companies and 13 of the world's top IT organizations.

ISS has approximately 1,250 employees. The companies said ISS operations would continue in Atlanta and that no layoffs were planned.

IBM counts over 3,500 consulting professionals within its global services ranks.

Article courtesy of internetnews.com

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