IBM recently agreed to acquire network security provider Internet Security Systems (ISS) for about USD 1.3 billion in cash to boost its security profile. But analysts speculate whether the acquisition, which is expected to close in the fourth quarter to 2006, makes sense to IBM.
Following the completion of the acquisition IBM plans to make ISS, which makes Proventia intrusion-detection and -prevention appliances and offers managed security services, as a stand alone business unit within IBM Global Technology Services, retaining the ISS brand and product development operations.
Advantages and Loopholes of the Acquisition
Yankee Group opined that both the vendors will benefit from the acquisition because ISS has a range of security service that will be complement IBM products. At the same time IBM’s customers will be able to gain from the combined product set.
While some of the analysts are of the opinion that both the companies would benefit from the deal, some analysts questioned how well the entire ISS fit into IBM business line. Research firm Gartner believes that some elements of IBM’s acquisition of ISS make sense, but others do not.
IBM’s managed security services provider (MSSP) has failed to perform for years and ISSS MSSP offerings are a good fit for IBM. IBM plans to migrate its MSSP clients to an integrated ISS-based offering, which should deliver service quality improvements and economies of scale. However, Gartner warns that IBM should work hard to ensure that it maintains product independence in its MSSP offering.
IBM will utilize ISS' X-Force security intelligence service, which proactively protects networks with detailed analyses of global online vulnerabilities and threat conditions. IBM security consultants and global sales force will also offer ISS' line of security appliances and software, and fully enable it for IBM and third party products, services and solution.
But the question here is how fast IBM will be able to bring up itself to compete in the network security segments, which has firm players like Cisco, 3Com and Juniper Networks.
"The acquisition of ISS's network security product, however, seems less logical. This acquisition will put IBM in the position of competing directly with network infrastructure vendors, such as 3Com, Cisco Systems and Juniper Networks, in this market," noted Gartner.
"IBM has been successful in identity- and access-management software. But the name IBM doesn't ring a bell to any network-security person. It's not a brand to compete against Cisco in selling network-security products," says John Pescatore, security analyst at Gartner.
Gartner said ISS's products can help IBM create dedicated network devices that integrate diverse elements of the service-oriented architecture framework and software stack, a key focus since the acquisition of DataPower. However, this goal runs counter to success in selling high-speed inline network security products to the network security buying center, which represents the majority of ISS's installed base and brand value.
"IBM will also need to rationalize its various security console offerings, which will add ISS's SiteProtector to IBM's Tivoli products and those acquired with Micromuse/GuardedNet," said Gartner.
Forrester Research analyst Paul Stamp is positive about the acquisition but he also has doubts on how IBM will perform in the network-security segment.
"They've concentrated more on systems and applications than on network infrastructure in the past," says Stamp. "However, with the Micromuse acquisition they've stepped up their management of networks, so securing [networks] is a natural extension. They'll never be a Cisco, but for a company that's approaching this from a unified management perspective, it's a good choice," he says.
What to Look for from the Deal
Gartner advises that enterprises using ISS Proventia network-based products not to expect immediate impact from the deal. However, Gartner says that customers should compare IBM’s capabilities with those of its competitors when making "refresh" decisions beginning in 2007.
For enterprises using ISS host-based security software, Garner says that the acquisition is a positive development, especially for those using Tivoli software segments. But Gartner says that desktop strategy should be focus on security products that integrate various types of protection, instead of multiple point products.
For those using IBM MSSP, the deal will bring significant benefits from standardization on the ISS Security Operations Center and customer portal, says Gartner.
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