Friday, May 24, 2024

Will All of ISS Fit With IBM’s On-Demand Strategy?

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On the face of it, IBM’s (Quote, Chart)$1.3 billion acquisition of ISS (Quote, Chart)makes perfect sense.

But deeper looks at ISS’s product lines and IBM’s customer base have some analysts questioning how well the entire company will fit into Big Blue’s own lines of business.

IBM has long considered itself a major player in the security arena, and already boasts application security, identity management and network security solutions among its services, server and software tool lines of business.

In addition to delivering IBM a strong brand in the security space, ISS brings to the table a managed security services business that fits into Big Blue’s stated goal of developing an on-demand offering for all of its enterprise solutions.

IBM has already announced that ISS will be merged into Big Blue’s global services division, rather than its software division.

That’s one indication that IBM is serious about using this acquisition to bolster its on-demand strategy.

Val Rahmani, general manager of the infrastructure management services unit within IBM’s global services division, also made that clear during a conference call to announce the deal.

One benefit of the acquisition, she said, is that it will enable IBM to offer “security as a service.”

The benefit of security as a service is that it allows enterprises to respond more rapidly — and in some cases preemptively — to security threats than if they had an on-premise solution with capabilities that eventually become anachronistic.

Paul Stamp, a security industry analyst with Forrester Research, agreed that ISS’s ability to deliver intrusion detection solutions on demand is a competitive advantage.

“ISS is coming up with ways to keep up with the hackers and then pushing that new information out to the customer,” he said.

That capability also works well with IBM’s global strategy.

“This potentially could go towards software as a service and open the doors for IBM on Demand,” Stamp told

John Pescatore, an analyst with Gartner who follows the security industry, noted that IBM has struggled to gain traction in managed security services, and suggested that IBM may migrate its own customers for those services to ISS’s solutions once the transaction closes and the new teams settle in.

“That’s the part of it that makes sense,” he told

The part of the deal that doesn’t make sense, said Pescatore, is ISS’s network security business, which accounts for half of the company’s revenues.

As Rahmani pointed out, ISS has more than 11,000 customers worldwide, including 17 of the world’s largest banks, 15 of the largest governments and 13 of the world’s top IT organizations.

Those customers are not just customers of managed services, but also of products like Proventia, ISS’s flagship network security solution.

“ISS has a big installed base that bought those products,” noted Pescatore.

Not only has IBM been largely absent from that market, it has provided services for network security providers like Cisco (Quote, Chart), Juniper (Quote, Chart), and Checkpoint (Quote, Chart).

“Those companies were channel partners of IBM,” said Pescatore. “What does this do to those relationships?”

Moreover, Pescatore said he finds it hard to believe that IBM will be able to retain all those customers when it comes time for enterprises to upgrade their systems.

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