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6/6/2007
08:05 AM
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IBM to Enter Web App Security

IBM buys app testing supplier Watchfire as part of overall governance and risk management strategy

IBM's security shopping spree is apparently still underway -- the company said today it will acquire Web application testing company Watchfire. If the deal passes the required regulatory hurdles, that would make IBM's fourth major security buy, following Tivoli, ISS, and Consul. (See IBM Up-Ends Security Services Market, IBM Merger Gets Mixed Responses, and IBM Buys Into Security Compliance.)

Web applications are some of the most vulnerable today, and security experts say IBM's purchase of the privately held Watchfire, based in Waltham, Mass., will help fix one of the biggest missing links in today's apps: building security into the development cycle itself. Watchfire's AppScan Web app security testing suite scans for Web vulnerabilities; it also sells risk management software.

IBM did not disclose financial details of the deal, but The 451 Group estimates it's worth about $80 million. IBM says it expects the acquisition to close in the third quarter.

"This will build on our governance and risk management strategy in providing broad security products [and] services offerings for customers around the globe," said Danny Sabbah, general manager of IBM's Rational Software group, in a media briefing on the deal today.

Watchfire's testing technology will let companies pinpoint security problems in their apps before they go live, he said.

"This will fulfill the critical requirement of software development and delivery -- namely, security and compliance testing," he said. "With online security and privacy incidents on the rise, security breaches and a lack of compliance can diminish business integrity and customer trust. Watchfire and IBM will help reduce these risks and their associated costs to businesses."

Although IBM is pushing the security testing side of Watchfire's business, the major chunk of Watchfire's business has been more auditing than security, says Nick Selby, a senior analyst with The 451 Group. "They had more customers for non-security stuff than security," he says. "Of their $20 million in revenues, less than $10 million was from the security side. The other was auditing stuff."

Selby says Watchfire's emphasis traditionally has been more about testing already-launched apps rather than those under development. "IBM seems to be positioning this as a compliance and Web app sec play, putting a lot of emphasis on security during the development process," Selby says. "That was surprising to us since Watchfire's bigger priority was testing applications already launched."

Caleb Sima, CTO of SPI Dynamics, one of Watchfire's main competitors as well as an IBM partner, says he expects IBM to focus more on the QA side. "We expect a lot of growth in the QA space for application security in the coming year."

"Once QA teams start testing for security issues, that pushes it back to developers needing to fix security issues," says Sima, who noted that SPI Dynamics has been selling QA security software for three years.

IBM's Sabbah, meanwhile, said Watchfire's testing tools will be integrated with IBM's Rational software platform, and the technology will "complement" IBM's Tivoli identity management and software, as well as its ISS technology offerings.

"No other vendor will offer full integration from development to operations to services the way Watchfire and IBM will," he said.

And as an existing IBM partner, Watchfire had already begun integrating its tools with the Rational software platform, he added.

IBM's entry into the security vulnerability testing market is timely. Gartner vice president Joseph Feiman earlier this year co-authored a report that found only 10 percent of enterprises use application source code scanners today. In an interview, Feiman then said 60 percent of enterprises will use vulnerability detection as part of their software lifecycle processes by 2009. (See Putting App Security to the Test.)

Meanwhile, IBM's Sabbah said all 189 Watchfire employees, including Watchfire CEO Peter McKay, will become IBM employees in the deal.

— Kelly Jackson Higgins, Senior Editor, Dark Reading

  • IBM Corp. (NYSE: IBM)
  • Watchfire Corp.
  • SPI Dynamics
  • The 451 Group Kelly Jackson Higgins is the Executive Editor of Dark Reading. She is an award-winning veteran technology and business journalist with more than two decades of experience in reporting and editing for various publications, including Network Computing, Secure Enterprise ... View Full Bio

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