IBM Buys Security Expert ISS for $1.3 Billion in Cash

August 28, 2006 Timothy Prickett Morgan

The IBM software and services spending spree continues, and the company shelled out $1.3 billion in cold, hard cash last week to acquire Internet Security Services. ISS, the fourth big acquisition IBM has done in as many weeks, is based in Atlanta and is one of the big players in security advisories, software, and appliances.

ISS is a publicly traded company, and only two months ago its stock was trading down in the range of $18 a share after a hiccup caused, in part, by problems with its ERP system. IBM’s all-cash offer of $28 a share was only a modest premium compared to the stock’s trading price before the deal was announced, but it is a pretty big premium compared to that low point in July. ISS was on a short list of companies that were named as potential acquisition targets in the wake of Hewlett-Packard‘s $4.5 billion acquisition of Mercury Interactive in July. And so it has come to pass.

IBM and ISS have been partners since 1999. IBM is planning to use the ISS portfolio of security products as a means of delivering managed security services, and as such, ISS will not be merged in IBM’s Systems and Technology Group or its Software Group, but rather into the infrastructure management services division within its Global Services group. This division is headed up by Val Rahmani, who was one of the people who spearheaded IBM’s acquisition of the consulting business of PricewaterhouseCoopers and who is one of the rising stars at Big Blue.

ISS was founded in 1994 and went public on the NASDAQ in 1998. The company has 1,250 employees and booked $329.8 million in sales and $38.6 million in net earnings in 2005; it has over 11,000 customers, who use its X-Force security intelligence service or who use its intrusion detection and prevention appliances. IBM has over 3,500 security experts working in Global Services, who help analyze vulnerabilities and implement security solutions for customers. So the ISS deal bulks up its headcount significantly. IBM says that Tivoli systems management and security products will be integrated with the X-Force service, and that it will continue to sell security appliances itself and through its partner channel.

IBM expects the acquisition to close within two months.

IBM Acquires Webify and MRO to Enhance Software, Services Offerings

Tags: Tags: mtfh_rc, Volume 15, Number 34 -- August 28, 2006

Do the Math When Looking at IBM i Hosting for Cost Savings

COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

“Hosting” in this context can mean different things to different people, and in general, hosting refers to one of two scenarios. In the first scenario, hosting can refer to a client owned machine that is housed in a co-location facility (commonly called a co-lo for short) where the data center provides traditional system administrator services, relieving the client of administrative and operational responsibilities. In the second scenario, hosting can refer to an MSP owned machine in which partition resources are provided to the client in an on-demand capacity. This scenario allows the client to completely outsource all aspects of Power Systems hardware and the IBM i operating system and database.

The scenario that is best for each business depends on a number of factors and is largely up for debate. In most cases, pursuing hosting purely as a cost saving strategy is a dead end. Furthermore, when you consider all of the costs associated with maintaining and IBM i environment, it is typically not a cost-effective option for the small to midsize market. The most cost-effective approach for these organizations is often a combination of a client owned and maintained system (either on-prem or in a co-lo) with cloud backup and disaster-recovery-as-a-service. Only in some cases of larger enterprise companies can a hosting strategy start to become a potentially cost-effective option.

However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

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