ISS Channel Braces For Big Blue Impact

The $1.3 billion acquisition, the fifth largest in IBM's history, gives IBM new security technology for its Tivoli software line, a fleet of experienced security consultants to add to its IBM Global Services bench, and a beachhead in ISS's 11,000 customer accounts.

"This is an interesting acquisition, as IBM is not a traditional security player," said Brad Reed, director of Internet security at Compuquip, a Miami-based solution provider and ISS partner.

ISS has made "absolutely phenomenal progress" over the past year in bringing in channel friendly people and rebuilding its channel team, Reed said. Channel partners drove 75 percent of ISS's sales in 2005, up from 68 percent the previous year.

ISS partners said they hope IBM will continue building on that momentum. Much of ISS's channel comprises security specialists that haven't previously partnered with IBM -- a contrast to IBM's other recent pricey buy, its $1.6 billion deal earlier this month to buy FileNet, a company whose channel network already significantly overlaps IBM's.

RBTi CEO Mike Comm, a former ISS employee and close partner to the company, said he trusts IBM to do the right thing.

"I think IBM wants to keep its partners. If they start cutting margins, a lot of the resellers will bolt," Comm said. RBTi, an Atlanta security solutions integrator, partners with more than two dozen vendors but has not previously worked with IBM. "As soon as it's announced that we have a contact person there, I'll be the first one on the phone. I want to continue the relationship. We have millions in recurring renewals with ISS each year."

Other ISS partners are less sanguine about the prospect of allying with Big Blue. One who requested anonymity said he has a strong relationship with ISS and was "very discouraged" by the news of the IBM acquisition. "It's always easier to do business with a smaller company like ISS than one of the sheer magnitude and bureaucracy of IBM," the source said.

IBM said the deal will be a boon to both its partners and ISS's, who will benefit from an expanded product line. IBM intends to integrate ISS's software with its own Tivoli systems management software portfolio.

Pete Venuta, vice president of sales and marketing at Information Security Technology, a St. Paul, Minn.-based solution provider, said he expects IBM's support and experience to provide significant value to ISS channel partners.

"Sometimes we question the reasons behind mergers and acquisitions, but in this case it makes sense because the security technology and services ISS offers are well adopted in the industry," he said.