By Toby Weir-Jones, Vice President of Product Development, BT Counterpane
Last May, we wrote about the changing face of VeriSign, and how it was largely exiting its traditional enterprise security businesses. Since then, we’ve seen a lot more M&A activity in the enterprise security market.
What’s clear is that HP was the first to diversify its services business, and Dell is rapidly following suit. They will both compete against IBM and other traditional players in the space, but presumably with a higher-tech positioning, rather than safe, process-driven conservative infrastructure.
Now, after returning from the holidays, one of the first announcements I saw was that Dell is acquiring SecureWorks, which is already comprised of a number of other components, from Lurhq to VeriSign and others. Privately held SecureWorks doesn’t have to reveal the price, though presumably we’ll find out via Dell’s SEC filings. The press releases all say FY2010 revenues would end up around $120M, but there is no indication of the split between managed services and PS-style consulting.
This is not the first interaction between Dell and SecureWorks – the two companies announced a relationship last July in which Dell would resell certain parts of the SecureWorks portfolio.
We see this move positively, since it validates a strategy BT employed more than four years ago when it bought Counterpane. Managed security services (MSS) are essential for almost every corporate client with any kind of sophistication on their network, but it’s also essential that those services be closely coupled with other IT-type activities. For example, if you operate a hosted application server farm, providing your customers a checkbox option to purchase your compliance monitoring and reporting package is a blindingly obvious thing to do. The end customer doesn’t need visibility into all the technology decisions that enable the MSS to work – they are interested in app hosting, after all – and the hosting provider knows that if the customer still fails their audits, no renewal will be forthcoming. So the pressure is still on to ensure that all the magic supporting that single checkbox is state-of-the-art.
Some customers will always want independent security providers, to avoid perceptions of conflict, and to have more direct access to the R&D functions when they have special requirements. Most, however, recognize that adding yet another vendor, with yet another contract, account team, and procurement exercise, is not worth the purported benefits that such direct access would provide. This is because the deliverables from managed security services are becoming increasingly aligned with audit and compliance, rather than bleeding-edge technology. The audit process, by its very nature, defines its objectives around established best practices and doesn’t reward dramatic technological risk-taking.
Customers should reasonably ask whether Dell will be able to step into the frenzied world of managed security services without any missteps. Its experience as a SecureWorks reseller for the past six months will have given them some idea of the commercial potential of the business, but not necessarily the operational features, variable costs of R&D and planning aspects of how to grow the MSP infrastructure rapidly.
