Sunday, September 03, 2000

Online security checkpoints prospering

Demand grows for safeguards

By Elise Ackerman
Knight Ridder News Service

        As the dust begins to clear from the dot-com shakeout, private guards are emerging as the front line of e-commerce.

        It's not that guards are needed to escort laid-off workers away from their foosball tables and catered company lunches. It's online security that has companies concerned.

        Companies that check digital identities, like Oblix Inc. of Cupertino, Calif., are thriving despite the downturn in dot-com prospects. Oblix, a privately held company founded in 1996, makes software that authenticates the identity of Internet users and then guides them to appropriate applications and assigns them proper security clearances.

        This may not sound like a big deal, but it's an increasingly important task as use of the Internet proliferates throughout the business world. “The need for controlling who can see what is just an explosive market,” said Katherine Egbert, an analyst at Thomas Weisel Partners. Egbert predicts a $6 billion a year market by 2003 for such software, which is technically a type of middleware, running between an operating system and an application.

        “What we are doing is key to utilizing the Internet,” said Oblix's chief executive Gordon Eubanks, a well-known local entrepreneur who ran Symantec Corp. for 15 years before joining Oblix last year. Widely credited with creating the market for software utilities like Norton AntiVirus and Norton Ghost, Eubanks, 54, developed Symantec into a name-brand powerhouse with more than half a billion dollars in annual sales and more than 2,000 employees.

        In comparison, Oblix has about 150 employees and is counting on an estimated $12 million in revenues this year from the sale of software licenses and professional services. However, Mr. Eubanks predicted that sales will more than double next year and that the company will be profitable by the beginning of 2002.

        Mr. Eubanks' optimism is based on the fact that companies are reporting substantial savings as a result of conducting business on the Net. “Any business that wants to be in business in 10 years is going to have to use the Internet to reduce the cost of transactions,” Mr. Eubanks predicted.

        And, he reasoned, that means they would need software from Oblix or one of its competitors, like Dascom Inc., which was acquired by International Business Machines Corp. last September or enCommerce Inc. which completed a merger with Entrust Technologies Inc. in June.

        Among Oblix's customers are Fortune 500 heavyweights like WorldCom Inc., Paine Webber Group Inc. and Best Buy Co.

        In contrast to the popular fascination with malicious hackers and disgruntled former employees, the security preoccupations of large corporations are generally much more mundane. For example, WorldCom uses software from both Oblix and rival Netegrity Inc. to help provide telecommunications services to customers like the Department of Defense and the U.S. General Services Administration. Using such software, hundreds of government employees can do things like check bills, examine system outages and order high-speed Internet access online without jeopardizing security.

        According to Steve Mahone, lead software design engineer for WorldCom, a key benefit is that employees need to enter only one password even though they may be using many different software applications. While that may seem like a small convenience, the savings in time and money add up. Continuous improvements to the software — Oblix released a new, more comprehensive product in July — could also boost productivity.

        Chris Byrnes, vice president of META Group Inc., said a Fortune 500 company that purchases Oblix's product could redeploy as many as 100 full-time workers to other tasks.

        The prospect pleases investors, who have awarded the Waltham, Mass.-based Netegrity a market value of $1.6 billion despite sales of only $12.7 million last year.

        “It's good to see them with a healthy stock price, because that's the type of valuation we are looking at,” said Nand Mulchandani, Oblix's vice president of product management and one of the company's founders.

        A private company with about $39 million in funding from investors like Kleiner Perkins Caufield & Byers and Patricof & Co., Oblix has no immediate plans for a public stock offering. Mr. Eubanks said the reason is not the market's fickle mood.

        “We have a great opportunity to be a public company,” Mr. Eubanks said. “But right now what is going to make it or break it for us is that customers are really and truly satisfied.”

        Casting about for an analogy, he compared the Internet to a disco. Oblix is going to make sure no one passes themselves off as Tom Cruise, sneaks into the VIP room and conducts unauthorized transactions, he explained. With Oblix, he said, the wild Web will become a safe place to do business.


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