DigiMerc adds software to security management offerings

BOULDER — Given its established relationship with one of the principal players in network security and a platform-neutral product line, DigiMerc LLC may be going places.

Not that the founders of this Boulder firm haven’t already been there, in some respect. In fact, Aaron White, DigiMerc’s founder and chief technology officer, has about as impressive list of network security clients as might be found. For instance, the FBI, the National Security Agency, the Department of Justice and various local and national governments. But with its new product line, released at the beginning of this year, DigiMerc is moving ahead with some even bigger plans. DigiMerc would not reveal revenues, but White said the new line is accounting for 50 percent of the company’s income.

“Now, we consider ourselves a software manufacturing shop,” White said. “My drive has always been the technology — creating these solutions for network security.”

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DigiMerc has been around for about 27 months, and was able to fund its startup and pay bills largely through offering professional services, such as installing NetScreen Technology Inc.’s network security systems into the national Naval and Marine Corps Intranet. NetScreen was a logical strategic partner to begin with, White said, because it was providing the “best-of-breed” network security products with which he wanted to work.

But providing network security products is one thing and managing them quite another. DigiMerc’s first move was to secure a license from NetScreen to provide full-featured management, proactive monitoring and real-time reporting system.

While NetScreen had a monitoring and management application, White said, the network security leader was clearly interested in providing clients with a more robust solution. Two companies were originally licensed to provide such a management application, but so far only DigiMerc has followed through.

DigiMerc’s DigiElite GP leveraged NetScreen’s security management software, NetScreen-Global PRO, essentially enabling it to be used by security managers who wouldn’t necessarily have to be experts for every security product and computer system on the network, said Christopher Blisard, president and chief executive of DigiMerc. DigiElite now allows businesses of all sizes to cost-effectively manage, monitor and extract standard and custom reports on NetScreen security devices through a user-friendly Web portal, according to company information.

“Using DigiMerc’s DigiElite GP and NetScreen’s award-winning appliances and systems can provide clients and partners a cost-effective and easily deployable solution that increases security and reduces the cost of security management,´ said David Flynn, vice president of marketing at NetScreen, in a prepared statement.

But DigiMerc clearly has something larger in mind, as it built the software to be platform neutral. “We really aren’t imbedded in a Cisco, or a NetScreen, or anyone else,” White said.

The company is positioning itself as an extremely affordable solution, as well, licensing its product with monthly payments and yearly contracts. Installation is usually covered by the first month’s licensing payment, Blisard said.

“Prices (per month) range from $65 to $75 to upward of a couple thousands f dollars for a lot of deployments,” Blisard said. “We have enterprise systems from 500 units in the field to several thousand. The product gives a widely disparate organization (a network with many different types of Internet servers and security products) the ability to centrally manage all of those boxes.”

Which, in some cases, means an organization doesn’t have to have security experts everywhere that it has Iternet access. Or for a highly managed Internet service provider such as ViaWest, one of DigiMerc’s first client/partners, it means the ISP can potentially manage and report on client security both on and off its servers.

ViaWest, an ISP that focuses on complex hosting, was part of DigiMerc’s strategic partners testing program, but has quickly moved on offering the service to the 750 hosting clients the company has in four Western states.

“What DigiMerc is making possible is a firewall offering that is not only state of the art, but reasonably priced,´ said Bill Heuston, the vice president of business development. “Usually this (firewall hardware) is only seen at the enterprise level, now it’s finally coming down to the small- and medium-sized businesses.

“Typically customers have to pay thousands of dollars, where through capital expenditures or management, to go to this type of firewall,” he said. “We can get that cost down to as little as $295 a month. Everyone is real concerned about using a firewall, but the real inhibitor has been cost.”

And the real trick is that ViaWest can bring the cost down because DigiMerc’s products bring down the management costs, Heuston said. “It’s the reporting mechanism — the (Web) portal — that allows you to get real-time reports.”

Other potential clients already include wireless access providers and security consultants. “We can now enable these other organization to offer a quality service at a very effective price point,” Blisard said.

Corporate accounts also may prove lucrative, especially with many organizations opting to use encrypted Internet protocol instead of private phone lines for credit card and other transactions. The advantage here is that companies can centralize their network security and possibly cut the security staff that has to be kept at some locations.

The company’s professional services and training departments continue to each contribute about 25 percent of the company’s revenues, Blisard said, and are still vital components of a plan to make it without venture capital, for at least the time being. That thinking, he said, is reinforced by the venture capital market, which now offers only “aggressive terms,” meaning a lot of the value of the company would have to be sold to get outside funding.

“We’re building profitable revenues and have expanded from NetScreen to other firewall providers and other forms of security,” he said. “Our focus is to become a leader in that space, and from there our exit strategy will be (determined) by our success.

“This is a wholly organically grown company, grown on its revenues, and that’s the focus of all the employees here,” Blisard said.