Customers Support EMCs RSA Buy

 
 
By Chris Preimesberger  |  Posted 2006-07-10
 
 
 

EMC president and CEO Joe Tucci said his companys decision to buy RSA Security for $2.1 billion makes sense in a world where data continues to grow and security is a constant concern.

And while financial and industry analysts were mixed in their views on the acquisition—why pay so much for a company that made only $310 million last year, some asked—customers seemed to buy into Tuccis argument.

"Im excited about the news," said Dave Young, program director of Web services at Geisinger Health Services, which runs 40 hospitals in Pennsylvania. "We are clients of both companies, and I believe the synergies will make both companies stronger as a unified enterprise storage and security company."

EMC announced the purchase June 29, with Tucci saying the deal will enable the Hopkinton, Mass., company to integrate such RSA technology as authentication and encryption into its storage products.

While some experts wonder if EMC will hold onto all of RSA Security, company officials say the technologies gained through the merger are vital to its vision of ILM. Click here to read more.

"Customers arent asking us to do this," Tucci said. "Theyre demanding it. And they dont want security bolted on. They want it woven in."

For customers such as Young, that makes sense. "I agree with them [EMC officials] that data at rest needs to be secure and encrypted much the same way we secure applications," he said.

Young uses RSAs Clear-Trust Web authentication application to give 20,000 patients online access to their medical records, while another portal allows physicians to log on via Clear-Trust to check their patients full medical records.

"In health care, regulations are changing as well to require this. Plus, EMC should open up additional customer bases to RSAs products and services," Young said.

"Whenever acquisitions occur, its always a bumpy ride for the first six to 12 months, especially in the support area, so Im hoping EMC and RSA can make this a smooth transition for [RSAs] existing customer base," Young said.

Victor Leung, director of Web development for Man Financial, a London-based futures and options brokerage, said that there is little downside to tighter integration of storage and security products.

"I cant see why IT managers would complain if EMC tells them their products are 100 percent compatible with the RSA infrastructure that is already in place," Leung said.

Paul Martinello, director of Web services and systems development at Credit Union Central of Ontario, in Mississauga, Ontario, is an RSA customer who understands the strategy.

Analysts are split on the value of EMCs acquisition of RSA, but EMC defends its "strategic" purchase. Click here to read more.

Credit Union Central provides operational and financial services to 190 credit unions in Canada and uses ClearTrust to manage how 3,000 people access its customer service site.

Martinello said he expects the deal will have little disruption on his day-to-day operation, though he said what is needed now is more feedback to customers from officials at RSA, of Bedford, Mass.

"Hopefully, there will not be an effect on our relationship, but that will be answered with time," Martinello said. "It would be good to have some follow-up from RSA on the acquisition and what will happen to/for their current clients."

Martinello said that up to now, "we are extremely satisfied with the [ClearPoint] application and have been for five years. [There are] no current issues, and the ones that we had in the past were dealt with in a timely and professional manner. I expect the same to continue."

He said that what RSA needs to do now is "contact us, your clients, and provide us with some assurances that the products will continue to be supported as in the past and that the current life cycle of the products will not be affected by this acquisition—perhaps even make them more powerful down the road."

Financial and industry analysts come at this deal from different perspectives, analyst Robert Abraham of Freeman Reports told eWeek.

"Many of the financial people are looking at the short-term profitability factor and are worried about it," said Abraham in Ojai, Calif. "It is a very expensive acquisition, thats true, and it will probably cut into profits for a time.

"But as far as the strategic reason for this merger, its very clear why EMC is doing it, and most industry analysts get it. Theres no question that EMC needs the mature, proven security technology that RSA provides.

"This acquisition is going to make EMC a more complete IT company, no doubt about it."

The two companies expect the acquisition to be completed late this quarter or early next quarter.

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