* Analysis of Computer Associates’ proposed acquisition of Netegrity
In the classic 1974 film noir revival, “Chinatown,” John Huston plays Noah Cross, a 1930s Los Angeles plutocrat who seeks to corner the rights to the entire L.A. water supply, and the real estate that depends on that water. Toward the end of the film, hard-boiled detective Jake Gittes (Jack Nicholson) asks Cross, “Why are you doing it? How much better can you eat? What can you buy that you can’t already afford?” Cross’s unhesitating reply: “The future, Mr. Gittes! The future!”
The future is what Computer Associates had in mind earlier this month when it moved to consolidate a substantial segment of the identity management market through the acquisition of Netegrity.
Frankly, there has been more fear, uncertainty and doubt surrounding this announcement than I have seen in some time, which suggests just how meaningful this consolidation is, both to the world of identity management, as well as to the management market generally.
Identity management players have alternated their spin between suggesting that it’s a great sign for the field as a whole and disparaging CA’s tarnished past with prior acquisitions. Competitors of both CA and Netegrity would like to cast a deep and dark shadow on the chances for the continued success of either – despite the fact that both CA and Netegrity together already have a substantial share of the identity management market. The most worried – and understandably so – are current Netegrity customers, as they continue to voice concerns about CA’s intentions.
None of these are really talking about the point of this buy: CA is seeking to acquire the future of management. Period. Competitors and “coop-etitors” of CA and Netegrity alike see this. And – despite whatever validity there may be to the aspersions they are casting on CA’s past – they are concerned.
The service-oriented architectures (SOA) upon which emerging distributed services are increasingly based are application-focused. Because a substantial aspect of their promise is their ability to integrate beyond the boundaries of any one enterprise, trust is fundamental. That trust will be predicated on the ability to identify users, as well as various service components and providers, in one of the most distributed architectural concepts of all. When it comes to the reality of federated services, the organizers of the Digital ID World conference taking place in Denver this week understand this fact perfectly. Their slogan says it all: identity really is “center.”
The distributed nature of SOAs means they will require a high degree of management, to coordinate what would today be understood as transactional processes involving a number of distributed and separate components. Without positive identification on which to base the trust of that management – itself one of the most trusted aspects of the enterprise – these architectures cannot succeed.
What CA paid such a substantial premium for in Netegrity (4-to-1 over present value, in cash) was nothing less than the future of application-focused management. As a software company, this plays to its strengths. If CA succeeds in allowing Netegrity to continue to flourish – in other words, if it handles new acquisitions in new ways as a reflection of its own recent overhauls – CA will be a formidable competitor in this developing space.
It’s not just about solidifying a very strong presence in a lucrative market today. It really is about the future, Mr. Gittes.
