Identity management vendor Oblix has caused a stir with an acquisition that offers users a migration path to web services management.

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	Oblix says enterprises get control of identity management before they begin managing web services. It bought Confluent so it can offer both: Customers invariably have ID management installed before they look at managing services Oblix is gambling that its 130+ customers will be happy to buy Confluent's offering Confluent has just 4 live customers. Two-thirds of its staff are to leave Apax Partners is an investor in both companies but did not broker the deal
	Glossary terms: digital identity, services management, systems management, lookup tool Sponsored links: your text link here

For a company that has just four live users, privately-held Confluent Software's acquisition, revealed last week, generated a surprisingly high level of interest. It grabbed attention because previous takeovers in web services management have been driven by traditional systems management vendors making up ground by acquiring small specialists. Computer Associates picked up Adjoin in the summer of 2003 in a deal first revealed by Loosely Coupled, while Hewlett-Packard acquired web services management specialist Talking Blocks in September.

Oblix's acquisition of Confluent gives users an alternative route into services management. The company argues that web services management is a logical step on from its specialist areas of identity and access management, and says it began receiving requests from users for web services capability up to a year ago. It claims users aim first of all to manage the interaction between people and systems: once they have achieved that, only then do they turn their attention to managing the interactions between different applications through web services.

Confluent's own experiences appear to reinforce Oblix's argument. According to Paola Lubet, VP of marketing at Confluent, almost all of the user organizations it speaks to already have an identity management solution in place.

Rick Caccia, director of product management at Oblix, said Confluent's roadmap and decentralized architecture fitted the Oblix model. Just as Oblix automates policy management and administration of identity and access management, Confluent's tools are designed to enforce operational policy in web services, allowing users to define and manage rules relating both to security — for example, is the person making a request authorized to do so? — and to service level agreements.

Calculated gamble

The assertion that users deal with identity management before turning to services management is the key to whether the acquisition will prove a successful move. Oblix has made a calculated gamble in terms of industry collaboration that will prove costly if its two-step analysis of the market is wrong. Until now, identity management vendors have tended to partner with web services specialists, and have been able to build multiple relationships. By acquiring Confluent, Oblix breaks with this pattern. It gains exclusive control of a product set, but at the same time is likely to exclude itself from being brought into future deals with rival management vendors as their identity management partner.

Ken Sims, Oblix's VP of marketing, believes the gamble is a safe bet. "It's important to note what comes in first," he says. "None of the web services management vendors has brought us in on a deal — we bring them in on deals. This gives us a much stronger product story."

On the upside, Oblix has an installed base of some 130 users, including high-profile names such as the US Postal Service and Boeing. It now has the opportunity to cross-sell Confluent's web services management products. In addition, Sims said that it will aggressively target the customer bases of identity management rivals Netegrity and IBM.

If its market analysis proves correct, this will give Oblix the opportunity to build a firm foothold in the web services market at a time when systems management giants like HP and CA are still feeling their way forward. Although Confluent has just four customers and a further twelve in final negotiations, HP and CA are themselves working with a first wave of early adopters and struggle to deliver customer reference sites.

Decision factors

Despite taking on only 15 of Confluent's 47 employees, Oblix insists that it is committed to maintaining the company's full web services management portfolio. It will sell them as standalone components of the Oblix product set. Confluent's application has already been integrated with Oblix' access system at a common customer site and according to Caccia, some tools may be unified over time.

While retaining just a third of the staff is unusual when a purchaser buys its way into a new market — it's more common when two competitors consolidate and strip out duplicated functions — Oblix says it has retained Confluent's core engineering and development team as well as key members of the salesforce, along with two of the founders. Confluent's high-profile chairman and co-founder, Rajiv Gupta, is not among those making the transition.

Oblix also dismissed suggestions that the deal may have been brokered by Apax Partners, a venture capital firm that holds stakes in both organizations, and stressed that the decision was made independently by the two boards. Sims said Oblix "looked at a lot of players and thought Confluent was the best." Confluent itself had been approached by a number of other suitors before it opted for the Oblix approach.

The two companies' investors will nevertheless be interested to assess how the deal impacts Oblix's medium-term fortunes. If the takeover generates significant additional revenue and helps position Oblix as a player in web services management, the privately-held company will become a more attractive acquisition target in its own right.

Customers will bear that consideration in mind too as they weigh up whether it makes sense to buy web services management from their identity management software vendor. Even if Oblix is right in its analysis that customers choose identity management first, there's no guarantee that they'll inevitably go on to choose the same vendor for web services management. Now it is up to Oblix to convince customers that its decision to go with Confluent is the right choice for them, too.

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