Watchfire Secures Sanctum, Eyes IPO

Watchfire Corp., a Web application management specialist, is acquiring the products and patents of Sanctum Inc. as part of a grander plan to move toward an IPO, officials said today.

The deal, Watchfire's fourth in three years, fills out its product line and brings the Waltham, Mass. company much closer to its goal of becoming public, CTO and founder Michael Weider told NDCF. He says the company's products have focused on monitoring and managing "quality issues" of Web applications but so far had not done much with security. Sanctum makes Web application security and monitoring tools.

"We are evaluating our prospects of going public," said Weider. "This acquisition gives us the needed scale to get closer to doing that."

No paperwork has been filed yet.

Watchfire's previous buyouts included parts of the Center for Applied Special Technology Inc. in mid 2002, all of Buystream Inc. in January 2004, and parts of Gomez Inc. in March. Watchfire's long-term plans include more compliance technology, Weider said.Watchfire's primary product line, WebXM, spans eight modules: accessibility, analytics, brand protection, compliance, quality assurance, security, style guidance, and user privacy. In the current security module, all WebXM offers is "some rudimentary ability to handle cross-site scripting issues and some SQL," Weider said. Contrariwise, Sanctum has focused on security since the late 1990s.

Watchfire plans to upgrade the security module using Sanctum's technology in November. Soon after, they plan to update Sanctum's AppScan 4.5 software with privacy and accessibility features, which will still be available as a distinct product, Weider said. In addition, customers have been asking for better developer and quality assurance tools two categories in which Sanctum has experience, he said.

As part of the deal, for which financial terms were not disclosed, 75 of Sanctum's 90 employees will join Watchfire, which also gets patents for application vulnerability scanning and policy-based protection, officials said. Sanctum CEO Peggy Weigle will stay only through the transition, but CTO Steve Orrin and R&D VP Amit Barkin will stay, they said. Both companies target enterprises in markets such as government, healthcare, financial services, and pharmaceuticals, they said.

David Sweeney, a program coordinator for accessibility at Texas A&M University, said his department installed WebXM 18 months ago to serve about 2,000 faculty and students per year. "We've been fairly happy," he said. "I wasn't aware of any problems with the security module." He commented, however, that the product's user interface is sometimes too cumbersome and could stand improvement.

— Evan Koblentz, Senior Editor, Next-Gen Data Center Forum0