By KRYSTLE CHOW
Published on the Ottawa Business Journal website.
Sept. 8, 2011

A Virginia security technology company is in the process of opening its very first Canadian office in Ottawa following its purchase of Cloakware’s password management business from Irdeto.

Herndon, Va.-based Xceedium Inc. announced Thursday that it’s bought the Cloakware Password Authority product, along with a perpetual licence to Irdeto’s patented white-box cryptographic libraries, for an undisclosed sum. The acquisition includes the transfer of 14 local employees to Xceedium’s staff roster, with no layoffs.

As a result of the deal, the company is also opening a new research and development facility in Ottawa, which will work closely with Xceedium’s 28-person R&D team in Jersey City, N.J.

Xceedium CEO Glenn Hazard told OBJ in an interview that the acquisition would allow his company to leverage Irdeto’s local engineering talent to provide an integrated access control and password management solution, as it will be combining Cloakware’s technology with its own GateKeeper product, as part of its new Xsuite offering.

“And as much as we are creating an integrated product, we would also like to have an integrated engineering team,” said Mr. Hazard, who noted there will likely be some staffing transfers back and forth between the Jersey City and Ottawa offices. “It is our intention to take all of the Canadian password authority resources and keep them in the company; it’s critical to us.”

He added Xceedium plans to hire on more staff for the local office, with growth of as much as 25 per cent to 30 per cent expected within the next 12 months.

Mr. Hazard said the Ottawa location will allow the firm to strategically grow its business in Canada, although he said it’s too early to tell the percentage of Xceedium’s overall business represented by the Canadian market. Still, he noted the company counts several large Canadian telecommunications companies, financial institutions and the government among its existing clients, adding value to its Ottawa presence.

Most importantly, the acquisition of the Ottawa-developed Cloakware password management technology means Xceedium will be better prepared to tackle the massive, but fragmented identification and access management market, which is worth an estimated $2 billion to $3 billion.

“There are many customers trying to solve a lot of problems with multiple products, so there’s a lot of advantages to one solution and one management interface, which is easier to deploy and maintain,” said Mr. Hazard, in reference to the integrated Xsuite offering. “It’s a real greenfields market because of the fragmentation.”

Originally an Ottawa-headquartered company started up by former Nortel employees, Cloakware was purchased by Irdeto in 2007 for US$72.5 million.