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Information Technology (IT) giant, International Business Machines Corp. (IBM) recently unveiled its new analytics software called Security Role and Policy Modeler. Developed by IBM’s newest division Security Systems, the software offers solutions for policy-based identity and access management governance issues.

IBM Security Role and Policy Modeler is a part of IBM Security Identity Manager. Security Role and Policy Modeler will help IT departments to regulate an individual’s security permissions in the work place. The software tracks a company’s applications and detects the number of permissions each employee possesses and based on this information, allocates specific roles and sub-roles to different employees. This segmentation helps the IT department to better secure an organization and manage compliance at a comparatively low cost.

As businesses continue to grow, identity management becomes a crucial issue. According to research firm Gartner, user provisioning and identity management is the second most important security concern for IT departments after data loss for 2012 and beyond. Moreover, the emergence of cloud computing has increased the importance of this technology, as enterprises integrate their identity management processes with their cloud deployments.

According to Gartner, revenue from security products and related services market will increase from $55 billion in 2011 to more than $71 billion in 2014. This will be driven by consistent increases in the complexity and volume of targeted attacks, coupled with the necessity for companies to address regulatory or compliance related issues.

IBM believes that the new identity software will be particularly beneficial for companies catering to the financial and medical sector where compliance regulations are strict and subject to regular audit. We believe that the new software will expand IBM’s security customer base going forward.

Meanwhile, IBM has set a new record of receiving the maximum number of patent rewards in 2011. The company earned 6,180 U.S. patents in 2011, including more than 100 security-related patents, adding to its existing security portfolio of more than 3,000 patents.

Besides developing software internally, IBM is also focused on acquiring companies, which will further expand its security business. To date, the company has acquired more than 12 companies for this purpose. IBM’s strong cash balance enables it to acquire companies with high intellectual property (IP), which will drive further growth in the upcoming quarters. With $20 billion to spend until 2015 on acquisitions, we expect IBM to remain aggressive on this front going forward.

We believe that the strong patent portfolio and accretive acquisitions will provide IBM a competitive edge over other prominent vendors, including Oracle Corp. (ORCL), CA Technologies (CA), Quest Software (recently acquired access-control technology vendor Bitkoo), EMC Corp. (EMC) and Symantec Corp. (SYMC).

We have a long-term Neutral recommendation on IBM and are optimistic about its strong fundamentals and robust growth prospects going forward. However, we expect the sluggish IT spending environment for 2012 to remain an overhang on the stock going forward.

We currently have a Zacks #3 Rank for IBM, which translates into a short-term Hold rating.

 
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