Argus Seeks Integrator Partners

Argus Seeks Integrator Partners<@VM>Argus Systems Group Inc.

Randy Sandone

By Nick Wakeman, Staff Writer

An Internet security company that has been making a name for itself in the commercial banking industry is now courting government systems integrators as a way to break into a growing public-sector security market.

Argus Systems Group Inc. of Savoy, Ill., is hoping to parlay its experience with large banks, such as Chase Manhattan and Credit Suisse, into a leg up in the government market, said Randy Sandone, chief executive of the seven-year-old company.

"We are talking to at least 10 of the top-tier systems integrators," Sandone said. By year's end, he said, the company should announce alliances with the likes of Computer Sciences Corp. of El Segundo, Calif., Electronic Data Systems Corp. of Plano, Texas, Lockheed Martin Corp. of Bethesda, Md., and Science Applications International Corp. of San Diego.

"We want to have partnerships with the systems integrators that understand the requirements of electronic government and high-level security," he said.

Argus makes software products that provide security for a server's operating system. This kind of security software acts as a last line of defense and the operating system becomes what is known as a trusted system, Sandone said.

As part of its thrust into the government market, Argus has enlisted the help of CSC to provide an independent evaluation of Argus' PitBull product for Sun's Solaris 7 server. The evaluation will be against the Common Criteria, an international security standard based on the Department of Defense Trusted Computer System Evaluation Criteria.

"We really think trusted systems are going to become very significant because of [Presidential Decision Directive] 63," Sandone said.

Known throughout the high-tech industry as PDD-63, the directive was signed by President Clinton in May 1998 and ordered agencies to protect systems critical to their operations.

"PDD-63 is basically the market driver behind information assurance," said Payton Smith, an analyst with market research firm Federal Sources Inc. of McLean, Va.

The Office of Management and Budget estimates that spending on infrastructure protection will rise from $1 billion in 1999 to $1.5 billion in 2000.

Argus currently has no government business, and it will face tough competition from Hewlett-Packard Co. and Sun Microsystems Inc., both of Palo Alto, Calif., Sandone said.

Sun has a strong base in the Defense Department, but the civilian side of the government is just starting to open up and should present opportunities for Argus, said John Pescatore, research director for network security at the market research firm GartnerGroup of Stamford, Conn.

"The civilian agencies are really getting pushed to secure their systems, and it's a good thing, too, because most of the attacks on government Web sites have been successful," Pescatore said.

At $5 million in 1999 revenue and projected to hit $15 million in 2000, Argus is tiny compared to HP and Sun. But if government buyers follow the pattern set by commercial buyers, Argus has an advantage in that it does not make the operating system, Pescatore said.

"We've learned that a lot of companies do not go to the operating system vendor for the operating system security," he said. "Argus can be a leading player, and they have a solid reputation."

In addition to the pressure from PDD-63, the government's desire to implement electronic services to citizens and electronic procurement systems creates market opportunities, Sandone said.

"We really think the time is right for us," he said. "What we have to do is open the eyes of the government users that there is a commercially available product for them."

Agencies Argus plans to target include the departments of Agriculture, Defense, Health and Human Services, Justice, State and Treasury, Sandone said. The company has 55 employees with three now dedicated to the government market.

Implementing electronic government opens agencies to greater risk because Web servers sit outside of the firewalls and intrusion detection software that internal agency systems use for protection, Sandone said.

Web servers often rely on "control gateway interface" software for security, but "those are notorious for being riddled with security problems," he said.

If the security of a Web server is compromised, a hacker can gain access to the internal systems of an agency, Sandone said. Business: Develops security software to protect the operating systems of Web servers.

Based: Savoy, Ill.

Founded: 1993

Employees: 55

1998 Revenue: $2.5 million

1999 Revenue: $5 million

2000 Revenue: projected to be $15 million

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