ActivIdentity Reaches Out to Managed Security Service Providers

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ActivIdentity this week announced a strategy for letting MSPs “create, manage and authenticate digital identities in the cloud,” as Grant Evans, ActivIdentity’s chairman and chief executive officer, put it. ActivIdentity doesn’t provide a cloud service. Instead, it offers the back-end infrastructure software that MSPs use to deliver strong authentication or credential management in the cloud, according to a company statement.

Other companies have taken a services tack on authentication. CryptoCard offers Crypto-MAS, a managed authentication service that the company says leverages cloud computing. Alliant Technologies and CSC also provide managed authentication services.

ActivIdentity’s interest in MSPs reflects its new go-to-market approach. During the company’s Q4 earnings call in November, Evans said the company was seeking to complement its exiting pricing model — perpetual licenses — with subscription-based pricing. The company intends to expand its distribution channel in the MSP space to assist with that push.

ActivIdentity currently points to two publicized MSP partnerships: EDS (now HP Enterprise Services) and BT. The HP business unit used ActivIdentity’s ActivID Card Management System to “deliver a cloud computing service to the U.S. General Services Administration Managed Service Office,” according to ActivIdentity.

The company described its arrangement with BT as “still in a pilot phase.”

Beyond that, ActivIdentity is a bit guarded in discussing its MSP pursuit. When asked how many managed security services providers the company plans to recruit, ActivIdentity responded as follows:

Nevertheless, ActivIdentity seems to be looking to MSPs for a subscription-revenue boost, a key element of the company’s strategy this year.

During the Q4 call, Grant said the subscription-based model will provide ActivIdentity with a more predictable revenue stream. He said the company’s goal for 2010 is to establish a business platform that can sustain double-digit revenue growth in the long term.

In the short run, the subscription approach could help the company at a time when customers are deferring capital spending.

ActivIdentity’s revenue for the quarter ended September 30 was $14.5 million compared with $15.6 million for the year-earlier period. For the full fiscal year, the  company generated revenue of $62.3 million compared with $59 million in 2008. The company narrowed its net loss in 2009 to $5.5 million from $76.5 million the previous year.