Entrust Claims Head Start in Network Security Race
Power, Carol, American Banker
A Texas-based company with Canadian roots may be one of the few that can take comfort in the chaos of corporate networking.
Entrust Technologies Inc., one of a growing horde of companies offering ways to secure information on the Internet, intranets, and various permutations thereof, says it is the only one capable of delivering the whole package of data encryption, digital certification, key management, and other intricacies.
Other companies formidable in electronic commerce, like International Business Machines Corp., GTE Corp., and Verisign Inc., have staked out positions as digital certificate suppliers, a crucial function in the authentication of on-line buyers and sellers, or financial institutions and their customers.
But no other data security vendor has "the ability to do enterprise certificates for internal needs and to support all applications," said John Ryan, president and chief executive officer of Entrust Technologies, which is based in Richardson, Tex.
"You can buy the security once and use it as an enterprise architecture, which is very attractive. We also allow you to buy one piece at a time and grow to a multi-application level and to an entire enterprise management system," he said.
Depending on the size of an organization, this brand of comprehensive security, which Entrust markets as the complete public key infrastructure, can cost from $75 to $159 per internal user. Large corporations are probably looking at a $2 million to $5 million investment over two to five years.
It is an investment that more highly networked companies, particularly in the financial industry, are willing to make.
"Virtually every major bank is a customer, and now we're hitting brokerage and investment companies," said Mr. Ryan. Customers include the Government of Canada, Bank of Nova Scotia, J.P. Morgan & Co., Salomon Brothers, Visa U.S.A., the NYCE electronic banking network, and the Swift international bank communications network.
"Our original target was government and banking," he said. "While we're going to continue to focus on financial services globally, we're looking at telecommunications, health care, and Fortune 500 companies."
The priority attached to data security was evident in Ernst & Young's fourth annual survey on the subject for Information Week magazine. It indicated that 78% of North American companies had suffered security-related financial losses in the past year.
Yankee Group has predicted that sales of information security products and services will exceed $4 billion in 2000, up from less than $250 million today.
"Although it's a brand-new market," Mr. Ryan said, "we've got mature technology"-in an industry where three years of product development constitutes maturity.
Entrust Technologies began in 1993 as Nortel Secure Networks, a division of the Canadian telecommunications giant Northern Telecom Ltd. At the end of 1996 the unit was spun off and renamed, with Northern Telecom retaining a 73% stake.
The rest is divided among J.P. Morgan Investment Management, T. Rowe Price Threshold Funds, Societe Generale, Olympus Partners, and Donaldson, Lufkin & Jenrette Securities Corp. The outside investors bought $26 million of common stock.
Entrust makes its appeal to banks and other organizations seeking a single security infrastructure to which all information technology applications can be connected. Entrust offers "tool kits" to ease implementation. For example, said Entrust senior cryptologist Michael Wiener, Internet banking transactions can be secured end to end.
The company has earned profits every quarter this year. It expects 1997 revenue to more than double last year's $14 million."Our forecast is that the PKI (public key infrastructure) management system is growing by 100% a year," said Mr. Ryan. This would make it a $500 million market opportunity by 2000.
Mr. Ryan, who began working for Northern Telecom in 1981, attributes Entrust's growth to three recent events:
The availability to 75 million browsers of a public key infrastructure based on the X. …