HelpSystems likely to operate Digital Defense as standalone security company

HelpSystems has been aggressive in building out their security portfolio through acquisition over the last couple years, and this has been a common model with other acquisitions.

John Grancarich, VP, Product & Growth Strategy at HelpSystems

Minnesota-based HelpSystems has added to their security portfolio with the acquisition of San Antonio-based vulnerability management and threat assessment provider Digital Defense. Digital Defense fills a gap in HelpSystems’ security offerings, and with other recent acquisitions Core Security and Cobalt Strike will allow the company and its partners to offer a comprehensive security assessment toolkit. While HelpSystems has not formally announced its integration plans for Digital Defense and its channel, based on their past acquisitions, the probable paths they will take are transparent.

HelpSystems has been in business a long time, since 1982. They started out making management tools for the IBM AS/400, and all these years later, while that’s now less than half of their business, it’s still a nice chunk. Customers on the IBM systems asked them to provide help with Windows and Linux systems as well, so they entered those areas. From there they moved into the automation and RPA [Robotic Process Automation] market.

“We make easy-to-use RPA for the mid-market,” said John Grancarich, VP, Product & Growth Strategy at HelpSystems. “That’s our niche in that market.”

The security business is mature, around 15 years old, and has been built up by a series of acquisitions. Some of the more recent ones before Digital Defense include SecureAuth’s Core Security products in February 2019, Clearswift in December 2019, pen-tester Cobalt Strike in March 2020,  and Ottawa-based Titus in June 2020. As the company expands its range of security products it is also moving from being solely midmarket focused to the enterprise as well.

“We’ve built a fantastic business with midsize products, but as we continue to strategically add more solutions, the amount of enterprise interest goes up,” Grancarich indicated.

About three-quarters of HelpSystems’ business is direct, with the channel being stronger in EMEA than it is in North America. They do have quite a lot of partners, who span an eclectic variety of business models.

“They range from MSPs, to IT shops in England that help people with file transfers, to broad cybersecurity vendors,” said Mike Devine, HelpSystems’ VP of Marketing.

While HelpSystems’ security portfolio has been expanding, vulnerability management has been a weakness.

“We’ve been on the hunt for a vulnerability and threat management capability for many years,” Grancarich said. “We built around it for some time by adding pen testing and Red Teaming capabilities.”

Grancarich said that acquiring Digital Defense specifically made a lot of sense.

“We have a dedicated corporate development team that talks with hundreds of potential companies to acquire every year, but there are several reasons why this made sense,” he noted. “We had identified a key need for vulnerability and threat management. Over time, we have added more of a cloud  posture, and Digital Defense is cloud-native. We also have had a really good record of acquiring smaller companies and bringing them into our platform, where we put them into our worldwide marketing and sales platform and expand their business. It has been a formula for success.”

While just about every tech acquisition since the invention of the abacus has emphasized cultural synergies between the combining companies,  Devine said that the vibes with Digital Defense were very positive.

Mike Devine, HelpSystems’ VP of Marketing

“Aside from the fantastic technology, we got along great with the people,” he said. “We look at a lot of companies, and with some of them, we conclude that they wouldn’t be a good cultural fit. One of our board members has a term, positive-aggressive. Basically it means that we want to win, but we don’t want to be jerks. That’s important. We want to work with pleasant people, collaborative people.”

Many of HelpSystems’s security acquisitions have been operated as standalone companies – Titus by HelpSystems for example – and it seems very likely that this will be the model here as well.

“It hasn’t been decided yet, but we have a working hypothesis that it will be a  standalone,” Devine said. “They have a great name in the marketplace, so it would be silly for us to rebrand them.”

Similarly, it’s too early at this stage to determine how the Digital Defense channel will be integrated, but Grancarich expects that it will be fairly smooth sailing. Both companies have hybrid Go-to-Market models, although Digital Defense’s channel component is significantly higher, and last year they unveiled plans to significantly expand their MSP channel.

“With 25% of our overall business coming from the channel, it will continue to be important to us,” he said. “We have a very well-oiled integration machine, and we expect it will be all ironed out in several months.”

“We will get down in the next few weeks and see what makes sense,” Devine added. “We want to keep those channel partners happy. We are committed to that route to market.”

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