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Palisade Systems beefs up corporate protection products


It could be as innocent as mistakenly clicking on a sensitive file that shouldn’t leave the building. A few more clicks, and it’s inadvertently e-mailed. Or it may be a disgruntled employee who decides to take more than a stapler with her when she leaves.

Regardless of the scenario, it’s much more likely a company’s intellectual property will be compromised from within the organization than stolen by outsiders, says Kurt Shedenhelm, president and CEO of Palisade Systems Inc.

The Ames-based systems security company, which in the past decade has marketed a suite of products that defend against internal network threats, this month is introducing a new technology it claims is unparalleled in the industry. Referred to as the Content Surety framework, the programs constantly monitor a company’s internal computer systems to prevent unauthorized leaks of corporate intellectural property.

“Most of the system solutions that are out today can basically only tell you (there’s been a breach) after your crown jewels have left the office,” Shedenhelm said. “Ours will stop it before the information goes out.”

As demand for effective system security tools increases, Palisade anticipates significant growth in revenues and market share within the next two years as it carves a wider niche in the emerging industry.

Founded in 1996 by Doug Jacobson, an Iowa State University computer engineering professor, Palisade controls exclusive marketing rights to the patented security technology developed by Jacobson that the software is built upon. The privately held company, which operates from incubator space at the ISU Research Park, estimates its revenues will reach $6 million this year. Sales are expected to more than double to $13 million next year with the launch of the new products.

Palisade’s products, which will be marketed as new versions of its existing content protection software, are application-independent, meaning that no matter how protected information is broken up, it won’t get out, said Jacobson, the company’s chief technology officer.

“Most of our competitors are taking the approach of putting the information in a specific place so that you know if one of those ‘yellow folders’ has left the office,” he said. “Our approach is to learn the key components of what makes up your intellectual property, so that even if someone cuts and pastes paragraphs out of a document, our application would detect that.”

Additionally, the applications use a delay loop similar to that used on censor profanities from live radio broadcasts to analyze data as it’s passing through and block any sensitive information from leaving the network. It also passes real-time alert messages to the system administrator and pinpoints the source of the security leak.

Among Palisade’s clients is ANE Technology Services, a Johnston-based company that provides security services to banks throughout the Midwest. ANE uses “best-of-breed” security devices to assist its clients in meeting a variety of privacy and security laws, from Federal Deposit Insurance Corp. regulations to the Gramm-Leach-Bliley Act.

“We did a lot of research on companies before we found someone almost in our own back yard,” said Joel Walker, ANE’s president and CEO. “We just found very few companies that could provide that level of protection, especially at that cost.”

Palisade, which has maintained growth in the 15 to 20 percent range, anticipates revenues will hit the stratosphere this year, in part because the new product’s unit pricing will be up to 10 times the earlier package’s level.

“The price per unit in the industry for the past several years has been $10,000,” said Steve Brown, Palisade’s product marketing manager. “With this, you’re in the $50,000 to $100,000 range, depending on the company. The number of units needed will vary based on the size of the organization and how they have the network set up.”

In addition to new sales, the company expects at least half its existing clients will purchase the new software.Currently employing 18 people, Palisade anticipates increasing its staff to 26 by the end of this year to handle the expected growth in sales.

Regulation drives spending

According to a survey by Pricewaterhousecoopers’ Technology and Data Services Practice, information security spending represented about 11 percent of overall corporate information technology budgets last year. Spending in this area remained level from 2003, an indication that companies are seeking more value in their security investments by ensuring ties to business needs and elimination of overlapping spending. Government regulations and potential liability continue to the be the biggest factors driving security investments, according to the survey.

A separate survey in January of 1,300 chief information officers by Gartner Executive Programs, a unit of research and advisory firm Gartner Inc., indicated that improving security enhancement tools is the No. 1 technology priority.

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