FB
On Feb.8th of this year you completed the merger with Saflink Corp. Can you tell us about that?
IDENTIPHI
It was an exciting event for us as it was a culmination of over a year’s work spent on building a relationship between Saflink and IdentiPHI, a relationship that started after Saflink announced their restructuring efforts towards the end of 2006. Around that same time we were looking to expand our security product offering and were investigating licensing or buying a biometric middleware solution. Fortunately, we were able to successfully negotiate the purchase of SAFsolution and SAFmodule, Saflink’s primary biometric solutions for the enterprise, and completed the transaction in February of 2007.
This was big and critical step for IdentiPHI. We’d been in the security market for a number of years, building a niche business as an integrator and reseller of third party products. Over the years we developed a number of trusted relationships with large companies and partners by providing straightforward advice, consulting, remediation, and implementation services for their security initiatives. Wanting to grow beyond this advisor and integrator model, we made the strategic decision to have control of our own product line, and based on our collective backgrounds and expertise focused our search on an authentication solution. We had been sourcing and implementing authentication solutions from other companies for our customers and had gained valuable experience in the space. The acquisition of Saflink’s middleware gave us the ability to play a larger role in a security implementation. We now have the ability to have IdentiPHI products providing a critical function for the organization. As another important component of the purchase, we received rights and protection under some of the more important biometric patents Saflink owned. This allowed us to build a strong and cohesive story around the solution for our customer and opportunities.
Between the acquisition of the middleware and the eventual merger, we elected to make a number of improvements to the product line. Because of the knowledge gained from our close work with a number of large Fortune 500 customers on security implementations, we decided to rebuild the SAFsolution product to better address the needs of our enterprise customers. We stood up a development team by hiring many of the experienced development staff from Saflink to expedite the development. While we were doing this, the discussions continued with Saflink and we realized there were some additional benefits to combining the companies. Saflink had additional intellectual property, customers, and relationships that we believed we could incorporate within our business model for additional growth with our prospects, customers, and partners.
We closed the merger in February of this year, combined the management teams and organizations, and focused our efforts on two activities – completing the development work on SAFsolution and increasing the opportunity for the product with customers and partners. I am proud to say that those activities are proceeding well. In the short time since the merger, we have been able to bring on additional customers, including some Fortune 100 clients, and expanded sales opportunities for the product with a number of key partners. In fact, we’ve doubled the previous number of SAFsolution seats sold in the last year alone. We will continue to focus our business efforts on our biometric middleware in 2008.
FB
You just recently announced the release of the SAFsolution 5 Enterprise Edition. Can you describe for us what the key benefits of this product are?
IDENTIPHI
When we started to revamp the SAFsolution and SAFmodule products, specifically focusing development effort on the next version of SAFsolution, we had a good product with good capability. It interacted closely with Microsoft’s directory infrastructure and provided easy user authentication for biometric or multi-factor log-on, but it wasn’t quite "enterprise ready" in relation to today’s expectations.
We used the twelve plus months after acquiring the middleware to work closely, and very hands-on, with a handful of our best and largest customers to understand their critical enterprise needs. We invested a good deal of time and effort to do this, recognizing the importance of asking our customers a basic question: "What’s important to you?" We believe our current customers and prospects will find the result of this effort – SAFsolution 5 Enterprise Edition – a true enterprise-friendly solution that addresses their needs. Not only have we made changes to improve security through the use of the latest Suite B cryptography, but we’ve enhanced the experience for both the user and administrator. Additionally, SAFsolution 5 now works with an even greater number of applications and biometric technologies and devices, further advancing one of the main strengths of the original product. Learning from our customer discussions and the past success of SAFsolution, we recognized the importance of strong authentication in strengthening complementary productivity solutions like Single Sign-On (SSO) applications. There are a number of key providers in this market and we placed special attention on making our integration stronger with their products.
I’d like to highlight one of the new capabilities I believe many organizations will find useful. In SAFsolution 5 Enterprise Edition, we have built out an intuitive and robust administrative function for the management of users and policies. In past versions, an administrator had to use the administrative functionality provided by Windows or other applications to manage many of the rules, requirements, and policies for users. In SAFsolution 5, we provide a centralized management console that companies can use to control, at a very granular level if they wish, the policies around users, devices, and computers, both for biometric enrollment and for use with their network. Existing users will find this a vast improvement over the previous version, saving time and simplifying their ability to manage an implementation day-to-day and over the product lifecycle.
FB
IdentiPHI provides solutions for several vertical markets, health care, financial, government and pharmacy. Where are you seeing the greatest growth?
IDENTIPHI
We believe authentication products like SAFsolution have horizontal applicability, and are not necessarily limited to a specific vertical. With that being said, I do believe we are seeing the greatest growth concentrated in a handful of areas, where there are significant drivers pushing growth and adoption of biometrics.
The health care vertical is a good example. HIPAA has been a driver for security in this area for a few years now and there are other pressures with respect to prescription ordering and issuing that are starting to have impact. The net result of these drivers is the implementation of technology to avoid the risks and tangible penalties providers face from not meeting the regulations and initiatives. We’ve now had six plus years experience with some health care clients using biometrics in many of the harshest environments in the hospital, and we truly believe that it’s going to continue to have strong potential. On-going efforts to streamline the environment that clinicians and staff work in are resulting in greater efficiency and an improved ability to access patient information. Our work with customers and partners operating in these settings has shown the value biometrics brings for convenience and above all else, identity assurance and security. Our customers are also looking to us to help with real-world situations where a hospital employee loses a laptop or patient information is accessed by someone that did not have the authority to do so, and they are at risk for real penalties. Using biometrics and other products we offer, we can save them not only the embarrassment, but also avoid real costs and offer them an improved security framework to operate in.
On the financial services side there are tremendous drivers. The publication of ISO standard 19092 is validation of the benefits biometrics can offer a financial institution, providing advice on implementation. We are getting new inquires from organizations that in the past had resistance because of cost and other issues with biometrics. Today, if you look at the things that have happened in high profile organizations such as Société Générale and others, you will see situations where basic security solutions were not up to the task of protecting access to critical applications. By employing stronger authentication to prevent unauthorized access, these well-publicized data breaches could have been avoided. Those organizations are investing in tightening controls and are coming to us and the industry for critical solutions.
As is typical in many developing markets, government activities are another growth area. In the US alone, there are a number of large federal programs underway that are helping to improve our industry. HSPD-12, TWIC, and various border control programs to name a few, are helping organizations and companies become familiar with the benefits of biometrics and importance of identity assurance. We are tracking these activities and other foreign government efforts and are excited to see what result their impact will have on adoption both in the government and private sectors.
I’d like to mention an interesting use of our technology in what many would consider a non-typical environment, but one where we see growing potential. We are working closely with a large telecommunications company who is deploying biometric technology to improve the customer experience at their national retail stores. They are doing this by moving the customer transaction closer to the accessories, phones, and other items that the customer wants to purchase. Instead of the customer queuing up and waiting at the counter for a sales associate to access their account information, sometimes discussing their personal information in a very open setting, the company is deploying tablet PCs enabled with a fingerprint swipe sensor to help create a new sales model. When an associate first turns on a tablet, our IdentiPHI software comes up and in combination with one of our key partners, BIO-key, we provide a solution that allows a sales associate to securely log on and roam the store to handle customer purchases. They now have a more private environment to speak with customers and eliminate what was a bottleneck in the stores, the line at the counter. By increasing productivity and security, we believe the solution will open up multiple uses across the large organization as it is rolled out into their stores nationwide.
Lastly, there is one other area having a large impact on the market. Our partners like Dell, and HP, and the large PC manufacturers as a group, are shipping millions of laptops every month with biometric swipe sensors in them. The cost of the biometric devices has gone down so much, and the ubiquity of these sensors in the corporate world is so great, that the lack of a device is becoming less of a hurdle to adoption. With the ability of SAFsolution 5 to seamlessly integrate into a Microsoft or the Novell directory infrastructure, we’re no longer viewed as something that is hard to implement or isn’t scaleable in the enterprise environment. This rise in biometric-ready laptops is allowing us to see applications and opportunities horizontally across the market, putting the technology right on the beginning edge of large enterprise adoption.
FB
You work with many of the key players in the Biometric, Smart Card and Identity management area - you mentioned BIO-key for example - and therefore you are in a unique position to understand some of the challenges that face the industry. What would you say some of those challenges might be?
IDENTIPHI
In the past there had been a lot of proprietary systems marketed in the card management and the biometric device arena. The original timeframe for development of SAFsolution and SAFmodule put Saflink in a unique situation, enabling a strong leadership role in the development of the BioAPI standards. We see the benefits of that participation in our product approach today. We have been a strong advocate for adoption and implementation of common standards and believe it is reflected in the open architecture of our products. This is where the market and customers have to move, the days of proprietary solutions are fading away. This approach provides us a strong competitive advantage in the market. As our technology partners make advances like new vein recognition technology and facial recognition capabilities, we will be in a position where we can adopt to it without barriers. In the past it was, “Well, I bought this biometric system and I can only upgrade or use it with their software or their devices.” This approach limited not only the scalability and adoption of biometrics, but truly secure multifactor authentication. As those barriers disappear, we are seeing new software and devices are that interoperable within the environment that a client needs, and not designed just to provide self-preservation of intellectual property in the market.
The other challenge is education. Biometrics used to be "Star Wars-like" or "Mission Impossible-like" technology, and people would see it as something futuristic that only secret three letter government agencies use. The most common form of biometrics, the fingerprint, has long been associated with the law enforcement community and because of that carries some negative perceptions. Today it is becoming something that people are utilizing on a daily basis for positive reasons. They see it on their work laptop, they see it more in environments they are going into, whether a grocery store or others. This exposure and use will help the industry out tremendously.
FB
What can we expect to see from IdentiPHI in the future?
IDENTIPHI
When customers are looking for biometric and authentication solutions, we want them to think IdentiPHI first. In order to achieve that goal, we are focusing on becoming the foremost provider of biometric solutions for network and application access. Our product strength is centered on our ability to deploy, manage, and administer biometrics for the enterprise. To that end, we will continue to develop SAFsolution 5 into one of the most scalable and premier enterprise biometric solutions.
We are putting energy into expanding the capabilities of our entire authentication product offering. It is critical to our strategy to build an open framework that supports the use of biometrics and other authentication methods widely in complementary security and productivity applications. A perfect example of this direction is our work with partners Wyse Technology and Citrix. Our biometric and smart card products are being validated and deployed with their virtualization and thin client technologies to secure access in an environment where identity assurance is even more critical – a virtual environment. We anticipate these activities will expand the market even more.
Along with the attention to product functionality and integration, we will continue to grow our successful partner relationships with very large OEM and security solution providers. These relationships have played an important part in the success of our business and will continue to provide valuable access to distributors, markets and customers.
It has been gratifying to see all our accomplishments over the last year. I am looking forward to a new phase of growth for IdentiPHI.
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