InformationWeek

thought I'd talk about a company that's actually thriving in today's gloomy technology environment. It's not a hot semiconductor company or wireless franchise. I'm talking about a good old-fashioned enterprise software company that sells large, perpetual licenses with high gross margins. Technology investors once again are favoring the old technology over the new.

More intriguing is the fact that this company is a startup that venture capitalists are willing to fund in a tough funding environment. The company, Waveset Technologies Inc., is a provider of business security management software. The Austin, Texas, company was founded in January 2000 by a bunch of ex-Tivoli executives (you know, the "old" enterprise software company now owned by IBM).

What makes Waveset unique enough to justify the recent $10 million round of financing by Lightspeed Venture Partners? The security angle for new businesses is a hot issue. The mousetrap that Waveset has built is the mundane but very necessary issue of access-management automation for the enterprise. In the brave new Internet/E-commerce world, access security is a concern. Waveset's software offers centralized access management control of all the major user-access functions, including user privilege rights, password management, access risk assessment, and single sign-on and logon capabilities.

That sounds like boring pieces of already-available enterprise-management software applications--and it is, but it's delivered in one package. That's what's so surprising--venture-capitalists funding an old "story" such as enterprise-management software applications. One unique feature of Waveset's software is what the company calls data-less repository. The software manages user information stored in native locations rather than consolidating it into a central repository. This substantially reduces the implementation time. Waveset uses an index of pointers to where the data resides, eliminating the physical and political internal battles for data control. Instead of months and years, installation can take just weeks.

Another big headache is the high cost of account access servicing and provisioning. Waveset's interesting solution is to use policy automation; it gives the user self-service for many simple tasks such as changing or resetting passwords and requesting access to new applications. This can be synchronized across Web-based and legacy apps.

Many of the software functions give IT managers better-unified views of user privileges through identifiable security policies. Combine this with active risk analysis that looks for and identifies suspicious activ-ity, and IT managers will have a powerful weapon in their security arsenal.

Business risks seem less than usual. The company plans on following more-traditional enterprise software licensing strategies, so no advertising revenue is required. This will mean perpetual six-figure license contracts, with the usual maintenance add-on based on the number of users (probably $50 per user). The company also will consider term licenses for certain clients, as well as hybrid contracts.

The competition overlaps many products. There's BMC and Tivoli/IBM, for example, which do a lot of the simpler enterprise systems authorization access functions. Netegrity and Securant do Web-access authorization; NetIQ and Quest have delegated-administration function; and Access360 and Oblix offer workflow functions.

The company's product is just coming out of beta, so it's ramping up sales and marketing. Waveset has a lot of cash (roughly $15 million of the $17.3 million raised so far remains in the coffers) but knows that survival requires managing it well.

The founders, CEO Mike Turner and president Mark McClain, have more than 30 years of experience in enterprise software. And, yes, experience does count for my sense of lower business risk. I'm not an investor, but I must admit, I have a weakness for old legacy software entrepreneurs. And for the "old" enterprise software model--it's still one of the best for making money.

William Schaff is chief investment officer at Bay Isle Financial Corp., which manages the InformationWeek 100 Stock Index. Reach him at bschaff@bayisle.com.