IBM has agreed to acquire Watchfire Corporation, a privately held security and compliance testing software company, for an undisclosed amount. 

The acquisition is subject to customary regulatory approvals and is expected to close in the third quarter of 2007.
Online security and privacy incidents are on the rise which can result in loss of customer trust, costly technology and business remedies and often legal battles.  According to a 2005 CSI/FBI Survey, internal security attacks cost US businesses $400-billion per year.
Watchfire technology will extend IBM’s governance and risk management strategy, with broad security and compliance capabilities integrated into the software development lifecycle. Watchfire with IBM Rational software will help customers integrate web application security and compliance early on and throughout the software development process. As a result, customers will now be able to define, test and track the compliance of their applications with security, legal and corporate requirements.
“Security breaches and lack of compliance with industry and government regulations can topple business integrity and customer trust,” says Zoaib Hoosen, software group executive at IBM South and Central Africa. “Watchfire is a recognised industry leader in the security and compliance market that will further strengthen our ability to help customers mitigate risk by integrating security, quality testing and compliance testing requirements early in the software development process – before vulnerabilities are exposed.”
Watchfire is a leading provider of web application security and compliance testing solutions.  IBM Rational software provides clients with comprehensive software quality management solutions, including the ability to perform functional and performance tests while developing software. With the addition of Watchfire technology, customers will now be able to include security, compliance and quality testing as part of their web application development, which will ensure the business integrity of their applications before they go live.
Watchfire technology will also complement existing IBM Tivoli identity, access and compliance management software offerings and ISS by extending security and compliance testing as an integrated element of the application development lifecycle.
IBM’s acquisition of Watchfire builds upon the existing relationship between the two companies.