Legato shores up portfolio with OTG acquisition

By Heidi Biggar

Legato Systems says its planned acquisition of OTG Software, a developer of data storage, data access, and e-mail management software, will result in tangible benefits for end users as early as next quarter. The combined company will reportedly unveil a detailed integration plan and product road map at the close of the deal, which could be as early as May.

The merger, which has been valued at more than $400 million, brings key application-focused software to Legato's portfolio. Officials from both companies say the agreement is the culmination of a long-term partnership--one that predates a March 1999 agreement between the two vendors--which allows for the integration of OTG's DiskXtender software into Legato's NetWorker backup-and-recovery suite.

"We've coalesced around our [application view of storage management]," says Jim Chapell, vice president of business development at Legato. "You've got to think of customer problems from the application perspective. Are my applications available, protected, and running in the most efficient way?"

Chapell says that while Legato has added some application-specific components to its core data management software over the past three years, its focus has largely centered on horizontal (e.g., backup and recovery), not vertical (e.g., e-mail, rich-media) markets. The acquisition of OTG, he says, fills that void with a product set that complements its data management offerings.

"It rounds out Legato's portfolio," says Gartner chief analyst Carolyn DiCenzo. "Their challenge is to quickly integrate the two companies' road maps and to increase the focus on marketing."

Both companies are focusing on automating data movement, adds Nancy Marrone, a senior analyst with the Enterprise Storage Group. "Legato focuses on backup and recovery; OTG on automating data placement based on policies [e.g., migrating Exchange data based on aging]. If Legato integrates these capabilities via policies, they will have a very strong automated data management product."

The acquisition would also expand Legato's channel presence and bring new relationships with vendors such as Compaq, EMC, Network Appliance, and StorageTek. The only potential sticky point, says DiCenzo, is Legato's handling of OTG's relationships with leading software vendors. "Most of these vendors have partnered with OTG for the NT piece, so it will be interesting to see how this plays out," she says.

OTG's software portfolio includes various storage, messaging, and content data management products. Overlap between the two companies' product lines is minimal. Legato says that while it plans to maintain OTG's Rockville, MD, headquarters, it will phase out the OTG brand going forward.

This article was originally published on February 27, 2002