Blogger: Lori Rowland
This week SAP announced its acquisition of MaXware, a privately held identity management vendor located in Trondheim, Norway. The core of MaXware’s identity management offering is its user provisioning and virtualization capabilities.
On the surface, this acquisition may seem nothing more than continued consolidation in the identity management (IdM) market. However, in reality this acquisition has deeper roots and may have a larger impact than expected.
Those familiar with the applications side of the IT world know that SAP and Oracle have a long and colorful history. In the 90’s the PeopleSoft and SAP rivalry was at its peak. The vendor’s respective ERP applications were still evolving -- the products were differentiated feature-by-feature, module-by-module. Other players in the market included JD Edwards, Siebel, Hyperion, and a little company called Oracle (okay- maybe not so little, but it was much smaller than it is today). SAP had a stronghold on the European market while PeopleSoft sales were skyrocketing in North America.
As history has shown, the only thing consistent is change. Oracle began its buying frenzy in late 2004 with its acquisition of PeopleSoft. Since that time they have acquired JD Edwards, Siebel, and most recently Hyperion – virtually wiping out its competition with the exception of SAP. Today, Oracle and SAP dominate the enterprise application market. These vendors are differentiated not by product features but by strategy, vision, and peripheral components (e.g. services, middle-ware, security, audit, and identity management).
In 2006, Oracle entered the IdM market through the acquisition of Oblix, Octetstring, and Thor Technologies which offer access management/federation, virtual directory, and provisioning features respectively. Oracle Identity Manager is a component of Oracle’s Fusion Middleware product family. Oracle positions its IdM products as an “application-centric” solution.
SAP also made several acquisitions. In 2006, SAP acquired Virsa Systems, an enterprise application controls management vendor offering access control and separation of duties features for the ERP environment. Virsa has been re-branded SAP Governance, Risk, and Compliance (GRC) Access Controls. SAP GRC Access Controls is just one component of SAP’s GRC product family.
In March, 2007 Oracle announced its GRC Suite which includes technologies acquired from Stellent, Inc. The rivalry between these vendors has begun to resemble a game of Battleship. SAP’s acquisition of MaXware representing a return fire on Oracle’s various IdM acquisitions. Both Oracle and SAP now have a GRC suite and an IdM offering. The interesting thing about this game of battleship is that so far no one has been wiped out.
At first glance, it appears that Oracle and SAP are merely firing shots at one another. This is true to some degree. These vendors are each trying to bring added value to their core application and platform. The ERP business is the core business for these vendors. This is similar to Microsoft’s strategy – if customers buy peripheral components (MSWord) they are more likely to remain committed to the core platform (MS Windows, XP, etc.). Peripheral components sustain the “cash cow.”
SAP’s entrance to the identity management market does however change the dynamic beyond the existing rivalry with Oracle. The acquisition will have a direct impact on the identity management market. Exactly how the market will be impacted will remain somewhat unclear until SAP reveals its long-term identity management strategy and roadmap.
SAP’s acquisition of MaXware has potential to impact the identity management market in several different ways such as:
- Application-centric identity management becomes a reality. Oracle’s and SAP’s IdM offering will truly have tighter integration with their respective enterprise applications. Integrating with ERP applications will be simplified.
- Identity becomes an embedded component of enterprise applications. Enterprise applications become the trigger for identity events rather than just a consumer. This has been something that Burton Group has predicted for sometime. Both SAP and Oracle have the opportunity to make this happen.
- Identity as a service. Again this is something Burton Group has been promoting. SAP has potential to influence identity as a service by combining its NetWeaver, SOA, standards, and identity strategies.
- Most obviously, SAP’s acquisition brings additional consolidation and competition to the IdM market.
This acquisition was probably not terribly surprising to those watching the IdM market. However, the game is not over. To be successful SAP must take the time to understand the needs of its customers (and potential customers) in the IdM market. Oracle and SAP both have the opportunity to truly impact and influence the services, IdM, security, and risk management markets while solidifying their competitive stance in the enterprise application space.