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Will This Be A Match Made In ‘IAM’ Heaven? Iddriven Inc (OTCMKTS:IDDR), Microsoft Corporation (NASDAQ:MSFT)

A rise in web-based applications and risk management solution combined with cost containment are set to drive the global Identity Access Management (IAM) market says Grand View Research. Such dynamics are prompting increased spending by large enterprises and government organizations, along with stringent regulatory compliances. Grand View calculates that this will be in the region of $24.55 billion by 2022.

What The Street Doesn’t Know Yet But Should Be Paying Attention To

Iddriven Inc (OTCMKTS:IDDR) is an enterprise software company that has developed and is now launching the next generation in Identity and Access Management enterprise solutions into a demand driven market.

Growing at a CAGR of over 18% from 2015 to 2022, analysts are already predicting that cloud-based identity and access management market will witness ‘robust’ demand by 2022. Investors are paying close attention now.

A major driver has and is expected to continue being Public sector and utilities sector organizations, which accounted for over 25% of the revenue in 2014. They’re anticipated to exhibit significant growth over the next six years as enterprises become more digitally connected.

Previous Successes From Current Management

IDDR is led by a senior management team with extensive experience in the Access governance and Identity Management market. But it gets better. Its successful track record includes having worked together at its prior company, BHOLD, to turn that company around.

In 2011, they engineered the sale of BHOLD and its flagship IAM software program to Microsoft Corporation (NASDAQ:MSFT) for a substantial, all-cash sum. MS supports that program still today but has been unable to port it to the cloud. Microsoft is a key – and enthusiastic – channel partner for IDDR according to IDdriven.

IDdriven, a solution heavily featured in the technology trade media, is completely committed to accelerating your business, delivering only the most efficient, cost-effective and innovative Identity and Access Management solution. These solutions are allowing consistent and continuous control over the identities and applications as organizations manage their on-premises as well as in their movement of applications further into the cloud. IDdriven allows businesses to successfully manage access across applications, users, and devices.

IDdriven’s management team holds more than twenty years of experience in the Identity and Access Management industry. Recognizing the expanding market for cloud apps, as well as devices and new regulation requirements, the team has come together to harness their expertise and work towards developing the secure, cost-effective and user-friendly solution that is IDdriven.

The IDdriven Solution

Services provided by IDdriven can be provided on-premises or completely cloud-based and delivered “software as a service.” IAM helps end-users in ensuring that access across multiple technological environments will be granted solely to the right individuals. The Company’s flagship, IDdriven, is engineered to manage large quantities of user volumes, granting access rights over various applications in hybrid environments, be it on the cloud or on premise.

The company has proven IDdriven’s performance as a superior, next-generation hybrid cloud-based solution, and the new state of the software that can be delivered as a service. IDdriven’s plug & play functionality enables a new, untapped SME marketplace that holds room for opportunity. IDdriven Inc. is led by an eminent senior management team that holds extensive experience in the Access governance and Identity Management market.

When asked to comment on their new channel partnership (just recently signed in July) with IDdriven, PATECCO Managing Director Moritz Anders stated, “PATECCO is arguably the top European consulting firm specializing in IAM solutions and, with IDdriven, we are excited to finally have a program – built in the cloud, for the cloud – that solves the many shortcomings that have hindered the sector to date. IDdriven (IDaaS) is effective, agile, easy to use and affordable. PATECCO prides itself on offering our customers state-of-the-art solutions, and I believe companies cannot afford not to have IDdriven as part of its security and data protection IT infrastructure.”

Germany-based PATECCO is a leading enterprise technology consulting firm that specializes primarily in the Identity and Access Management sector. PATECCO is also a certified Microsoft Silver Partner and NetIQ Gold Partner. Arend Verweij, Chief Executive Officer for IDdriven said, “IDdriven is building a solid foundation to support high volume, global sales to small, mid-size and large enterprises throughout Europe and the US. PATEECO is well known and highly respected for its expertise in all things IAM. We are delighted to partner with a world-class IAM expert that shares our commitment to excellence and unrivaled customer service.”

IDdriven is a cloud-based platform that can be up and running within minutes to successfully add a layer of security that travels alongside each specified employee. “Employees will only have access to company applications and data in regards to their access rights as dictated by their role within the company — and when they are within a predefined area or location,” Verweij stated. IDdriven differentiates itself from market solutions that were built to address stationary access borders at large enterprises by making their solutions completely cloud based & 100% scalable, “With a simple and intuitive installation, IDdriven is securing the new perimeter — identity.”

Recently, IDdriven, Inc. announced another channel partner and distribution agreement with Oxford Computer Group for the Company’s signature (IDaaS) Solution. OCG values the idea of connecting the two software programs and has taken it upon themselves to develop this proprietary interface software at their own expense. This connector between two companies brings forth a solution for hybrid application landscape that also enables customers with the ability to move from on-premises to a cloud application landscape.

With such a connecting software now in place, OCG can begin selling IDdriven’s IDaaS solution to their client network, many of which are larger, well-known global brands. With Oxford Computer Group’s connector and the IDdriven cloud software, the full integration between companies like Microsoft Office 365 and Azure AD is now feasible for all their customers. Customers with either an Office 365, Enterprise Mobility Suite or Azure Premium subscription, now highly benefit from the total solution OCG can bring to the market.

The IDaaS solution is valued as an asset as well as a selling tool when offering clients a management software package. Having OCG build an entirely new interface software specifically to connect the IDaaS solution with Microsoft’s Identity Management Software program gives IDdriven a great sense of confidence in both product and direction as a company. The IDaaS solution couples alongside Microsoft’s software to provide users with a complete identity access, cloud, and mobile device management solution unmatched by competitors. This new interface software gives IDdriven a clear competitive advantage and positions them in favor of capitalizing on a fast-growing market.

Market Growth To Pay Attention To

Industry analysts project the demand-driven IAM market to eventually double from its previous $9.16 billion in 2014 to a forecasted $18.30 billion by 2019, a 14.85% compound annual growth rate. IAM solutions provide secure, identity-based access to various systems, applications, and information from any device or location. Currently, the market value is at approximately $22,216,450, with an authorized shares total of 500,00,000 as of April 2016.

IAM solutions are continuously becoming widely adopted by large-scale enterprises as well as government departments. Experts are calling the streamlining enterprises of the newly created IAM industry to be one of the faster-growing segments of the “Software As a Service” industry over the next 6 years, anticipating a significant growth as enterprises continue to become more digitally connected.

Mergers And Acquisitions Climate Is Ripe

Other large corporations are heavily focused on rolling up this segment as early opportunities and untapped growth are in full motion. This is not to the tune of smaller dollars either:

IBM (NYSE:IBM) acquired Lighthouse Security Group to expand on its IAM offerings.

LogMeIn acquired San Francisco-based startup Meldium for $15 million in cash.

Cybersecurity solutions provider Optiv Security, Inc. (previously Accuvant and FishNet Security) acquired IAM firm Advancive LLC

OneLogin expanded on its IAM solution for enterprises through an acquisition of Cafésoft

Ping Identity announced that it has been acquired by Vista Equity Partners. Ping is the same organization that made waves with its acquisition of Marketo, a leading marketing software firm, for $1.8 billion!

Ernst & Young has even earmarked at least $20million for the firms recently launched Managed Security Operations Center (SOC), an initiative designed to provide 24/7 tools and support to secure businesses worldwide!

“I think these acquisitions to some extent indicate there’s more interest in … managing identity through the cloud…So I think or we think there’s going to be more M&A [merger and acquisition] activity around identity and I think it’s fair to say a good portion of that will involve companies who have some way of delivering identity and access management services through a cloud-based model.”

– Garrett Bekker, senior analyst with 451 Research.

There’s no shortage of dollars heading toward the segment and no stall in growth projections within the next 6 years either, which is why many large organizations and investment firms are choosing now as the time to get involved.

Potential Risks Involved

Just as with any investment, there are obvious and clear risks involved with a company like IDdriven. Most notably, investors should refer to the recent financial statements of the company. This is still a micro-cap company and outside of the usual liquidity risk that stocks trading at these levels face, there is also much needed capitalization to continue operations. In the most recent 10Q filing IDDR shows very little by way of revenues currently.

Even though current management had success with the BHOLD project in connection with Microsoft and they state that Microsoft is “a key and enthusiastic channel partner of IDdriven,” there’s no guarantees that such a transaction would take place again (despite my optimism).

Further diving into the financials, the current balance sheet does not show many assets on the books as far as overall value is considered but with the largest being “Cash and Cash Equivalents” at about $161k, this may be a benefit as far as expendable assets for growth are concerned. The going concern that IDDR lists should also be noted as a potential risk factor here as well.

“The Company has incurred operating losses of $460,799 during the period ended March 31, 2016 and has an accumulated deficit of $2,649,860 as of March 31, 2016. In addition, current liabilities exceed current assets by $1,403,376 as of March 31, 2016.” They will surely need to raise funds in order to sustain operations, which could result in liquidation into the market down the road.

The Road Ahead

Despite the risks, which many already know when investing time into looking at companies not only within the emerging tech space but the microcap space as well, IDDriven has seen a good amount of progress through channel partnership built within the last few months. The previous successes of management specifically with Microsoft should highlight its ability to properly design solutions for enterprises just as big if not bigger than MS. Furthermore, with the climate for M&A very hot, the potential for a buyout is still in the back of my mind outside of any successes that IDdriven sees operationally.

This having been said, when it comes to the Software as a Service company, many of these “smaller organizations” are being looked at for real solutions not only because of lower overhead in comparison to large-scale enterprise but also because of the “personal touch” that they can offer. Obviously IDDriven’s leadership has engaged with some of the biggest channel partners in the space so looking ahead, the potential to firm up these relationships and further build the business could be closer than we think.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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