Today, SAP announced it has acquired Mountain View, CA based Customer Identity and Access (CIAM) provider Gigya. Several media outlets placed the purchase price in the $350M range. Gigya has been a CIAM vendor since 2010 and raised ~$105M in venture capital, so if the purchase price is accurate, it reflects a good return for Gigya’s investors.

Gigya has an existing integration with SAP Hybris and several joint customers in production. The Gigya/SAP Hybris integration should facilitate the technical integration work once the merger is completed. The stated intention behind the merger is to meld the Gigya CIAM platform with SAP Hybris for enable better targeting and personalization within the SAP ecosystem.

These are the main takeaways from the SAP/Gigya merger:

  1. Validates strong CIAM market demand. Over the last 12+ months, Forrester has seen a steady increase in the number of CIAM-related inquiries from enterprise clients looking to provide a holistic, omnichannel customer experience that doesn’t compromise on security or privacy. In addition to the growing inquiry volume, our recent data research has forecast the CIAM segment to be one of the fastest growing IAM categories over the next 5 years, so this merger is positioned to capitalize on the projected growth.
  2. CIAM is at the nexus of personalization. Advances in technology and customer urgency have made personalization hot again. By pulling customer data, content, business intelligence, and algorithmic matching engines out into a personalization architecture, firms can deliver contextually relevant experiences across journeys, not just touch points. All this requires some identity context as well as underlying user-centric security and privacy controls especially with GDPR compliance looming in May 2018. The SAP/Gigya combination reflects the importance of having strong identity context to drive personalization.
  3. CIAM will increasingly be a global platform play. As multinational organizations build digital relationships with consumers face a myriad of data sovereignty and privacy requirements that they must correctly implement to minimize the risk of fines and penalties for noncompliance. The complexity of managing the privacy requirements of multiple jurisdictions can also stall any planned online customer identity initiative and will increasingly require global platform providers that can meet these local hosting requirements. Putting Gigya within the broad global SAP ecosystem helps meet that need.
  4. CIAM requires cloud delivery. This acquisition signals SAP response to a changing CIAM landscape in which vendors have to provide not only on-prem but also SaaS /cloud delivery of their integrated and turnkey CIAM offerings to their client base – augmenting existing B2E and B2B platforms.
  5. Expect more consolidation and new CIAM entrants. SAP’s purchase of Gigya helps raise the profile of the CIAM market especially in validating how an identity-platform can complement other customer-facing and marketing technologies. While already has a CIAM platform, SAP’s move could precipitate similar actions from vendors like Adobe, IBM & Oracle to acquire or develop CIAM capabilities to meet the growing CIAM demand.
  6. Success of the acquisition will depend on corporate culture and ecosystem integration. Forrester expects that the success of SAP’s Gigya acquisition will hinge on the following factors:
  • How well can SAP integrate its existing Business Intelligence and Marketing platforms with Gigya?
  • How well can SAP position Gigya and its subsequent versions as a full-service Identity and user management platform (Something that did not work as well following the NetWeaver acquisition)?
  • How well can SAP maintain Gigya’s past security and marketing partnerships and platform neutrality to support the growth of its CIAM business?