McClain On The Record
The tech industry overall may be paring back on staff in sales and other roles, and some companies in the cybersecurity market have done layoffs as well. But for providers of technologies in the red-hot identity security sector, such as SailPoint, the economic upheaval and fears of a recession are having minimal impact on the game plan, according to SailPoint founder and CEO Mark McClain.
“We’re still planning for continued acceleration and continued market capture,” McClain said in a recent interview with CRN. “While the noisy economy is a little bit of a negative driver, there’s way more positive drivers for us—just the fundamentals of the world moving toward digitally centric business.”
SailPoint, an Austin, Texas-based provider of identity governance and administration (IGA) and other identity security tools, and its solution provider partners are benefiting as more customers recognize that identity is a “critical linchpin” in their digital transformation efforts, he said. Research firm MarketsandMarkets forecasts that the IGA market will reach $7.7 billion this year, more than doubling in size since 2018. Identity and access management (IAM) is expected to grow by 91 percent by 2027, to $25.6 billion, according to the firm.
In August 2022, SailPoint was taken private in a $6.9 billion deal by Thoma Bravo—a private equity investor that last year also acquired Ping Identity and reached a deal to acquire ForgeRock, two other prominent players in identity security. Then in January, SailPoint made an acquisition itself, snapping up third-party identity security vendor SecZetta to bolster its platform.
During the interview, McClain also addressed a recent claim that SailPoint is a “legacy” identity security provider. SailPoint offers a “true SaaS product [built] from the ground up,” he told CRN. “We’re a 17-year-old company, but we’re not legacy SaaS. We’re the most cutting-edge SaaS product in our category.”
McClain also discussed the potential for further consolidation in the identity security space, the biggest opportunities for channel partners looking ahead, the SecZetta acquisition and the prospects of making additional acquisitions.
What follows is an edited portion of CRN’s interview with McClain.
How are things looking for SailPoint in 2023?
I think we’re still feeling a lot of really good momentum in the market. Obviously, it’s a little choppy in the world. It has been off and on for a few years. I think we felt a little more in the second half of last year.
We’ve all seen the massive tech resizing. I think it’s almost obvious [why that is happening]. When you’re in a go-go mode, you’re not sloppy—we weren’t either—but we all were kind of assuming a continuation [of the economic conditions]. So you plan and hire for that. When it changes, then there’s some readjustment you have to do. I think some companies were a little more disciplined than others and their adjustments are less dramatic.
We haven’t seen as much of that in security, though.
There’s the world, then there’s IT, then there’s security, then there’s identity. Within identity, we felt a little bit of choppiness in the second half and heading into this year, but nothing too choppy compared to other segments. Like you said, even all of security still feels pretty good, most aspects of it. And then you get out into IT, it’s a much more mixed story. You get outside of IT, and it’s a really mixed story in some industries. I think we’re still planning for continued acceleration and continued market capture.
While the noisy economy is a little bit of a negative driver, there’s way more positive drivers for us—just the fundamentals of the world moving toward digitally centric business. Whether you’re in the tech business or not, we’re all talking about leveraging digital [in a bigger way], digital transformation, using technology to advance your business cause. Anything that drives more heavy investment in technology in a world that’s now default cloud/mobile/remote—that helps us. Because identity is now clearly seen as a critical linchpin in that mix. If you’re going to do more digital assets, more new business applications, you’re going to do them in the cloud. You’re going to do them to mobile. And identity is just very core to that.
I wouldn’t say everybody gets that, but we’re getting close. Most companies get that and then they’re now going, ‘OK, if that’s true, what do I do about that?’ And that’s what leads to a lot of great conversations for us.
Are there certain parts of the market where you’re finding the momentum to be especially strong right now?
In some cases, it’s midsize companies who probably never did a lot in this arena. Big companies have absolutely done some things, and they’re revisiting what they’ve done and if it’s going to work for them into the future. So they’re both a very large market and [are making] a very large migration. In the midsize world, more often they have less investment in our category and are looking at if they should be doing more than they’re doing. They recognize the problem far more than they did a couple of years ago.
So back to your point, I don’t see security feeling the pain in general that the market’s feeling. And I feel identity is feeling even less of the pain than the rest of security. I think most identity companies are still sounding pretty bullish right now.
How have things been going so far since being taken private by Thoma Bravo? Is that playing out the way you’d hoped?
If I’m honest, it’s only been since late in the fourth quarter where we really got much deeper into the dialogue on, ‘Where are we? Where are we going to go? How are we going to get there?’ The SecZetta [deal] had been looked at pre-Thoma, we temporarily put it on the back burner until we saw how things unfolded there, and then roared it back into action once we closed the deal with Thoma. We actually had a light offering for what we called ‘non-employee life cycle’—how do you manage people that aren’t your employees in the world of identity? We knew that was a need. And there’s a lot more of that than there used to be—there’s contractors, there’s various value chains, distribution chains, supply chains.
And one of the hotter new topics is non-human identities. That wasn’t a big focus of SecZetta’s, but they’ve touched that a little. The initial focus from this will be the human non-employee. But this technology lends itself to extending to other flavors of the non-typical employee. So it was a very clear place for us to be extending and expanding. We looked at how easy it would be to integrate that into our core platform versus building something from scratch. Ultimately, the decision was that it’s better to buy this.