1Mby1M Incubation Radar 2010: CionSystems ,Redmond, Washington

By guest author Ravi Bulusu

CionSystems offers identity management solutions that provide IT departments in organizations single, centralized federated identity management for the enterprise and different cloud solutions. The company focuses on three main areas: account management (provisioning and de-provisioning of enterprise accounts), managing multiple identities and keeping them in synch, and audit compliance and generation of required reports.

The company is based in Redmond, Washington, and was founded in 2007 by Zubair Ansari, a veteran of Microsoft. Ansari observed problems of identity management while working with high availability networking and clustering solutions within and across Microsoft’s multiple organizations. That experience prompted him to start his own company. His 17 years at Microsoft helped to prepare him for the challenges expected in a startup journey.

CionSystems’s solutions cut the time taken to provision and de-provision accounts and provide additional security to corporate IT resources. Typically, a 1,000-user company spends $400,000 a year in provisioning, de-provisioning, and password management. Still, companies find themselves exposed to security risks and slow application deployment and adoption. In a 1,000-user company, the typical user has to be provisioned for 30 different applications using different tools. This process can take five to eight working days. The process is similarly long for users who are no longer with the company and need to be de-provisioned; users may still be active and have access several days after leaving the company. Further, surveys conducted by Gartner, IDC, and others indicate that about one-third of the calls to IT helpdesks are for password retrieval, and each call costs an enterprise approximately $40. CionSystems makes retrieval easier by providing employees with a secure means of resetting passwords.

With cloud computing gaining prevalence, the problem of identity management in IT departments becomes more complex, and this complexity only increases with multiple vendors of different platforms. With each such application, the IT identity management load increases onefold. For instance, in an enterprise using Salesforce.com, Amazon Web Services, and Exchange, IT will need to manage accounts for the user base times three. CionSystems maps IDs for all three and keeps them in synch. Users can securely use multiple services through a single sign-on. Providing a comprehensive solution that also includes management of accounts to the cloud resources is an opportunity that CionSystems is working to seize.

Another important aspect that CionSystems addresses is audit compliance. The software automatically keeps records required for compliance and generates the necessary reports. Such records of historical data are a requirement to pass audits for companies that deal with money transactions of any kind. CionSystems can handle compliance for Sarbanes–Oxley, Payment Card Industry (PCI), and the Health Insurance Portability and Accountability Act (HIPAA), among others.

CionSystems delivers these services through its Active Directory, a browser-based platform, and its related modules, Active Directory Self-Service, Manager, Reporter, and Change Notifier. Customers can person any number of them. The average price ranges from $5 a user to $35 a user for a perpetual license, based on the number of employees, plus a 20% yearly maintenance cost. In addition the company has a “lease” model that it provides for two- or three-year contracts. The lease pricing, perpetual license is typically divided into two to three yearly payments plus a small percentage.

Forrester estimates that the identity management and access (IAM) market will grow from nearly $2.6 billion in 2006 to more than $12.3 billion in 2014. This includes revenues from both products and implementation services). It further expects provisioning to account for two-thirds of the market by 2014 and says that “even after years of healthy adoption rates, the IAM market is actually just beginning its trajectory toward broad adoption and deep penetration.” The move toward managed services will be part of this growth.

Currently, CionSystems is mainly targeting the mid-size market for IT management in technology companies and in the public sector. The company is looking to expand to other verticals, including the financial and healthcare industries. But the market is vertical agnostic, and CionSystems can cater to the identity management needs of IT administrators, security auditors, business owners, and end users (development, testing, business development teams, etc.) in a typical enterprise

When they first started, there were a few other companies that were also trying to address identity management. Competitors include Ensim, Quest, NetIQ, and Manage Engine. CionSystems aims to compete by building a cloud solution that will differentiate it; competitors have either an enterprise-only solution or a cloud solution. CionSystems is combining these to have centralized enterprise plus federated solutions. It also takes a different approach to marketing by focusing not on on channels but working with consulting companies and providing its solution as a tool kit. It has weathered the rough economy by being frugal and continues to be a profit-making company.

At present, the company has 70,000 client licenses. Customer acquisition was all achieved through personal contacts, word of mouth and a well-honed SEO strategy. The business been entirely bootstrapped thus far, and CionSystems is looking to hit its first million in revenue in FY 2010. The company is also seeking funding, namely, $2 million–$5 million in preferred stock. It will use the funds to improve sales and marketing, build a cloud-based federated system (identity enabled Web services) as an additional solution offering for emerging cloud-based IT application markets, and generally grow and position the company for acquisition.

CionSystems presented at Sramana’s 1M/1M roundtable on September 16, 2010, and a recap is available here. Sramana’s advice was to look at some case studies on how to get more out of the core product while bootstrapping, while she is helping Zubair in obtaining institutional funding in parallel.

This segment is a part in the series : 1Mby1M Incubation Radar 2010