Oracle Buys Bharosa

| July 19, 2007 | Enterprise Security | Competitive Intelligence Report

| Analyst: Andrew Braunberg

Event Summary

On July 18th Oracle agreed to acquire Bharosa, Inc., a provider of software that helps combat online identity theft and fraud. Strong authentication and fraud detection are increasingly critical components of identity management deployments and are seeing rapid adoption. Driven by regulatory mandates such as FFIEC, PCI, and HIPAA, organizations are under pressure to reduce fraud and provide higher levels of assurance of users' identities and their usage intent.

Analytical Summary

• Current Perspective: Positive on Oracle’s acquisition of risk-based authentication vendor Bharosa because the company provides Oracle with immediate credibility in one of the hottest segments of the identity management market. Bharosa claims more than 25 million online users of its mutual authentication and fraud prevention products.

• Vendor Importance: High to Oracle’s identity management business because risk based authentication is critically important to financial services companies, which are a key market segment for Oracle. A combined Oracle/Bharosa solution is expected to deliver compliance, auditing, and reporting requirements for financial services, healthcare, and online commerce vendors.

• Market Impact: High on the risk-based authentication market because Oracle is the first identity management suite vendor to buy into this market and one of the largest, if not the largest, vendors to show interest in the space. Oracle’s move is likely to accelerate market consolidation and help evolve risk-based authentication from standalone products to features within larger suites.

Recommended Competitor Actions

• Token vendors, such as Entrust, RSA, VASCO, and Verisign, should be wary of Oracle as a risk-based authentication partner. All of these vendors have made moves to deliver risk assessment and fraud prevention on top of their existing authentication businesses. This is especially true for Entrust and RSA, which both joined Oracle’s Extended Identity Management Ecosystem partnership program last June as strong authentication partners. These partners should look to Oracle for reassurances on the continued importance of these existing relationships.

• These same vendors, and many other pure plays, should position this acquisition as a validation of the strength of the risk-based authentication market and its strategic importance to identity management vendors. It is also more broadly an indication of the growth in the consumer authentication market and an indication that innovation has lately been bubbling up from this less-traditional market segment.

• CA, which was partnered with Bharosa, should at the least be looking for additional partners in the risk-based authentication space. A more aggressive move would, of course, be to also consider buying into the space. There is no shortage of innovative start-ups addressing risk-based authentication and fraud prevention. A small sample includes: The 41st Parameter, Actimize, Cogneto, Deepnet, and Digital Resolve.

Recommended End User / Customer Actions

• Existing Oracle and Bharosa customers should be pleased with this announcement. Bharosa’s technology finds a secure and well funded home and Oracle should quickly expand its product line to include risk-based authentication and fraud detection tools.

• Prospects should continue to assess both Oracle’s Identity Management suite and the Bharosa products separately. Even after this deal closes it will be some time before Oracle will fully integrate these new products.

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