IAM middleware empowers the secure and efficient development of the digital economy

Source: Frost & Sullivan report

The rapid development of the global artificial intelligence industry, especially the innovative applications of large language models, is driving the growth of the middleware market. As a core component in large model training, middleware, combined with ultra-large-scale computing, network, and storage infrastructure, provides powerful computing support for enterprises. With the increasing demand for the design and optimization of AI computing cluster solutions, middleware has seen new growth opportunities. At the same time, the rapid expansion of global AI applications has also increased demand for middleware. Taking IAM middleware as an example, it plays a crucial role in ensuring that AI agents execute tasks securely and efficiently. This includes but is not limited to ensuring that AI agents have undergone appropriate authorization and identity verification when accessing resources; precisely allocating necessary permissions based on the role and assigned tasks of AI agents, meeting both task execution needs and preventing excessive permissions; and monitoring and recording all activities of AI agents, including the resources they access and operations they perform, for subsequent security audits and performance analysis, among other functions. This helps to build a secure and efficient AI agent operating environment.

As governments and regulatory bodies around the world increasingly tighten regulations on data protection and privacy, such as the EU's GDPR and China's Cybersecurity Law, enterprises face more stringent compliance requirements. They must take effective measures to protect user data and network security. Against this backdrop, enterprises' demand for security features and audit capabilities provided by middleware software continues to rise. Middleware providers need to continuously strengthen the security and compliance of their products, including enhancing data encryption, access control, audit logs, and other functions, to meet the increasingly strict regulatory requirements of enterprises. At the same time, enterprises are willing to invest more resources and funds in purchasing and deploying middleware products with high security and compliance to protect their business data and network security, reduce legal risks and compliance costs. Therefore, security and compliance requirements have strongly driven the development of the global middleware market, making middleware play an increasingly important role in enterprises' digital transformation and information technology applications.

As one of the core middleware components, IAM leverages the general adaptability of middleware technology to bridge different types of users with various systems and platforms. It focuses on providing an effective middleware feature that can manage and control the access behaviors and permissions of multiple types of users or terminals, including but not limited to users, IoT devices, virtual reality environments, and artificial intelligence systems. This ensures that each entity can obtain reasonable access rights and monitors and audits these access activities to enhance overall security and compliance. IAM has a comprehensive identity governance system that includes identity management, access permission control, identity authentication, adaptive multi-factor intelligent fusion authentication, automated control of electronic identity creation and recycling, access behavior auditing, permission mutual exclusion compliance management, and risk management mechanisms that ensure real-time alerts and effective prevention. This can ensure that in enterprises and organizations, the correct users can access the corresponding resources, helping to improve security and reduce risks. With the IAM middleware, enterprise and application developers can integrate IAM functions into each front-end application without having to develop IAM functions separately for each application. This improves connectivity, security, and maintainability between different applications, simplifies the development process, and enhances overall digital service efficiency.

With technological updates and iterations, as customer needs continue to evolve, the new generation of digital identity management systems has become the main development direction in the global IAM middleware market. The new generation of digital identity management systems is a multi-layered, compliant, in-depth security defense and comprehensive identity governance system for identity management and intelligent control. It lies between underlying IT resources and upper-layer applications and is one of the most core infrastructures for digital construction. It manages and controls the permissions and risk control of different types of identities, including internal and external users, system identities, object identities, AI identities, digital identities in metaverse spaces, as well as related identity data and behaviors. It achieves identity management within local systems and compatible cloud environments, further improving in terms of compatibility, usability, scalability, and security, realizing connections, sharing, and security in the digital world.

In terms of revenue, the global IAM market size grew from $9.84 billion in 2019 to $16.17 billion in 2023, with a compound annual growth rate (CAGR) of 16.1% between 2019 and 2023. Among them, the market size based on local deployment models increased from $5.43 billion in 2019 to $8.74 billion in 2023, with a CAGR of 12.6% during the same period. The market size based on cloud environment models showed faster growth, increasing from $2.93 billion in 2019 to $6.46 billion in 2023, with a CAGR of 16.6% during the same period. The cloud environment model accounted for 42.5%. Looking ahead, the global IAM market size is expected to reach $26.78 billion by 2028. The cloud environment model is expected to reach $13.92 billion by 2028, with a CAGR of 16.6% between 2023 and 2028, and the cloud environment model will account for 52.0%.

Source: Frost & Sullivan report

The Chinese IAM market started relatively late. In terms of revenue, the scale of the Chinese IAM market grew from 1.27 billion yuan in 2019 to 3.15 billion yuan in 2023, with a compound annual growth rate of 25.4% from 2019 to 2023. Among them, the scale based on local deployment mode increased from 1.14 billion yuan in 2019 to 2.73 billion yuan in 2023, with a compound annual growth rate of 24.4% from 2019 to 2023. The scale based on cloud environment mode showed faster growth, increasing from 130 million yuan in 2019 to 420 million yuan in 2023, with a compound annual growth rate of 32.8% from 2019 to 2023. The cloud environment mode accounted for 13.2% in 2023. Looking ahead, with the continuous deepening of China's digital transformation and the wide application of digital technologies such as cloud computing, big data, and artificial intelligence, the IAM market and identity cloud service market will achieve significant growth. Thanks to the expansion of China's cloud service market, the identity cloud service field will embrace broad development space, indicating huge growth potential and market opportunities. The scale of the Chinese IAM market is expected to reach 10.21 billion yuan in 2028, with a compound annual growth rate of 26.5% from 2023 to 2028. The cloud environment mode is expected to reach 1.97 billion yuan in 2028, with a compound annual growth rate of 36.5% from 2023 to 2028, and the cloud environment mode accounted for 19.3% in 2028.

Source: Frost & Sullivan report

With the acceleration of digital transformation in Chinese enterprises, the number of applications within the internal management processes, including interactions with customers, suppliers, and partners, is increasing continuously, leading to an increase in the complexity of digital systems. To improve efficiency and competitiveness, enterprises are constantly introducing new applications and services. These applications can be internally developed or purchased as SaaS services externally. As the number of application systems increases, managing user access to these systems becomes more complex. Traditional manual management methods can no longer meet the identity management needs in large-scale, multi-system environments. IAM systems can provide a centralized platform to automate the management of user identity information and access permissions, ensuring that only authorized users can access specific application systems. In addition, the increase in the complexity of digital systems is mainly reflected in system integration and data exchange. Enterprises need to coordinate, manage, share, and interact with different types of application systems and users uniformly to achieve business process automation. This involves not only internal enterprise systems but also supply chain systems and external collaboration systems. IAM helps enterprises achieve secure and efficient access management in complex system environments by providing unified identity authentication, authorization, risk control, sharing management, compliance auditing, etc.

As enterprises accelerate their migration to the cloud, ensuring secure access to cloud resources and fine-grained permission control becomes crucial. IAM provides enterprises with the capability to centrally manage and finely control cloud resource access permissions in a cloud environment. It allows multiple user identities to be created and managed under one cloud account, assigns different access permissions to different user identities, and offers more granular access management, providing enterprises with an identity access management solution that better fits the modern cloud environment. At the same time, the development of artificial intelligence technology has driven the IAM market from identity management to potential risk posture awareness functions. AI technology enables IAM to have more comprehensive and intelligent proactive defense capabilities such as pre-event detection, dynamic permission control and in-process control, post-event comprehensive audit and traceability, making it easier to use, safer, and more efficient.

In the digital age, data has become an important asset and production factor for enterprises. The circulation and utilization of data require strict data ownership and access control to achieve data classification, grading, and decentralization. IAM systems can accurately allocate access permissions based on users' roles, responsibilities, and needs, including access control at the feature level, menu level, and data level, ensuring that employees, partners, and customers can only access data necessary for their work or business. In addition, with the strengthening of data privacy regulations such as China's Personal Information Protection Law, enterprises must ensure that the collection, storage, and processing of personal data comply with legal requirements. IAM systems provide key access control and compliance audit support in this process. IAM systems not only offer identity authentication and authorization management but also help enterprises record and analyze data access behavior through auditing and monitoring functions. This helps enterprises promptly detect and respond to potential security threats while providing necessary logs and reports for compliance audits. As enterprises increase their dependence on data, the role of IAM systems in protecting data security, supporting compliance, and enhancing data governance capabilities becomes increasingly prominent.

The Chinese government has introduced a series of policies and measures to promote enterprises' cloud adoption and digital transformation. These policies encourage enterprises to use cloud computing and platform services to improve operational efficiency and innovation capabilities. As more enterprises adopt cloud services and multi-cloud strategies, there are higher demands for access efficiency and security management in cloud environments. IAM systems have become a key technical support tool in this context, helping enterprises achieve efficient and secure management of cloud resources in complex scenarios.

The cooperation between enterprises increasingly relies on digital platforms and tools, which require enterprises to securely share data and resources while protecting their own business and customer information. IAM systems ensure that only authorized partners and suppliers can access specific data and applications by providing fine-grained access control and permission management, thereby supporting efficient collaborative work in the industrial chain. Mobile office enables employees to access enterprise resources from any location using any device, posing new challenges to enterprise security management. IAM systems support features such as multi-device management, multi-terminal entry management, remote access policies, and virtual private networks to ensure data security and compliance for employees working remotely, providing a guarantee for information security in remote office environments.

In recent years, with the vigorous development of the digital economy, the value and sensitivity of personal data have become increasingly prominent, and China's requirements for data privacy and compliance have also become more stringent. To address this challenge, China's legislative body has introduced a series of new regulations and standards, including the landmark Personal Information Protection Law (PPIPL) and the Data Security Law (DSL). The formulation and implementation of these laws and regulations mark a solid step forward for China in the field of data protection and cybersecurity. According to the provisions of the PPIPL, enterprises must follow the principles of legality, legitimacy, and necessity when collecting, storing, using, sharing, and transmitting personal data to ensure data security and the protection of individual privacy. In addition, the DSL clarifies the data classification and grading protection system, requiring enterprises to take corresponding protective measures based on the importance of the data and the potential harm that a breach could cause. Against this backdrop, the role of IAM middleware has become particularly crucial. IAM middleware provides fine-grained access control and authentication functions, helping enterprises establish a complete set of data access policies. It can not only restrict access to sensitive data but also monitor and record data access behavior in real time, ensuring that enterprise data operations comply with legal and regulatory requirements.

The main participants in the IAM market in China include IAM solution providers represented by Bamboo Cloud Technology, AsiaInfo Security, Paila Software, and CoreShield Times. IAM solution providers have rich industry experience and professional product innovation capabilities in providing IAM-related solutions. They offer a variety of functions including identity management, authentication, access control, dynamic authorization, permission management, intelligent risk control, etc., and support both local deployment and cloud-based service models. In terms of revenue for 2023, Bamboo Cloud Technology is the largest IAM solution provider in China.