Today, LogRhythm and Exabeam announced their intent to merge into a single company. This is another big change for the Security Analytics Platform market, which has been undergoing a rollercoaster of activity the past few years, from Microsoft announcing Sentinel in 2019, to Cisco’s acquisition of Splunk, to XDR vendors shooting their shot, to vendor misalignment to customer needs.
The merger between LogRhythm and Exabeam is a classic case of opposites attract:
- LogRhythm has languished in the last 5 – 10 years, struggling to transition its product and customers to the cloud. Part of this is because many of its customers prioritize on premise, given its EMEA market focus. However, it has also faced challenges with lack of innovation and slow time to market on its cloud native offering, providing LogRhythm Cloud in 2019 as a stop gap before LogRhythm Axon, its cloud-native product, was released in 2022.
- Exabeam hit its peak in customer interest, especially in North America, its focus, around 2020 because of its high-quality user behavior analytics (UBA). However, it’s popularity waned recent years due to its lack of completeness in other areas of the offering, such as the SIEM and SOAR capabilities, new market entrants (like Microsoft), customers looking to consolidate vendors during and after the pandemic, and the accompanying macroeconomic challenges.
Opposites provide some synergies
On the one hand, the merger could be great for LogRhythm and Exabeam. LogRhythm has a solid SIEM foundation while Exabeam has a high-quality UBA. Both companies needed a missing piece the other could provide. which is an opportunity for customer expansion.
But opposites are still opposites
However, merging will present challenges for both companies. They have dramatically different company cultures and processes, as LogRhythm is a veteran security company founded in 2003 with a focus on a suite-style offering, while Exabeam is, by comparison, a younger company founded in 2012 with a focus on modular, standalone products. In addition, both of these companies have faced challenges in recent years that are not solved by a merger: difficulty keeping pace with market innovation and with the transition to the cloud. LogRhythm has traditionally focused on the midmarket, while Exabeam aggressively pursued large enterprise deals, highlighting a difference in target market that must be bridged.
Expect a tumultuous short-term, unknown long-term
Mergers are a tumultuous time for vendors – innovation gets put on the backburner, attrition rates increase, and customer support often suffers. All this happens as the vendor shifts focus to creating a central organization, set of offerings, and market message. Current customers of LogRhythm and Exabeam must prepare for a period of innovation stagnation as the vendors adjust their footing. In the longer term, the vendors will push the synergies of their offerings to make the case for a security analytics portfolio competitive with the likes of market leaders. However, given where the competition sits in the market, the speed at which this newly merged company is able to start innovating will dictate its long-term success.
The combined organization is likely to push hard in the midmarket, where LogRhythm’s existing suite has had success and the Exabeam user experience makes it a more natural fit.
Security analytics market changes will continue
Overall, this merger showcases how security analytics platform vendors continue to face headwinds on ensuring completeness of offering while competing with innovation coming from other vendors, including hyperscalers like Microsoft, AWS, and Google and cybersecurity stalwarts like Palo Alto Networks. Expect more consolidation in the security analytics platform market in the years to come as well as increased competition from Extended Detection and Response (XDR) vendors that are pushing into the SecOps space.
Forrester clients can schedule an inquiry or guidance session with me to discuss their options with LogRhythm and Exabeam moving forward.
