Friends and frenemies in the eID market


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The eID industry is growing fast these days, creating continuous investment flows and a solid demand for eID software and hardware solutions. More than 120 countries have already implemented e-passports and nearly 40% of world’s countries will be moving towards eID documents in the next five years. In this sense, companies will have to find ways to work together and implement strong identity management systems all over the world. 

The formation of a network is inevitable in the project based business. Generally speaking, this network encompasses five different actors: buyer (customer), seller (vendor), collaborative partner and complementary actor (e.g. service or infrastructure provider). A company in the eID industry can be also distinguished by its role in the project: developer, technology owner, integrator, reseller, investor, etc. Another factor in the segmentation is the company’s geographical scope - international, regional and local. The scale and complexity of the eID project determines the type and the number of actors involved in the project. The current practice reveals that there are less prime suppliers, companies tend to cooperate more actively.

Why do we need to cooperate?

The companies in the eID industry, as is the same as in any business environment, are involved in different relationships like competition, cooperation, coexistence and co-opetition (cooperative competition). All this may sound a bit academically confusing, but the level of interdependencies defines how different market players will interact in public procurements and projects – play by rules, benefit mutually and yet remain competitive. 

When solution providers cooperate, they usually get involved in the business, information and social exchange. Twenty years ago two outstanding marketing experts Hakansson and Snehota (2000) claimed that “no business is an island”. Nothing much has changed – companies seek to develop long-term, trusted relationships and establish social, knowledge or legal/economic bonds.

The major reason for cooperation is the greater and quicker access to resources.  Another side of the cooperation, is a reputation that plays an important role in eID projects. Cooperation builds a strong and positive reputation in the industry and among competitors. However, the grounds for cooperation may also differ slightly from the scope of business – local companies cooperate to keep their business and bring new technologies to their region.

Motivation and interest affect the way companies cooperate. It is a reality that business compete and cooperate with each other simultaneously for separate projects. When the solution providers cooperate on e-passport or national ID projects, it does not mean that they do not compete. It is likely that they distrust each other when it comes to any guarantee.

Cooperation in the eID business

In the eID business, there are multiple cases when companies cooperate. For example, small software companies are dependent on other suppliers and work mainly via partner networks. Working together, solution providers access each other’s resources and create synergy. Hardware providers usually become a resource for many actors involved.  Similarly, companies work together to deploy biometric and Public Key Infrastructure (PKI) solutions for eID documents because this part is not very much integrated in the document production.

Before any company searches for external resources, bid management is a preliminary step towards the ultimate provision of an integrated solution. In this process, the company defines a resource gap and makes a strategic decision to use internal or external resources. Both have pros and cons. For example, in-house development is a more time-consuming and expensive process, therefore risk management is critical to successful resource mobilization. In the case of external resources, the company cooperates and easily acquires third-party technologies along with a skilled and experienced personnel who is capable to implement very complex projects in a short time.

The use of external resources means that the company will need to cooperate and select a partner based on technical capabilities, reputation, agenda and goals, not to mention - political issues or regulations imposed by investor funds.  Depending on the selected partner, cooperation can have a formal or informal character.  When companies form a strategic alliances or partnerships to contribute resources towards their mutual goal, formal agreements are in place to establish clear legal responsibilities and liabilities. However, this approach is sometimes difficult to apply in practice, because regulations differ from one country to another. Informal agreements are intangible because of the trust and social relationships companies build. Usually, it can also be complemented with formal agreements to control the distribution of power and dependencies, thus avoiding any conflict                   

A strong partner network and a good track record with the client are the basic requirements for successful cooperation. For example, solution providers establish trusted relationship, working on 2-3 projects. In the future, this kind of approach may bring new cooperation opportunities.

Negative outlook to cooperation

Whether the cooperation turns out to be successful, entirely depends on the level of power and the extent to which a company can regulate access to the information and the end-consumer.  If a strategic alliance partner has a direct contact with the end customer, it is very likely that this company will dominate the marketplace and influence the outcome of the project. Likewise, if the solution provider gives more power to the partner, there is a risk that the partner will take over control and exercise leadership.

Another uncertainty associated with cooperation is unforeseen changes in the consortium of potential cooperative partners. Even though reputation and credibility are critical for any organization, there are cases when leading companies may trick a less influential partner and cooperate with other similar solution provider. The first signs of trouble are a lack of progress and communication between partners caused by an increasing “appetite” for a stake in the project. ln the eID business, software technology providers are much more loyal to their partners because they usually do not have direct access to the end-customers. The same way – small and privately owned companies are more trustful, considering that there is a direct contact with the company’s owners and bureaucracy is eliminated.


Winning formula of cooperation

Behind the win-win cooperation is trust and credibility between partners. A shared understanding of the project is another way how to create a win-win situation because all the actors involved are confident and transparent about the project. This is the reason why sometimes co-opetition (cooperative competition) is more preferred relationship model than traditional cooperation because all the actors are clear about their motivation, agendas and goals.

Even if technological advances are at the forefront of the eID industry, people are the generators of the business value. Highly educated experts with excellent IT skills share information, leverage their expertise and involve joint problem-solving to build trust and promote long-term cooperation.


Hakansson, H., & Snehota, I. (2000). The IMP perspective, assets and liabilities of relationships. In: J. Sheth & A. Parvatiyar (Eds), Handbook of relationship marketing. Thousand Oaks: Sage. [Reprinted in. In: D. Ford (Ed.), Understanding business marketing and purchasing. Thousand Oaks: Sage Publications].

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