Managed security sales grow like Topsy

SMEs look to outsourced sheriffs

Europe's managed IT security market will grow to €4.6 billion in 2008, according to Forrester Research.

Demand for IT security services is increasing because enterprises are finding it harder to find the skills internally to cope with an increasingly volatile IT security environment. The problem is particularly acute for smaller businesses. Forrester forecasts that SMEs will account for 66 per cent Of managed security spending in five years time.

Managed firewalls will claim 36 per cent, or &euros;1.7 billion in revenues, of the total managed security market by 2008, Forrester forecasts.

"Most large firms already have a firewall, but the lack of internal skills, high cost of internal management, and a more mature managed service market will drive conversion to managed firewall services," said Forrester analyst Lars Godell.

While managed firewall services are predicted to grow at an impressive 25 per cent per year, managed intrusion detection systems (IDS) will grow at an even more impressive clip, according to Forrester.

Managed IDS will grow at 47 per cent per year, to account for €1.5 billion in revenues by 2008, the firm forecasts.

First generation intrusion detection systems, essentially hi-tech burglar alarm systems designed to notify of unauthorised activity, have been subject to widespread criticism about false alerts and management overheads. In response vendors are introducing intrusion protection systems, which proactively block common security attacks. We think this development will profoundly change the way the managed IDS market is defined by 2008.

Managed PKI takes off

Elsewhere, Forrester forecasts the long awaited blossoming of the Public Key infrastructure (PKI) market.

"With EU approval of digital signatures, we expect managed PKI certificates to grow rapidly at a CAGR [Compound Annual Growth Rate] of 52 percent, reaching 1.1 billion euros in 2008," Forrester optimistically forecasts.

Every year for five years, we've been told that next year will be the year of PKI.

It's never happened.

PKI systems are big ticket sales items which are difficult to implement and hard to sell outside government and financial markets. Meanwhile major players, such as Baltimore Technologies, have undergone a surge in shares values - followed by a collapse - that has impressed even seasoned observers of the IT scene.

Granted that managed digital certificate services are a slightly different proposition to PKI systems but we are treating Forrester's prediction of 50 per cent plus annual growth with caution.

Moving on, Forrester predicts that regulatory mandates such as Basel II on assessing operational risk, and market maturity will drive adoption of vulnerability assessment services. But overall these services will represent only seven pe rcent of the managed security services market by 2008, generating & euros;318 million in revenue by that time.

Small is beautiful

While telcos and outsourcing firms slug it out over big managed contracts for large multinationals, Forrester predicts that SMEs -- 99.75 per cent of all European firms -- are the "untapped opportunity" for managed security vendors.

Forrester calculates that SMEs will in 2008 account for &euros;3 billion, or 66 per cent of the total €4.6 billion managed IT security market. By contrast, Europe's largest firms, which can afford to run a security in-house, will represent only 8 percent of the 2008 market, Forrester forecasts. ®

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