IT systems constantly need greater protection
Layered security model essential
Increased interest in security solutions amongst enterprises globally has ensured that security product revenues have exceeded those of many other IT solutions. Ian Williams, program manager for Datamonitor's Enterprise Security team, looks at the growing awareness of the constant need to offer greater protection to IT systems...
Enterprise security products generated revenues of $7.1 billion in 2002 and global enterprise investment in security products is predicted to rise to $13.5 billion in 2006. Intrusion protection, vulnerability assessment solutions and security management tools are tipped to be key revenue generators. While North America will remain the largest market, Latin America, followed by Asia Pacific will be the fastest growing.
However, vendors have struggled to increase demand in what is still a soft market. Security product vendors with more than one solution in their portfolio have often performed well in one market but have mostly failed to increase sales of their other products. The failure to achieve significant cross-sell opportunities has been a frustrating experience for vendors that have invested heavily in the 'one-stop shop' school of security product promotion. However, vendors have turned to new solution models and subsequently new markets are evolving.
Positioning best selling solutions within an overall security framework will allow vendors to better leverage their best of breed products to greater effect and enable them to gain more revenues from areas where stronger growth is predicted in the future.
Rise of new security solution models means new markets have evolved
Despite being the most mature, anti-virus and firewall solutions have seen strong growth due to a number of high profile virus outbreaks ensuring that perimeter protection solutions remained popular. One of the new models, for 'layered security', will help ensure that these markets continue to grow steadily. The layered security approach encourages enterprises to embed more technologies at each layer of the enterprise: at the perimeter, within the network, on servers and on client devices such as PCs and PDAs. This will increase sales of more traditional security solutions as well as encouraging greater sales in complementary markets such as threat protection and content filtering.
Vendors have also increasingly turned to other solution models that combine the properties of a number of solutions to meet a common aim. New markets have subsequently evolved including threat protection, secure content management, security management and identity management. While some vendors are looking to cross-sell opportunities, others see it as a natural way to meet the needs of ever more demanding clients. The secure content management market, for example, combines anti-virus content filtering and employee Internet management solutions to ensure that all unwanted content is filtered out from incoming emails or the Internet: be it viruses, pornographic images or unauthorized text.
The security management tools market will grow at an average annual growth rate of 30 per cent from 2002 to 2006
As companies increase the number of products in their architectures, they struggle to manage a heterogeneous environment. Security administrators will look to cope better with the thousands of security alerts their systems generate on a daily basis and as both legislation and regulations force companies in a number of industries to respond to increasingly strict policy compliance mandates. This will fuel the need for security management tools.
Vendors of solutions such as threat management and security policy compliance products have responded to this need by pushing more sophisticated solutions to help reduce the IT departments' workload. By bringing with it a powerful return on investment argument, the market for security management tools generated global revenues of $371 million in 2002. By 2006 Datamonitor predicts that this market will be worth $1.1 billion.
The intrusion protection and vulnerability assessment market generated revenues of $642 million in 2002
Vendors have learned from their mistakes and as well as improving their technologies to reduce the number of false alarms, they have looked to create closer links between traditional security mainstays such as greater integration with firewall and anti-virus solutions. A more focused positioning of the technologies involved and an industry wide push for more far-reaching 'threat protection' solutions will see the combined intrusion protection and vulnerability assessment grow at a CAGR of 20 per cent to reach over $1.3 billion by 2006.
The more traditional security product markets such as firewall and anti-virus demonstrated some impressive growth in 2002 and although some vendors struggled in the face of stiff competition, the overall market increased by around 11-12 per cent between 2001 and 2002. While the market for other products such as intrusion protection and vulnerability assessment solutions will see stronger growth over the next few years than previously experienced they will achieve greater success as part of a more complete security solutions package than by themselves.
Related research Datamonitor Enterprise security product markets (DMTC0913)
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