Managed firewalls will claim 36% of IT security spending in 2008

Small and medium-sized enterprises, which make up more than 99% of European firms, will account for 66% of the total US$7.3 billion managed IT security market.

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By  Vijaya Cherian Published  July 16, 2003

Outsourcing of security services will gain more significance in the next few years as enterprises increase their IT security spending to counter e-mail spam and cyber terrorism. According to Forrester Research, small-and-medium sized enterprises which make up more than 99% of European firms, will look to managed IT security services to handle their increasingly volatile IT security environment as they will be hard pressed to find the skills within to cope with it.

“Managed firewalls will claim 36% of the total 2008 market, generating US$2.6 billion in revenues by 2008, at a compound annual growth rate (CAGR) of 25%,” says Lars Godell, senior analyst at Forrester Research. “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.”

Managed intrusion detection systems (IDS) will also grow strongly at a rate of 47% per year, and will account for US$2.38 billion in revenues by 2008, representing 32% of the total managed IT security market. The growth will be compounded by the European Union’s approval of digital signatures. This will also lead managed PKI certificates to grow rapidly at a CAGR of 52%, reaching US$1.74 billion in 2008. “Growing awareness, regulatory mandates like Basel II on assessing operational risk, and market maturity will drive adoption of vulnerability assessment services — but overall they will represent only 7% of the 2008 market, generating US$504 million in revenue by 2008,” explains Godell.

SMEs hold huge potential for managed security vendors as they require cost-effective security solutions. In 2008, Forrester calculates that SMEs will account for US$4.7 billion, or 66% of the total US$7.3 billion managed IT security market. By contrast, Europe's largest firms, which can afford to run a 24/7/365 IDS in-house, will represent only 8% of the 2008 market. Companies with fewer than 10 employees, which represent the bulk of European firms, simply will not have the scale or funds to buy expensive, complex managed IT security services.

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