Managed security services are going to be a "success story" locally, says BMI-TechKnowledge analyst Heini Booysen. He says although the local managed security services industry is still in its infancy, because of a shortage of IT security skills and budgetary pressures, managed services will become a growth area.
According to research by Booysen, the local security industry is worth about R440 million a year, including hardware, software and estimates of services.
Based on global trends, he expects the local security industry to expand at a compound annual rate of 25%. However, with the expected growth in managed services calculated in, the growth will "probably be closer to 30%".
The relatively slow take-off of managed services locally, says Booysen, can largely be attributed to negative perceptions of outsourced services and the local market`s strong tendency towards products rather than services. "Locally, most of the revenue in security is from products and not from services, which is different to the international market where services account for more than 50% of revenue. It is part of the South African mindset that is reluctant to pay for services."
Similarly, while the global market for security software is dominated by 3A (authentication, authorisation and administration) software, the local security software industry is heavily biased towards content management, itself largely biased towards anti-virus software. "Worldwide, companies are looking for a central point of administration for their security, which is driving the 3A market."
Locally the 3A market is ranked third after content management such as anti-virus and exclusion devices such as firewalls and virtual private networks.
On the global chart, hardware is also the faster-growing portion of the security market, largely led by the introduction of integrated network appliances that fulfil the demands of a range of security services.
Locally the Internet appliance hasn`t yet taken off, Booysen says, although he believes it will be a strong growth area as most vendors are starting to push appliances locally.
But the real growth for the security industry will be in the area of managed security services, where service providers provide an "a la carte menu of security services".
The increased demand for network services over the past has brought with it greater risk. However, most companies, particularly small and medium companies, do not have the skills resources to run effective internal security services.
"With budgetary constraints, managed services are much more effective than doing it in-house. Locally the market for managed services is still very small but it is beginning to stir ... and people are becoming aware of the managed services industry."
Globally the managed services industry is expected to be worth $2.6 billion by 2006, up from last year`s $860 million.
Booysen says that of the companies surveyed locally, only 21% said they already used managed security services, with 20% saying they were planning to go the managed service route in the next year.
As far as IT spend goes, Booysen says he found that most companies are spending between 1% and 10% of their budget on IT security. Comparative figures indicate that companies are spending more of their budgets on security and there is far less ad hoc security spending than there was in the past.
This year just over 45% of companies spent up to 10% on IT security with the majority of the balance spending more than this. Booysen says these figures are substantially higher than international trends where most companies report spending around 5% of their budget on IT security.
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