Managed security services growth to continue: analyst

Large enterprise accounts for 75 per cent of MSS revenues despite misgivings

The growth in managed security services (MSS) is expected to continue across Australia and New Zealand, according to analyst firm, Frost & Sullivan. The market grew an estimated 13.5 per cent in 2009, raising revenues of $US375.6 million.

The analyst predicts the Asia Pacific market will hit almost $US1.55 billion in 2010, rising 18.2 per cent over last year. ANZ revenues are expected to hit $US438.2 million, rising 16.6 percent over last year.

Frost & Sullivan forecast the ANZ market will have a compounded growth rate of 17.3 per cent annually for the next five years, reaching $US1.01 billion by the end of 2015.

The growth in the MSS market has been attributed to simplicity and lower costs coupled with an increase in small and medium businesses using MSS to resolve their businesses’ security issues.

“The past two years saw many companies trimming their IT budgets and looking for cost-effective ways of meeting their IT needs; network security included,” Frost & Sullivan industry analyst, Cathy Huang, said in a statement.

“This has fuelled keen interest in shared infrastructure delivery models such as MSS users in 2009 at approximately 75 per cent of the region’s revenues.”

Huang said large enterprise is generally not in favour of hosted services, despite its 75 per cent share in the ANZ region’s MSS revenue, due to the unpopularity of the cloud model for security, which is perceived as a loss of control.

“They [large enterprises] prefer instead to outsource the remote monitoring and management element of their security needs while hosting the infrastructure in-house,” she said.

“While SMBs are decidedly keener to outsource their security functions through hosted services, large enterprises, especially those from security-sensitive industries, such as the BFSI [banking, financial services and insurance] and government, still prefer to adopt a co-management approach with MSS vendors.”

Huang sited compliance as one of the contributing factors to the growth in the market.

“Regulatory compliance is one of the significant factors contributing to the growth in the MSS market,” she said.

“Nevertheless, the CAPEX/OPEX savings brought by the MSS model was another important factor in driving the market, in the sense that by fully outsourcing security functions to a third party vendors/service providers, enterprises were able to reduce overhead costs, as well as bank on the security expertise of the service providers to ensure an adequate security posture of their networks”, she said.

Huang went on to discuss the future of the popularity of MSS as a trend: “As technology convergence continues to make its impact felt on the IT security landscape, the popularity of converged services is likely to pick up rapidly in the coming years”, she said.

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