Researchers Expect Spike In Security Spending

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While IT spending in general is soft, companies are plenty worried about security, according to researchers at Dataquest, Inc. and IDC.

The worldwide security software market will reach $4.3 billion in 2002, an 18% increase over 2001 revenue of $3.6 billion, according to figures released this week by Dataquest, a unit of Gartner, Inc.

Leading the spending charge in 2002 will be government, education, information technology and financial services firms. Last year, telecommunications and communications industries were the big security spenders, enabling them to cut back this year, Dataquest says.

In terms of particular technologies, companies are looking at antivirus software, intrusion detection systems and firewalls, according to Colleen Graham, industry analyst for Gartner Dataquest's Software Industry Research group.

Biometrics and other forms of authentication likewise are generating interest, but she expects high price tags to delay mass adoption until next year.

Dataquest cites a number of drivers for the increased security spending, from heightened awareness since the September 11 terrorist attacks to well-publicized hacks, virus outbreaks and distributed denial of service attacks that have crippled some Web sites.

IDC expects lots of companies won't be able to handle these security requirements on their own and will look to security service providers for help. The company predicts the market for managed security services will grow from about $720 million in 2000 to $2.2 billion by 2005, a compound annual growth rate of more than 25% per year.

Security service providers will take advantage of the lack of security expertise among user organizations in the face of increasing network complexity and capital constraints that prevent large investments in security technology, IDC says.

This largest opportunity for security service providers will be among small- to medium-sized organizations, which are especially limited in security skills and resources.

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