Managed Security Service Market Offers VARs Promise

Increased security efforts in key vertical markets and slew of compliance issues help drive MSSP demand.

VARs searching for a safe haven in these tough economic times should consider setting up shop as a managed security service provider (MSSP) as the market for managed security services is growing briskly, according to a recent report from researcher Frost & Sullivan.

The researcher found that the North American MSSP market grew by 12 percent in 2008 and is projected to increase another 14 percent in 2009. The market earned revenues of more than $1.06 billion in 2008 and is expected to reach $2.40 billion in 2015, said Frost & Sullivan analyst Martha Vazquez.

Frost & Sullivan attributes the market’s growth to several factors: MSSPs’ stronger focus on driving business after considerable industry-wide consolidations; increased security efforts in key vertical markets; and a slew of compliance issues forcing companies to tighten security processes.

“There are more regulations than ever before,” said Kevin Prince, chief technology officer at Perimeter eSecurity, an MSSP with $60 million in annual recurring revenue. “Corporate concerns about compliance and security are helping companies like ours to grow. Compliance has always been a driver but regulations are applying more broadly and demanding additional levels of security.”

Vazquez said the increasing need for compliance with Payment Card Industry Data Security Standards (PCI DSS) and other required mandates is spurring the adoption of security services in manufacturing, energy, retail, utilities, and other verticals. “More companies are seeking ways to remain in compliance while keeping their costs low,” said Vazquez, noting that outsourcing security services has become more popular.

“Many organizations are now realizing that it is okay to outsource, and that there are a lot of advantages -- including cost cutting – to doing so,” said Prince. Organizations that said they would never outsource are now calling up looking for services.” Prince added that the "should we outsource or not" debate is over for most organizations.

“The gains an organization can achieve when they outsource the right elements of their security to the right provider at the right terms are very compelling,” said Prince.

Vazquez said the recession has motivated companies to prioritize the implementation of cost-effective security solutions, as hackers continue to innovate and refine their attacks, exposing weaknesses in companies’ internal armor.

At the same time, Frost & Sullivan research reveals that the functionality of security products continues to improve to meet the ever-increasing number and variety of network attacks – thereby ensuring the growth of such products.

"Threats continue to be malicious and complex, and malware is increasing alarmingly, highlighting the need for companies to defend all the endpoints attached to the corporate network," said Vazquez.

Despite the generally upbeat outlook for MSSPs, confusing regulatory policies remain an issue for many industries. "Multinational corporations, in particular, are scrambling to comply, and that confusion is slowing MSSP industry growth," she said.

Nevertheless, Frost & Sullivan expects uncertainties over legislation and compliance to gradually disappear.

TAGS: services,malware,data security,managed services,VARs

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