Europe Wants Security Software, Despite Tight Budgets (Executive Summary) Executive Summary Publication Date: 1 July 2003
Authors Fabrizio Biscotti Alain Dang Van Mien Norma Schroder Chris Pang This document has been published to the following Marketplace codes: SOFT-WW-EX-0099 For More Information... In North America and Latin America: +1-203-316-1111 In Europe, the Middle East and Africa: +44-1784-267770 In Asia/Pacific: +61-7-3405-2582 In Japan: +81-3-3481-3670 Worldwide via gartner.com: www.gartner.com Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. 115807
Europe Wants Security Software, Despite Tight Budgets (Executive Summary) Challenging Sales Environment The global economic downturn has affected European spending on all sectors of IT software and solutions. Some sectors have fared better than others, one of which is security. The increasing number and simplicity of mounting attacks against interconnected IT systems has meant that spending and investment in security cannot be suspended indefinitely. In times of decreasing revenue, protecting the reputation of the organization becomes even more important. Any public breach of security can only lead to further revenue depression. Security will remain a top priority for businesses, but the short-term direction ofthesecuritysoftwaremarketisuncertain.formoreinformation,see"security & Privacy in 2003: Complex and Uncertain" (AV-18-9698). Limited budgets and restructuring have resulted in a wholesale reassessment of security projects and purchases. Final decisions and purchase authorizations are no longer the responsibility of only the IT department, but are escalated to the CEO and CFO. Spending has to be justified in terms of return on investment (ROI) and value to the organization. For the security software industry, this is not easy, because the benchmark of an effective security product is business as usual. To sustain market growth, security software vendors must seek to balance the cost of a security product to an intangible ROI. Best-of-Breed Security vs. Security Suites Thesecuritysoftwaremarketisfragmented,withadisparatenumberofbestof-breed solutions and a variety of security suites from the larger vendors. Bestof-breed vendors concentrate on one or two core competencies and gain a good reputation for a certain product. Whereas suites contain a best-of-breed solution complemented by a variety of "good enough" products. In the short- to medium-term, suites and best-of-breed solutions will take equal market shares. Large organizations will continue to implement a variety of best-of-breed solutions for the functionality, protection and assurance that they inherently provide. Large organizations are able to negotiate less expensive deals for these solutions with resellers, system integrators and value-added resellers (VARs). However, because of restructuring, takeovers and mergers, companies are seeking to cut costs. This will lead to a shakeout of vendors and standardization of software platforms. Security suite solutions will also continue to grow, fueled by demand from small and midsize businesses (SMBs). Suites may not offer all the functionality of a best-of-breed solution, but an SMB may only need a competent security product. Other major factors are cost and ease of maintenance. Dealing with a single vendor is inevitably simpler when you do not have the resources or bargaining power of a large organization. Best-of-breed and suite vendors must emphasize their core competencies and ROI models to adapt and grow in the changing climate. 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1
2 Europe Wants Security Software, Despite Tight Budgets (Executive Summary) Signs of Convergence Across Countries The advent of European Union (EU) directives on digital signatures and data privacy has done much to standardize the European security software market. But past trends and attributes regarding largest market and key competencies in R&D still hold true. For example, the United Kingdom remains the most competitive market for security in Europe. Vertical Markets: Government Is Up, Telcos Are Slow The vertical industry market has evolved a great deal over the past five years, with the pharmaceutical, healthcare and insurance sectors joining the government and finance sectors as heavy investors in security products. This can be attributed to various e-government, privacy legislation, and healthcare IT initiatives around Europe. Many of these are still in their early development and implementation stages, giving a positive outlook for selected security vendors for the short to medium term. The telecommunications sector a keen investor in security will also continue to be a key buyer once the economic outlook becomes more positive. Security Technologies: Bridging the Gap Recommendations The security technologies space in Europe will be varied and interesting in the coming period. The most promising will be identity management, instant messaging security and user provisioning. Newer and more complex areas of security, such as digital rights management, intrusion detection system (IDS) and managed security services, which can be applied across a large organization, are slowly but surely gaining credibility and investment. However, given the current economic downturn, uptake and application of these services is unlikely in the short term. The more commoditized or specialized technologies such as antivirus, firewalls, encryption, public key infrastructure (PKI) and biometrics will continue to grow and attract modest interest. The security software market remains positive despite the economic downturn. Budgets may be smaller, but enterprises will continue to invest in security solutions, albeit more slowly and carefully. Vendors are advised to: Provide functionality that the customer demands, for example, security policy compliance tools are expected to receive a favorable reception in Europe. Provide easily integrated security solutions to enable simple and cost-effective management. Build a solid relationship based on trust. To foster trust in clients, vendors need to deliver a well-engineered solution to address the specific issue. Present clients with a demonstrable and referenceable short-term ROI. Budgets are tight and only solutions that can add value or reduce costs in the short term are likely to be considered. Offer shorter-term licensing deals to give the customer choice and reassurance that the service or product is a cost-effective value-for-money proposition. 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1 July 2003
Europe Wants Security Software, Despite Tight Budgets (Executive Summary) 3 Links For the full report, see "Europe Wants Security Software, Despite Tight Budgets," which is published to the Software Infrastructure Worldwide and Software Europe Clusters: SWSI-WW-FR-0107 SWSF-EU-FR-0103 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1 July 2003
4 Europe Wants Security Software, Despite Tight Budgets (Executive Summary) 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1 July 2003