Big Network Security Investments — And Market Opportunities — Ahead

Here is some interesting data that came out of the 2011 IT Spending Intentions report from ESG Research. In a global survey of 611 IT professionals from mid-market (i.e. 100-1000 employees) and enterprise (i.e. more than 1,000 employees) organizations, 46% of all firms will increase investment in networking products and services in 2011 while 58% will increase investment in security products and services this year. What I found especially intriguing is that both networking and security professionals claim that their organization will make its most significant investment in network security over the next 12-18 months. In other words, networking AND security folks believe that network security is their highest priority. This emphasis on network security also came out with regard to infrastructure management. When IT professionals were asked which areas of infrastructure management their organizations would make the most significant investments in, the top two responses were security management (31%) and network management (29%).What does this data mean? It’s easy to dismiss firewalls, IDS/IPS and SIEM software as mature legacy technologies. The ESG data indicates just the opposite — these venerable safeguards are going through a metamorphosis. Why? Perhaps data center consolidation and rich-media applications are driving new scaling needs. It may be that the threat landscape demands new types of safeguards. It is possible that existing network security and management tools have simply grown long in the tooth. I believe that all of these factors are driving network security upgrades and new requirements.From an industry perspective, there is a lot of opportunity here. Some possible winners include:Cisco. Cisco always gets its share of the pie but the ESG data indicates a better than usual opportunity for Cisco initiatives like TrustSec and Borderless networks. Cisco is also back in the high-end with its AXA 5585X.Crossbeam/Check Point and Juniper. These companies lead in large enterprise perimeter security — a nice place to be with data center consolidation, wireless carriers, and cloud computing investments galore. Crossbeam and Check Point work well together but Crossbeam is building its multi-platform status with relationships with other leaders like McAfee as well.HP. HP paid a lot for ArcSight but the ESG data shows that the timing may be fortuitous. HP is also re-investing in TippingPoint after the company’s on-again-off-again relationship with 3Com. HP should look at acquiring NetWitness as a complement to ArcSight in the federal and large enterprise space.Sourcefire. When is someone (perhaps HP) going to buy this successful firm? Should be another good year for Sourcefire both inside and outside the federal market. McAfee. Killing it with IPS/IDS and has something up its sleeve with Sidewinder integration. The ESG data indicates that the market is ready for new solutions so the timing may be perfect for a new visionary offering. The App firewall crowd. Palo Alto leads here but I keep hearing that its acquisition price is too rich for anyone. Better hurry as Check Point, Juniper, and others are catching up quickly.Other SIEM vendors. Many organizations will be upgrading old SIEM systems or migrating away from Cisco MARS. Good opportunity for upstarts like Log Logic, LogRhythm, Nitro Security, and Q1 Labs. Beyond these mainstream players, there is plenty of business for others like Blue Coat, Citrix, F5 Networks, and Riverbed.