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KN72071 KEY NOTE IT SECURITY MARCH 2001

Editor: Dominic Fenn
ISBN: 1-84168-055-9

This report covers:

Companies covered include:

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EXECUTIVE SUMMARY

In 2001, the cost of security breaches in the UK reached £4.86bn, according to Key Note estimates. The cost of security breaches is rising rapidly, at around 14 percent to 15 percent p.a. (per annum), reflecting the increasing reliance on information technology (IT) systems by the UK economy. Key Note estimates that, in 2001, expenditure on products and services to prevent security breaches will reach £4.96bn. Spending has declined in the past few years, reflecting a decline in spending on ‘Millennium bug’-related matters, which has more than offset strong growth in spending on other areas.
This report focuses on two separate aspects of IT security: spending on security breach prevention (covering spending on security products and services and prevention of the ‘Millennium bug’); and the costs of security breaches (covering the direct costs of suffering a breach and the cost of software piracy in the UK). Security-specific products and services are taking a growing share of the total expenditure on security breach prevention, indicating that companies are focusing more of their spending on IT security, rather than on areas such as physical security and IT maintenance.
Important factors that are shaping the market include the growth of the Internet and e-business (electronic business) generally (which is leading to a growth in computer networks), group working, mobile/remote working and the need to communicate with contacts outside the organisation. This environment is inherently less secure than one based on stand-alone computers and proprietary computer networks. New legislation and rules are also impacting on the market, including how companies must organise and conduct their security policies, e.g. the Regulation of Investigatory Powers Bill (RIP), the Lawful Business Regulations, and the introduction of new security standards such as BS7799 and ISO17799.
Factors impacting on the market include the continued growing threat of virus and hacker attacks on companies (which is aiding sales of anti-virus and firewall products), new developments such as the ending of export restrictions in the US and the ending of the RSA encryption patents (which are making encryption products cheaper to develop), and the creation of mainstream software with greater security features as standard, e.g. self-healing software.
In the future, spending on security breach prevention is set to grow strongly in the UK. Spending will become increasingly centred on networks as companies try to build secure systems that are also open and flexible to outsiders (e.g. suppliers and customers). This will result in strong growth for trust products and services, and also access control products and measures.

TABLE OF CONTENTS

Executive Summary	1
1. Market Definition	2
REPORT COVERAGE	2
MARKET SECTORS	2
Spending on Security Breach Prevention	2
Spending on Security Products and Services	3
Spending on the ‘Millennium Bug’	3
Costs of Security Breaches	3
MARKET TRENDS	4
Table 1: The Most Important Security Issues Facing UK Organisations ( percent), 2000	4
The Internet and E-Commerce	4
Employees and Remote Access	5
The Management of IT Security	6
MARKET POSITION	6
The UK	6
Table 2: The Share of the UK Computer Market Taken by Spending on Security Breach Prevention ( percent), 1997-2001	6
Overseas	7
KEY TRADE ASSOCIATIONS	7
Computing Services and Software Association	7
Business Software Alliance	7
EAN UK Ltd/ecentreUK	8
European Forum for Electronic Business	8
TruSecure	8
2. Market Size	9
THE TOTAL MARKET	9
Table 3: IT Security Spending and Costs (£m), 1997-2001	9
Table 4: The Challenges to Achieving the Required Level of Security ( percent of organisations), 2001	10
BY MARKET SECTOR	10
Spending on Security Breach Prevention	10
Security Products and Services	10
Table 5: The Use of Security Technology ( percent of organisations), 2000	11
Broad Market Definition	11
Table 6: Broad Market for Security Products and Services by Value at Current Prices (£m at final selling prices), 1997-2001	12
Narrow Market Definition	12
Table 7: Narrow Market for Security Products and Services by Value at Current Prices (£m at final selling prices), 1997-2001	12
Spending on the ‘Millennium bug’	13
Table 8: Expenditure on the ‘Millennium Bug’ (£m), 1997-2001	13
Costs of Security Breaches	14
Direct Costs	14
Table 9: The Direct Costs of Security Breaches at Current Prices (£m), 1997-2001	14
Table 10: Why Information is Critical or Sensitive ( percent of organisations), 2000	15
Table 11: The Main Causes of Security Breaches ( percent of organisations), 2000	16
Table 12: What Organisations Believe They Could Have Done To Prevent a Breach, and the Action They Took Afterwards ( percent), 2000	18
Software Piracy	19
Table 13: UK Software Revenue Lost to Piracy at Current Prices and the UK Piracy Rate ($m, £m at msp and percent), 1997-1999	19
3. Industry Background	20
INTRODUCTION	20
Recent History	20
Number of Companies	21
Table 14: Number of IT Security Companies Supplying the UK Market, 2001	21
DISTRIBUTION	21
HOW ROBUST IS THE MARKET?	22
LEGISLATION	23
Table 15: Awareness of Various Schemes and Acts ( percent of organisations), 2000	23
Data Protection Act 1998	24
BS7799	24
Regulation of Investigatory Powers Bill	25
The Lawful Business Practices Regulations	25
Electronic Signatures Directive	26
New Proposed EC Legislation	26
ISO17799 Information Security Code of Practice	27
4. Competitor Analysis	28
THE MARKETPLACE	28
Product Suppliers	28
Services Companies	29
MARKET LEADERS	29
Product Suppliers	30
Baltimore Technologies PLC	30
Check Point Software Technologies (UK) Ltd	31
Cisco Systems Ltd	32
Computer Associates PLC	33
Entrust Technologies (UK) Ltd	34
Network Associates International Ltd	34
Panda Software UK Ltd	35
Sophos PLC	36
Symantec (UK) Ltd	37
Trend Micro (UK) Ltd	38
VeriSign Inc Ltd	39
Services Companies	40
Accenture	40
Cap Gemini Ernst & Young	41
Comdisco UK Ltd	42
EDS UK Ltd	42
Guardian IT PLC	43
KPMG Consulting	44
PricewaterhouseCoopers	45
Product and Service Companies	46
IBM UK Ltd	46
Other Companies	48
5. Strengths, Weaknesses, Opportunities and Threats	49
Strengths	49
Weaknesses	49
Opportunities	49
Threats	50
6. Buying Behaviour	51
CUSTOMER PROFILE BY COMPANY SIZE	51
CUSTOMER PROFILE BY INDUSTRY	51
Table 16: Expenditure on Security Breach Prevention by Industry (£m and percent), 2000	51
Table 17: The Share of Computer Expenditure Devoted to Preventing Security Breaches by Industry ( percent), 2000	53
Non-Service Industries	54
Service Industries	54
7. Current Issues	55
SECURITY BREACHES	55
Examples of Security Breaches in 1999/2001	55
ENCRYPTION DEVELOPMENTS	56
SELF-HEALING SOFTWARE	56
PKI USAGE EXPANDS	56
ARE E-BUSINESS AND SECURITY POLICIES COMPATIBLE?	57
8. The Global Market	58
INTRODUCTION	58
THE TOTAL MARKET	58
BY MARKET SECTOR	58
Security Software	58
Security Services	58
Security Breach Costs	59
Major Growth Sectors	59
THE FUTURE	59
9. Forecasts	60
FORECASTS 2002-2006	60
Table 21: Forecast IT Security Spending and Costs (£m), 2002-2006	60
FUTURE TRENDS	60
10. Company Profiles	62
Baltimore Technologies PLC	63
Cisco Systems Ltd	65
Comdisco UK Ltd	67
Computer Associates PLC	69
IBM UK Ltd	71
Network Associates International Ltd	73
Sophos PLC	75
10. Glossary	77
11. Further Sources	84
Associations	84
Periodicals	86
Directories	88
General Sources	89
Bonnier Information Sources	90
Government Publications	91
Other Sources	92
Key Note Research	95
The Key Note Range of Reports	96

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Last updated by Jacob van Eldik 19th June 2001