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Executive Summary

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EXECUTIVE SUMMARY

For the purposes of this report, IT (information technology) security is divided into four separate markets: security products and services, security breach recovery, the Year 2000 problem and software piracy.

In 1998, Key Note estimated that UK business and individuals spent £2.86bn on security breach recovery, while £4bn was spent on the Year 2000 problem and £438m was spent on security products and services. Software piracy cost software publishers £204.9m in lost UK sales in 1998.

The rise of distributed network architectures, the development of the Internet, intranets and extranets, and the impending new Millennium, are leaving companies more exposed to security breaches than in the past. The growth of networking and network-centric computing is also changing the security market.

The market for IT security products and services is both highly competitive and also fragmented and diverse. There are few clear industry leaders, except in specific small markets. However, industry consolidation is now taking place, as major clients increasingly demand integrated security products for network management and security.

Key Note estimates that UK spending on security breaches will reach £3.8bn in 2003, with annual spending rising as the cost of breaches increases. Key Note predicts that the proportion of software pirated in the UK will continue to fall over the coming years, although the absolute loss from piracy will rise to £220m in 2003.

Spending on the Year 2000 problem is predicted to reach a peak in 1999, when around £7bn will be spent on Year 2000 projects. Spending will decline thereafter, but will still be significant through 2000 and 2001, as companies still have to cope with a vast amount of Year 2000 work.

Spending on security products and services will reach £1.08bn in 2003, an increase of 123.7 percent on 1998.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

THE KEY AREAS OF IT SECURITY

MARKET DEFINITION

MARKET POSITION

MARKET TRENDS

Table 1: Relative Expenditure on IT Security (£m and percent), 1998

Table 2: Expenditure on IT Security (£m), 1997 and 1998

Market Size

INTRODUCTION

THE TOTAL MARKET

BY MARKET SECTOR

MARKET SHARES

Table 3: The UK Security Products and Services Market (£m), 1997-1998

Table 4: The Average Cost of Security Breaches by Size of Company (number of employees and £), 1998

Table 5: The Estimated Cost of Security Breaches in the UK (£bn), 1993-1998

Table 6: The Rate and Cost of Software Piracy in the UK ( percent, $m and £m), 1994-1998

Table 7: The UK Security Products and Services Market (£m), 1996-1998

Table 8: The Most Common Causes of Network Failure ( percent of respondents), 1998

Table 9: The Most Common Types of Security Incident ( percent of companies questioned which experienced that incident), 1997

Table 10: The Average Cost of Security Breaches by Type (£), 1998

Table 11: The Incidence of Security Breaches by Type (average number of incidents in the last 2 years), 1998

Table 12: Estimated UK Expenditure on Security Breaches by Type ( percent), 1997

Table 13: Breakdown of Year 2000 Expenditure (£m and percent), 1998

Industry Background

INDUSTRY CONCENTRATION

MARKET LEADERS

TRADE ASSOCIATIONS

Table 14: The UK IT Security Market by Sector and Number of Major Players, 1998

Table 15: The Companies with the Broadest IT Security Market Coverage, 1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS AND THEIR BRANDS

Table 16: The Major IT Security Companies by Areas of Operation, 1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

IMPORTANCE OF SECURITY

COMPANIES AT RISK

CORPORATE SECURITY

LEGAL FRAMEWORK

Table 17: Opinion Poll: The Most Important Technical Issues Facing IT Directors Over the Next 2 Years ( percent of IT directors), 1997 and 1998

Table 18: Companies Suffering Security Breaches by Size of Organisation and Sector ( percent), 1998

Table 19: Expenditure on the Year 2000 Problem by Sector ( percent), 1997 and 1998

Table 20: State of Progress in Dealing with the Year 2000 Problem ( percent of IT directors and senior managersÅ), 1998

Table 21: UK Business Year 2000 Readiness by Number of Employees and Industry Sector ( percent of businesses surveyed), 1998

Table 22: UK Business Year 2000 Readiness ( percent of companies surveyed), February and June 1998

Table 23: Businesses Suffering Virus Attacks in the Past Year by Sector ( percent of companies questioned), 1997

Current Issues

YEAR 2000 ACTION

THE GROWING USE OF WINDOWS NT

SELF-HEALING SOFTWARE

C:CURE SCHEME

INTEGRATION STANDARDS/SECURITYWARE

IT SKILLS SHORTAGE

ENCRYPTION

IMPROVED SECURITY FOR ELECTRONIC COMMERCE

SECURITY FIRMS FAILING CLIENTS

SECURITY DEFICIENT E-MAIL

THE CONTINUED RISE IN VIRUS INFECTIONS

FIREWALL DEVELOPMENTS

ALL-IN-ONE SOLUTIONS

Table 24: The Comparative Reliability and Limitations of Microsoft Windows NT

Table 25: A Comparison of Systems Reliability, 1998

Table 26: E-Mail Packages with Security Holes, 1997/1998

Table 27: The Most Common Virus Infections Reported (number and percent), July 1998

Forecasts

GENERAL TRENDS

FORECASTS

Table 28: Expenditure on Security Contingency Services by Platform ( percent), 1997 and 1999

Table 29: The Forecast Security Services and Products Market (£m), 1999-2003

Table 30: The Forecast Cost of Security Breaches in the UK (£bn), 1999-2003

Table 31: Forecast Expenditure on the Year 2000 Problem (£m), 1999-2003

Table 32: The Forecast Level of Software Piracy in the UK ( percent and £m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1998 Key Note

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Last updated by Jacob van Eldik 19th February 2000