Cloud Security Spend Rises

The Shift to Cloud Security Spend Continues

Recent studies show that the growth in cloud and security will continue to substantially outpace the rate of growth in traditional business-technology systems.

According to the Society for Information Management’s IT Trends Study, the three organizational priorities for the year are IT and alignment with the business, security, and innovation. According to the study, IT and business alignment and security are also among the concerns that survey respondents found personally concerning, along with the difficulty in finding the right IT skills.

The study also found, not surprisingly, that the percentage of budget being spent on hardware and software is moving to cloud, while average IT salaries this year increased 3.5%. Overall IT budgets are down a smidgen to 4.15% from 4.6%. That’s a result, I figure, reflecting the shift from high cost on-premises capital expenditures to lower upfront and operational costed cloud services.

“The increase in cloud utilization and spending is not only associated with big reductions in the cost of keeping the IT lights on,” said Leon Kappelman, IT professor, and lead researcher of the study in a news release, “but also big increases in spending on integration and probably some of the increase in cybersecurity spending too.” In its 37th year, the Society for Information Management’s IT Trends Study is based on responses from 1,213 society members, from 801 organizations, and represented $192 billion in 2016 IT spending.

A separate study, conducted by research firm International Data Corp. (IDC), forecasts that worldwide revenues for security-related hardware, software and services will grow from roughly $74 billion in 2016 to $102 billion by 2020. IDC’s anticipated compound annual growth rate of 8.3% is about twice the growth rate identified as the overall IT budget for this year.

According to the IDC report, the business segments that will have made the largest investments in security this year include banking at roughly $8.6 billion. Banking is one of the four industries that will constitute nearly 40% of global security spending in the next five years, followed by discrete manufacturing, government, and process manufacturing. The industries that will grow the most rapidly in the next five years, each growing more than 9% annually, include: healthcare, telecommunications, utilities, state and local government, and securities and investment services.

Why is security spending accelerating so much? I suspect a large part of the investment is because many industries have to play catchup from years of neglect when it came to cybersecurity. I think another aspect of the spend is the result of a little fighting the battles of today with the strategies of yesterday when it comes to cloud security. Too many organizations are investing in legacy toolsets that have been “cloudwashed” as cloud security alternatives.

Finally, I think the skills shortage in IT generally, and cybersecurity especially, is what is driving the 45% of all security spending, in IDC’s view, going to security services, including managed security services. Also, as many enterprises do play catchup, they are investing more into security basics including endpoint security, identity and access management, and security and vulnerability management software driving more than three quarters of the category’s revenues.

Let’s just hope most of these investments are being spent wisely.

About George Hulme

George V. Hulme is an internationally recognized information security and business technology writer. For more than 20 years Hulme has written about business, technology, and IT security topics. For five years, Hulme served as senior editor at InformationWeek magazine, he covered the IT security and homeland security beats. His work has appeared in CSOOnline, ComputerWorld, Network Computing, Government Computer News, Network World, San Francisco Examiner, TechWeb, VARBusiness, and dozens of other technology publications.

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