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After Years Of Struggle, SaaS Security Market Finally Catches Fire

Shifts in economy, threats make SaaS an easier choice, oldest providers say

When it comes to security, software-as-a-service (SaaS) technology is hot. In a report published last month, Infonetics Research projected that despite a horrendous economy, the security SaaS market will grow at a rate of 46 percent annually for the next five years, making it by far the fastest-growing segment of the security services market.

Such explosive growth is a bit of a surprise, given the fact that SaaS security offerings have been around for more than a decade. Why has the market suddenly jumped onto the SaaS bandwagon? To help answer this question, Dark Reading recently interviewed the top executives at two of the oldest SaaS security providers: MessageLabs, which is now a part of Symantec and celebrated its tenth anniversary earlier this month, and ScanSafe, another 10-year-old SaaS provider, which was the first provider to launch a Web-oriented SaaS security offering.

Ten -- even five -- years ago, SaaS was a tough sell, says James Palmer, vice president of SaaS strategy at Symantec and a top executive of the MessageLabs unit. Many enterprises were reluctant to outsource any aspect of security to a third party, and there was serious doubt about whether an outsider could manage an "in-house" function as well as a dedicated IT staff.

"It was a little easier in the email space," Palmer says. "A lot of companies were already using a third party for email services, so it was less of a leap of faith to use a third party for email antivirus services. But it started very slowly."

Roy Tuvey, who co-founded ScanSafe 10 years ago with his brother Eldar, had similar memories. In fact, ScanSafe started out as an email and Internet marketing firm -- a hot business in 1999.

"We had entered into a joint venture with the leading Internet caf vendors around the world," Tuvey recalls. "When users would go into those cafs and use their Webmail accounts, all of that Webmail traffic would get routed by our data center in London, and we would introduce targeted marketing content. People would check their email and find a targeted ad, and that was our revenue stream. That helped us develop the genesis of the technology behind what we do today, which is scanning traffic for viruses and malware."

The early security service providers -- known then as application service providers (ASPs) -- were part of a wave of services that rolled out during the Internet boom, the executives recall. Many of those providers had weak business models and weaker balance sheets, and when the Internet bubble burst, so did they.

"A lot of ASPs went out of business, and that created skepticism in the market," Tuvey says. "There was a perception that a lot of service providers were not reliable or secure. And that made customers slow to adopt."

That situation began to change as the threat began to expand in the early 2000s, and enterprises became regularly bombarded by viruses with names like Code Red, Nimda, and ILoveYou. MessageLabs -- which now holds some 19 patents on anti-malware technology -- began developing services designed to stop or limit the impact of the viruses, which were a terror to clean up after infection.

"We marketed it not as a way to save money or staff, but as a more efficient way to solve the problem," Palmer says.

Later, when Web-borne viruses and other attacks came on the scene, ScanSafe began offering filtering and other security capabilities that went beyond Internet cafes and into larger network environments. Huge Internet service providers, such as AT&T, began offering ScanSafe's services, and users began to become more comfortable with the idea that they could get some of their security capabilities from an outside provider.

"The comfort level has changed because the need has changed," Tuvey says. "Every day, users spend more time on the Internet, and organizations depend on it more. They're dealing with distributed environments and geographies that don't lend themselves to hardware or appliances. Users are more mobile, and the threats are more complex. The confidence level [in SaaS] has shifted."

And how, Infonetics says. In fact, the research firm predicts that SaaS will be the single biggest factor in the rapid growth of the entire managed security services market, which is projected to grow 78 percent in the next five years. "Strong interest in SaaS and broad availability of SaaS offerings from a wide variety of players -- from network providers and security specialist service providers to large content providers and product manufacturers -- drive continued growth in the market," the Infonetics study says.

"We're a long way up the adoption curve now," Palmer says. "In the U.K., about 20 percent of the enterprises are already using some form of SaaS security services, and we see similar adoption in other parts of Europe and Asia. In the U.S., it's a little slower, at about 15 percent. But SaaS is very much the 'in' form factor now." Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

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