October 13, 2016 by Canadian Underwriter
Worldwide revenues for security-related hardware, software and services will grow from US$73.7 billion in 2016 to US$101.6 billion in 2020, according to the International Data Corporation’s (IDC) first Worldwide Semiannual Security Spending Guide.
The report, released on Wednesday, said that the change in revenues represents a compound annual growth rate (CAGR) of 8.3%, more than twice the rate of overall IT spending growth, over the five-year forecast period. The spending guide covered eight regions – Canada, the United States, Japan, Western Europe, Central and Eastern Europe, the Middle East and Africa, Latin America and Asia/Pacific – and 20 industries, including insurance, banking, professional services and construction, among others.
“Today’s security climate is such that enterprises fear becoming victims of the next major cyberattack or cyber extortion,” said Sean Pike, IDC’s program vice president, security products, in a press release. “As a result, security has become heavily scrutinized by boards of directors demanding that security budgets are used wisely and solutions operate at peak efficiency.”
The industries making the largest investments in security solutions in 2016 will be banking (US$8.6 billion), followed by discrete manufacturing, federal/central government and process manufacturing, the release said. These four industries will deliver 37% of worldwide security revenues this year and will remain the largest industries in terms of total spending throughout the five-year forecast. The industries that will see the fastest growth in their security investments will be healthcare (10.3% CAGR), followed by telecommunications, utilities, state/local government and securities and investment services. Each of these industries will experience CAGRs above 9.0% over the forecast period, reported IDC, a global provider of market intelligence, advisory services and events for the information technology, telecommunications, and consumer technology markets.
The largest category of investment will be security-related services, which will account for nearly 45% of all security spending worldwide in 2016. The largest segment, managed security services, is forecast to generate revenues of US$13 billion this year. Security software will be the second largest category in 2016, with endpoint security, identity and access management, and security and vulnerability management software driving more than 75% of the category’s revenues, the release said.
In addition, security hardware revenues will reach US$14 billion in 2016, led by purchases of unified threat management systems. One of the fastest growing segments of the security products market will be user behavior analytics software with a CAGR of 12.2%.
“The pace and threat of security attacks is increasing every year, especially across compliance-driven industries like healthcare, telecom, government and financial services,” said Eileen Smith, program director, customer insights and analysis, with IDC. “In addition to the traditional challenges of risk and regulatory compliance, digital transformation and the use of 3rd platform technologies are putting even more pressure on organizations across all industries to develop and execute on a new generation of security measures.”
From a geographic perspective, the United States will be the largest market for security products throughout the forecast. In 2016, the U.S. is forecast to see US$31.5 billion in security-related investments. Western Europe will be the second largest market with revenues of nearly US$19.5 billion this year, followed by the Asia/Pacific (excluding Japan) region. Asia/Pacific (excluding Japan) will also be the fastest growing region with a CAGR of 13.8% over the 2016-2020 forecast period, followed by the Middle East & Africa (MEA) and Western Europe.