Security Needs of Web-Centric Firms Benefit Some Industries

By IBISWorld Analyst Josh McBee

As every aspect of American life becomes increasingly digitized, consumers and businesses have become more concerned over the security of their private information online. For example, social networking giant Facebook already integrates its users’ information with its partner modules, including Spotify, BuzzFeed and countless news websites. In online shopping, one of the Internet’s oldest venues for sensitive data exchange, quick action on the side of credit card companies is necessary to keep customers feeling safe and retailers reputable. At the same time, several companies across the economy have suffered high-profile cyber-attacks in the past year. These assaults include an attack on Sony’s PlayStation Network in April 2011, which comprised the security of about 77 million users’ personal data, and the January 2012 attack on Zappos.com, which compromised the security of about 24 million users.

With the rising popularity of cloud computing, in which user data are stored on remote servers and accessed over the Internet, businesses and consumers will demand ever greater levels of electronic protection. Companies will also be required to spend more to protect new endpoints like Wi-Fi hotspots and mobile applications. In 2010, research firm Gartner reported that businesses around the world spend an average of 5.0% of their total IT budgets on security-related issues, and the average IT-security expenditures per employee has fluctuated between $500 and $700 since 2007. On a per-attack basis, a 2009 study by Ponemon Institute and PGP Corporation revealed the average mitigation costs per file to be about $204. IBISWorld forecasts the increasing integration of personal data into consumers’ online experience t oincrease demand for information protection. In turn, higher security demand will force businesses that rely on transmitted data to spend more to guard themselves against cyber attacks.

The following table lists industries expected to demand the highest levels of cyber security. These industries form a large and growing part of the US economy; combined, they account for a total of $347.8 billion in revenue in 2012. Over the past five years, this total revenue figure has grown at an average annual rate of 6.8% and is forecast to continue growing an average of 7.5% per year through 2017. As they continue to grow insize, these industries will demand more and more online protection services:

• E-Commerce & Online Auctions
• Credit Card Processing & Money Transferring
• Video Game Software Publishing
• Database & Directory Publishing
• Search Engines
• CRM System Providers
• HR & Payroll Software
• Travel Computer Reservation Systems
• Online Survey Software
• Online Recruitment Sites

While the above industries will likely incur higher costs for the measures they employ in securing customer and internal data, other industries will benefit from their demand for such services. Companies that specialize in the installation of digital security infrastructures will be tapped for their ability to secure company web sites, software and databases from unwanted intruders. In general, the IT Consulting industry (IBISWorld report 54151) and the Software Publishing industry (51121) will likely benefit from increased sales of enterprise-level security applications and services. More specifically, the following niche industries stand to benefit from virtual vulnerabilities:

IT Security Consulting: This industry offers managed IT security services, such as firewall and intrusion prevention, security threat analysis, proactive security vulnerability and penetration testing and inciden tpreparation and response, including IT forensics.

Encryption Software Developers: This industry sells licenses for software that use various encryption standards to encrypt data to make that data unreadable by anyone but the intended recipient. Products and services include encryption software, file encryption and disk encryption.

Extended Validation Certificate Issuers: This industry issues extended validation certificates, which are public key certificates that enable secure encrypted transmissions with websites certified as legitimate by the issuer. Extended validation certificates generally cost more than domain validated certificates and organization validatedcertificates.

Document Management Services: This industry stores information and records for other companies, which involves record management, data protection and recovery services.

Cyber Liability Insurance: This industry underwrites (i.e. assumes the risk and assigns premiums) cyber liability insurance, which is used to protect businesses’ and working professionals’ lost income or liabilities related to business interruptions, network security, Internet liability, electronic communications, intangible assets and web content liability.

In addition, the Database, Storage and Backup Software Publishing industry (51121b), Data Processing and Hosting Services industry (51821) and Virtual Data Rooms industry (OD4593) will increasingly cater to cloud-based and mobile applications that require secure transmissions and restricted access. In the realm of law, companies will turn to the e-Discovery Software Publishing industry for arbitration software that features security in addition to comprehensive functionality. Last ,although most high-profile cyber attacks have focused on the illicit retrieval and subsequent unauthorized publishing o fuser and internal data, some attacks involving the deletion of files, especially on mobile devices, will likely spur demand for specialist firms in the Digital Forensic Services industry (OD4585).

To download full research reports for the industries discussed in this article, click on the report titles below.

E-Commerce & Online Auctions, Credit Card Processing & Money Transferring, Video Game Software Publishing, Database & Directory Publishing, Search Engines, CRM System Providers, HR & Payroll Software, Travel Computer Reservation Systems, Online Survey Software, Online Recruitment Sites, IT Security Consulting, Encryption Software Developers, Extended Validation Certificate Issuers, Document Management Services, Cyber Liability Insurance, Database, Storage and Backup Software Publishing, Data Processing and Hosting Services, Virtual Data Rooms, e-Discovery Software Publishing, Digital Forensic Services

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