Security-as-a-Service (SaaS) became a US$4 billion market in 2017, up 21 per cent thanks to the continuous adoption of enterprise cloud solutions.
Analyst firm, Canalys, estimated the total security market was worth US$31 billion in 2017, up 10 per cent.
Specifically, growth in the security services sector was double the amount compared to rest of security market with software and hardware growing five per cent and 10 per cent respectively, reaching US$27 billion combined.
“In the past year, vendors like Cisco, McAfee and Trend Micro have strengthened their cloud portfolio, which now includes a wider range of products and almost the same array of functionalities that get delivered when clients purchase a software license.” Canalys research analyst, Claudio Stahnke, said.
“The ability to buy these products from public cloud providers and channel partners (e.g., AWS marketplace) has also reduced the complexities of deploying security products and, at the same time, provided a more flexible billing process, as the customer can add and remove seats monthly.”
The analyst firm expects growth within the SaaS space to continue strongly through 2018 and 2019, as vendors keep improving their portfolios and delivery method. But the hardware and software security segment will still represent the biggest portion of the security pie.
Canalys said the adoption of SaaS was driven by its multiple advantages compared to software licensing, but the change in revenue stream was creating headaches for security vendors who have to rework forecasts for 2018, so they don’t disappoint investors. Canalys used Symantec as one example of a security vendor, which missed its fourth quarter revenue target because it underestimated the adoption of SaaS products.
“Investors still get spooked when vendors like Symantec miss the mark, but we are not seeing the kind of panic witnessed a few years back when Adobe’s stock crashed after it switched to subscriptions for its software suite. Investors are learning subscription-based revenues are not a bad thing, but are where the market is going,” Stahnke said.