Frost: Telcos, System Integrators, Specialist Providers Boost Euro CPE Managed Security Services Market

February 14, 2008 // Published as a news service by IHS

European and global telecoms and network services companies, European and global system integrators (SIs), as well as pure play MSS competitors are set to spur a take-off in the market.

Recent analysis from Frost & Sullivan of the European CPE MSS market, found earned revenues of $707.8 million in 2007, with estimates to reach $1,770 million in 2014.

"The cumulative effect of complex new laws and the lack of qualified and experienced security personnel is that companies are forced to seriously consider outsourcing the security of their network infrastructure as an economical, reliable and round-the-clock alternative to a small internal security team," said Frost & Sullivan program manager Jose Lopez.

This growing appeal of the MSSP [managed security services provider] model in Europe is led by telcos [telephone companies], Lopez said, such as British Telecommunications (BT), Orange, KPN and Verizon, as well as global system integrators (IBM) and specialist European providers (Integralis and Vistorm).

"The presence of strong competitors in the region committed to the MSS model will drive its acceptance in Europe over the long term," he said.

Strong growth projections notwithstanding, analysts said the European market is far from being homogeneous. Many regions, including all of Eastern Europe, are still in their infancy. The maturity level in countries, such as the U.K., is similar to that in the U.S.

As end-users become more comfortable with the MSS model, growth in different industries and among businesses of all sizes is likely to accelerate. Analysts said large businesses and governments will continue to remain the key target markets for MSSPs. However, given the abundance of small to medium businesses (SMBs) across Europe, MSSPs will increasingly offer specific solutions for businesses of this type. This will positively influence the growth of this market in the region.

Despite this promising scenario, analysts said challenges remain. Leading Industry providers estimate that more than half of large multinational corporations have chosen to keep their network management in-house. Therefore, the primary competitors are not the MSSPs themselves, but rather the enterprises that choose to rely on their existing internal IT administrators to manage their networks.

"Rather than stubbornly adhering to the early industry paradigm of choosing between the total outsourcing of an enterprise's network, or keeping it altogether in-house, MSSPs are increasingly positioning themselves as partners to existing network managers within the enterprise," said Lopez. "As partners, MSSPs are able to not only provide complementary services and analysis, but provide cost-efficiencies, 24/7 network coverage and decrease network bandwidth that is wasted through inappropriate usage."

Source: Frost & Sullivan.