Security as a Service outpacing traditional offerings

 Security as a Service (SaaS) experienced strong growth last year with the pace of growth providing vendors that gain revenues from traditional offerings with some maneuvering to do.

 Numbers from Canalys indicated that SaaS increased by 21% last year with sales of $4bn, which saw it grow at double the rate of the traditional hardware and software markets, which improved by 5% and 10% respectively.

The total security market is worth $31bn, according to the channel analysts, which is a 10% year-on-year improvement.

Growth is positive but it has caused some problems for vendors that have underestimated the speed of change and might not have prepared investors for some of the changes that have started to appear on balance sheets, with Symantec a recent example of a firm that missed expectations because of SaaS changes.

“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," said Claudio Stahnke, Canalys research analyst.

Vendors are promoting SaaS and most have struck up relationships with the main public cloud providers, which has also widened the opportunities for the channel to reach a higher number of customers.

“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.” Said Stahnke.

“The ability to buy these products from public cloud providers and channel partners (eg, 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," he added.