When most people read the terms cybercrime, cyber security, hacking attacks or something similar a doom-laden future scape will often be conjured up. Investors need to look beyond the implied gloom and spot the opportunities to invest in what is clearly a big issue now, and it’s getting more critical by the day.
For those that can, the latest report from technology market researcher Juniper will be seen as an opportunity.
Here’s the report headline:
Cybercrime and data breaches to cost businesses $8 trillion over the next five years
A key point is that the problem is accelerating at a faster pace that organisations are investing in solutions.
‘Cybercrime is a growing threat to corporations and consumers, who are increasingly using online methods to run their businesses and lives,’ Juniper says. ‘With the advent of mobile computing and an expected 46 trillion connected devices in use by 2021, this will become more and more common.’
Juniper’s latest forecasts estimate global cyber security spend will hit nearly $135bn in 2022, up from an estimated $93 billion this year. That implies a compound annual growth rate (CAGR) of 7.5%.
That’s faster than the low to mid-single digital growth expected for wider technology industry investment but seems very sluggish when faced with soaring costs, from fines, lost business and remediation expenses, anticipated to total $8 trillion over the next five years.
Machine learning an artificial intelligence (AI) are expected to play an increasing part of cyber defences.
‘To deal with this increasing complexity, several cyber security firms, like Cylance, Darktrace, Fortscale and Patternex are using machine learning to monitor network and program behaviours, detecting and eliminating many anomalies without involving a cyber security professional,’ spell out Juniper. ‘This can address the capability gap that SMEs face when considering cyber security.
All of the above companies are currently privately-owned, Darktrace backed by Invoke Capital, the tech fund set-up by Autonomy founder Mike Lynch in Cambridge.
So investors must cast a wider net. Specialists such as Sophos (SOPH) and GB (GBG:AIM) have so far carved fairly successful growth paths within their individual niches (network and end user security, and ID management respectively). Distributed denial of service (DDoS) tech supplier Corero Network Security (CNS:AIM) and Intercede (IGP:AIM), the personnel management business, are also trying, albeit with patchier operational pasts.
But don’t forget the managed services environment, the companies to whom organisations are increasingly happy to outsource their IT, communications and digital business needs.
Glasgow-based Iomart (IOM:AIM) has a long and successful track record supplying smaller and medium-sized enterprises (SMEs), reselling third-party cyber security tools alongside an host of other IT kit.
In a similar vein bigger IT providers, such as Computacenter (CCC) or Softcat (SCT), will also happily provide and maintain third-party technology defence tools. Presumably this will include many of the AI-based product suites that Juniper says are in development now, once they are ready for market.
‘AI provides a solution for the cyber security market’s talent gap, performing similar roles to cyber security analysts,’ remarks Juniper research author James Moar. ‘However, in order to succeed these new approaches must also bring simplicity and interoperability to end users, in what is a very fragmented market.’
