Security is a focal point for SMB IT spending

Spending on infotech security is set to grow remarkably in 2006; last year it grew by 63 percent, says AMI Partners. An in-depth look at Indian SMB spending on IT by Neha Jalan, Research Analyst & Consultant, AMI-Partners.

Small and medium businesses in India are on track to cross $133.6 million on beefing up their IT security solutions this year, buoyed by their adoption of sophisticated enterprise applications and advanced storage solutions. That’s a jump of 53 percent over last year, which in turn saw infotech security spending leap 63 percent over 2004, according to the latest study by New York-based AMI-Partners.

As India’s SMBs (with employee sizes between 1 and 999) embrace the benefits of Internet access, network connectivity and increased storage capacity, IT security has become a focal point for these businesses. Many SMBs have seen the loss in productivity and have experienced the damage that online viruses can inflict.

With the explosive growth of the Internet, the advent of broadband ‘always-on’ technology, and the increased prevalence of viruses and malicious worms, data security has assumed greater significance. The increasing options for remote connectivity as well as expanding number of critical applications that are accessed remotely have made businesses more vulnerable to unauthorised access.

Data security

One of the primary factors hindering the widespread use of security solutions has been a lack of awareness among Indian SMBs. However, the upsurge in security solutions adoption is the result of pressure from both internal and external factors.

These include deployment of broadband connectivity, integration of various business applications, usage of hosted applications and increased interaction with global business partners. The SMB security market presents an enormous opportunity for IT vendors. More than a third of SBs (1 to 99 employees) and 42 percent of MBs (100 to 999 employees) rated the need to enhance enterprise IT security as ‘important’ and ‘very important.’

“Indian SMBs are gradually progressing from the first stage of security solutions adoption to deploying sophisticated bundled offerings. AMI’s latest studies on India’s SMBs show that 83 percent of these businesses have installed anti-virus software on their PCs and 30 percent of medium businesses also deploy anti-spam software. Additionally, the majority of SMBs have deployed a software-based firewall on their PCs or LAN servers.

Packaged software solutions such as anti-virus and anti-spam and software-based firewalls have traditionally been touted as fundamental solutions for SMBs. However, as businesses become increasingly dependent on their networks for data storage and retrieval as well as interaction and collaboration with business partners, the need to safeguard data and remain in operation 24/7 becomes acute. As a result, India’s progressive medium businesses are looking for adoption and implementation of network security appliances such as network firewall, VPNs and intrusion detection.

Emerging trends

Given their limited budgets and in-house IT skills and resources, SMBs need products that are easy to adopt and maintain. Until now, Indian SMBs were focussed on deploying stand-alone security solutions. However, as vendors offer point-based solutions to counter different kinds of attacks, users face the challenge of integrating these various solutions.

This has led to the emergence of integrated security solutions as one of the fastest-growing segments in the SMB security market. As a result, all leading security vendors have introduced integrated security products containing entry-level security solutions such as anti-virus, anti-spyware, intrusion prevention and personal firewall.

Indian SMBs prefer to manage their security deployment internally, and as most are still investing in basic security products, this strategy has been effective. Nevertheless, as businesses progress towards deploying firewalls, VPNs and IDS, managed security services offer the twin benefits of convenience and cost-effectiveness. Less than a tenth of medium businesses currently invest in managed security services, but this service is anticipated to grow much faster than traditional security solutions in the near future.

Decision-makers In SMBs

Among India’s small businesses, the business owner/president is the primary decision-maker for all IT security solution investments. The business owner is not only responsible for the final purchase decision, but also identifies the purchase need and selects the configuration and brand.

Therefore, educating small business owners on the plus points of IT adoption, and the advantages one brand offers over another is an important focus area for IT vendors. This is one of the major ways in which the segment will see increased adoption of best practices and proper IT implementations.

However, among medium businesses, decision-making for IT purchases is more evenly split between three groups of key personnel—the non-IT senior management, the in-house IT personnel, and the office manager/departmental heads.