Last year saw a steep increase in the adoption of security-as-a-service, according to the latest research by Canalys. However, this fast change in revenue stream is creating headaches for vendors who have to rework 2018 forecasts to avoid disappointing investors.
Security-as-a-service registered strong growth in 2017 at 21% to US$4 billion, following the rise in adoption of cloud solutions for enterprises. This growth was double the pace compared to the rest of the security market with software and hardware growing respectively 5% and 10% year-on-year to reach $27 billion combined. Canalys estimates the total security market was US$31 billion in 2017, up 10% overall. The researcher predicts continued growth through 2018 and 2019, as vendors keep improving their portfolios and delivery method.
“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,” explained Canalys research analyst Claudio Stahnke.
But this rapid shift towards a subscription-based revenue stream is posing challenges for vendors, especially when it comes to reporting their results to shareholders. A number of key players missed their Q4 2017 revenue targets because they underestimated the adoption of security service offerings.
This data suggests that MSSPs and channel partners are not only looking at solid growth potential in the security-as-a-service space, they’re also seeing additional opportunities in forewarning vendors about the need to manage expectations.