Federal Demand for Cybersecurity Sustains Continued Growth Trend

If any one word seems to summarize the current state of much of federal IT it would have to be uncertainty. But even with repeated continuing resolutions and no end in sight for sequestration federal agencies continue to operate and support their mission with the necessary networks and technologies and these need to be kept secure. In fact, the uncertainty of ongoing threats of disruption and destruction is one reason information security continues to garner support from budgeters inside agencies and appropriators on Capitol Hill.

In looking at the cybersecurity market comprehensively, we see four major categories that continue to create demand for budget investments:

• Threat Drivers - Rapid rise in complex, diverse, persistent and morphing threats to networks, devices, data and other infrastructure.
• Policy Drivers - Executive branch policies address wide areas of cyber- across government and beyond. Stagnant legislation reflects diversity of opinion. Compliance policy bolsters spending on existing frameworks. RFP language both driving and requiring security.
• People Drivers - Challenge to find enough qualified cybersecurity professionals. Initiatives to cultivate internal government talent and “inherently governmental” roles will limit contractor addressability, but agencies that supplement by contracting will drive spending.
• Technology Drivers - Threats and vulnerabilities drive direct technical remedies while new, disruptive technologies require security for full adoption.

Given these drivers, Deltek forecasts the demand for vendor-furnished information security products and services by the U.S. federal government will increase from $8.8 billion in FY 2013 to $11.4 billion in 2018 at a compound annual growth rate (CAGR) of 5.4%.

 

Key Findings

Throughout our consideration of what we are observing across the federal environment we came to several conclusions about what is impacting the market and where it is likely to progress in the near-term: 

• Agencies are focusing on core security capabilities, looking to industry for skilled personnel to close competency gaps and advance their security posture.
• Information security investments continue to be driven by persistent threats, broad policy remedies, skilled workforce shortages, and technological innovation – both inside and outside security-centric technology area.
• Disruptive technologies influence information security demands around key areas shaping the federal operational environment and market landscape.
  • Mobility and cloud computing bring operational shifts that drive new requirements for security solutions.
  • Advances in security technologies like continuous monitoring, advanced network protections, and data analytics are finding strong reception within agencies.
• Push for operational efficiencies presents openings for targeted technologies to bring savings and greater effectiveness to various security functions.
• Ramifications of several high-profile insider security breaches include heightened awareness of insider threat, intensified scrutiny of contractors, increased internal automation and greater demand for data security measures.
• Lasting budget constraints temper agency investments and require trade-offs.
  

While we see various efforts for increased efficiency, effectiveness and economy having some impact on how agencies are thinking about their cybersecurity budgets we are still confident that the federal priority of securing and protecting their data and infrastructure will continue to drive significant market opportunity.

Read more of our perspective in our latest report: Federal Information Security Market, FY 2013-2018.