Following on Friday's post regarding innovative broadband technologies, with this blog post we'll work our way up the circulatory system to the network 'edge', which is defined as the point where your network meets the Internet. This is a critical nexus for multiple functions, such as email, firewalls and web filters. Any content filtering or security you wish to implement is usually embedded in or around this 'perimeter' of the network, as it is the topologically-logical (say that three times fast!) location to place these functions.
In recent years, there have been a number of regulations passed that require that companies limit or monitor their external communications. Rulings such as the Sarbanes-Oxley act, GLBA, HIPAA regulations in the United States and their international counterparts have all built in penalties to companies that do not adhere to a strict regime of data management within their organization, ensuring that confidential financial or patient data doesn't accidentally find it's way to your friend the day-trader, or another accidental Outlook-Auto-Complete recipient.
And government-regulated behavior begat data loss prevention......
Data Loss Prevention, or DLP for short, is a similar concept to spam filters in email, just applied to all traffic traversing a network edge. If there is a device or service encamped on the network perimeter that detects a spreadsheet of social security numbers, the name of a company under consideration for acquisition, or a draft of next week's earnings announcement, it can both prevent the data breech as well as alert the necessary information security staff that there is a 'bad actor' within the network. As the perennial CSI/FBI Computer Crime and Security Survey reported in their last annual survey, the most prevalent threat to computer security (at 59%) is insider abuse of network access, greater than virus' or other malware.
....and nothing gets venture capitalist juices pumping quite like a market that is governmentally-regulated into viability.
As is typically the case, the early adopters of DLP were financial services organizations (reporting for GLBA and NASD rule 3010) and healthcare concerns (reporting for HIPAA), and the technology is now reaching the mainstream of broad enterprise adoption, hitting the J curve. This is why it is both an emerging technology to specific enterprise sectors, but a relatively known quantity to early-adopter industries such as the Wall Street crowd.
So what has been the result so far? Early entrants like Vericept and Reconnex have been through multiple rounds of funding and have been deployed in the enterprise and government sectors. Second generation players such as Vontu have been more successful, leveraging the lessons learned by the first-generation players. Third generation (stealth) players coming to market are improving and disrupting the market even more. This has resulted in many Fortune 100 customers deploying DLP solutions for North of millions of dollars per installation, which is always 'blood in the water' for large tech firms (when a customer says they spent millions of dollars with a startup, a Pavlovian salivary reaction ensues at CSCO, MSFT, JNPR, INTC and GOOG).
And the early stages of the feeding frenzy, when the larger technology firms attempt to ride the J curve up into the stratosphere of mainstream adoption, has been underway since Symantec announced their purchase of industry-leader Vontu for $350M in October of 2007. Four days ago, McAfee announced that they were purchasing Reconnex for $46M, signaling that even the mature players in the industry had value. Microsoft, Juniper, and Cisco have struck other licensing deals with companies adjacent or directly in this space, taking a 'wait and see which dominant market paradigm will emerge' posture until their major customers turn up the burner hot enough to urge them into action.
Fortune 100 Customer: "Gee MajorTechCompany, I really need this type of solution for our business, but I am just not comfortable relying on a small startup for such a critical function. If only you had a solution exactly like theirs, we'd feel much more comfortable purchasing it from you."
MajorTechCompany to Fortune 100 Customer: "Well, we'll certainly look into that!"
MajorTechCompany aside to internal lackey "Go find out how many more customers this startup has and what their last valuation was....perhaps we should just buy our way out of the problem."
WIIFY? This is a hot space to watch, and has been for a number of years, as evidenced by the Internet Research Group's excellent coverage of the development of this market since 2003. Now that the solutions are finding their way out of the early-adopter-shadows and into the mainstream, expect much more technical diversity to sprout up as other technology firms reposition their offerings to take advantage of this flight to regulatory compliance.
Quite an interesting article. Thanks for posting it.
Posted by: Anxiety Cures | October 09, 2010 at 05:42 PM