IDC: What Will Drive European Investments in Security

The first Worldwide Semiannual Security Spending Guide from International Data Corporation (IDC) confirms strong growth in European companies' security-related spending across hardware, software, and services. The Western European market will grow from $19.5 billion in 2016 to $26.4 billion in 2020, generating a compound annual growth rate (CAGR) of 8% over the five-year forecast period, more than twice as fast as the overall IT market in the region. The new spending guide expands on IDC's previous security forecasts by offering greater detail on spending by geography, industry, company size band, and technology.

"There are three mega-drivers of security spending in Western Europe," said Duncan Brown, head of European Security at IDC. "A dynamic threat landscape, new technology adoption required by digital transformation, and regulatory upheaval led by GDPR combine to drive the market strongly through to 2020.

Security-related services represent 55% of all security spending in 2016, and they will continue to drive growth through 2020. Managed security services will grow at nearly 13% CAGR and are set to overcome integration services as the largest security category by 2020. Among software markets (30% of total security spending overall), endpoint security will remain the largest segment, but the strongest opportunities for growth will lie in security and vulnerability management, and identity and access management. The security hardware market will remain relatively smaller and generate slower but still sustained growth (5.3% CAGR), driven primarily by unified threat management appliances.

"Security remains a key concern among European companies, and investments are on the rise not only among large enterprises in highly regulated sectors, but also among SMBs and in industries, such as the manufacturing and professional services subsegments, which were not as security conscious in the past," said Serena Da Rold, senior research manager, Customer Insights and Analysis. "As the adoption of cloud and mobile solutions expands, and companies open up to external partners and clients on social platforms, their need for access control is becoming more sophisticated, calling for new investment in next-generation security solutions.

Nearly 42% of the market for security solutions in 2016 will be concentrated in four industries: banking ($2.9 billion), discrete manufacturing, process manufacturing, and professional services. These four will remain the largest spenders in security technologies, continuing to grow faster than the market average. Nevertheless, even faster growth in security investments will be generated by utilities and healthcare, as well as professional services, which will all increase by more than 9% CAGR through 2020.

Managed security services and integration services will continue to attract the lion's share of security spending in the four industries making the largest investments, growing to represent around 48% of total security spending in 2020 in banking and professional services, and 43% in manufacturing. In utilities and healthcare, the strongest growth will materialize in security and vulnerability management software, as well as in managed security services.

From a geographic perspective, Western Europe accounts for around 26% of the total worldwide security market. The three largest markets — the U.K., Germany, and France — will represent over 60% of security-related investments in the region. The U.K., the Netherlands, and Germany, will generate the strongest growth opportunities throughout the forecast period.

The Worldwide Semiannual Security Spending Guide quantifies the global revenue opportunity for both core and next-generation security purchases. The guide offers detailed forecast data for security spending by 20 industries and 5 size bands across 8 regions and 53 countries, including the 16 Western European countries. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of security-related spending today and over the next five years.