Making Sense of Service Providers - Page 3

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Security Is a Service Driver

Crucial to any discussion of service providers is the SSP. A late- September report from International Data Corp. forecasts $2.2 billion in SSP sales to financial companies alone by 2005—up from $848 million last year and accounting for roughly 10 percent of an SSP market that IDC predicts will grow during the same period from $6.7 billion to $21 billion.

The IDC figures, despite their focus on financial-sector buyers, imply that nonfinancial companies will boost their SSP spending by roughly one-third—compounded—over each of the next four years.

This rapid growth represents a combination of trends.

First, smaller companies are increasing their presence on the Net and especially their reliance on advanced technologies such as broadband. This creates new problems, such as exposure to a wider range of Internet attacks, as well as new opportunities. Its not practical for a small company to hire in-house specialists in an area so exotic, so vital and so volatile as Internet security.

Second, the pervasive adoption of the Net elevates customers expectations (backed up by a growing list of government regulations) for the integrity of a companys e-business presence. Purchased services, sometimes with their own recognized brand names in areas such as bill presentment and processing, provide customer assurance while outsourcing business and technical risk.

Security is merely one of the most visible areas in which many pressures combine to strengthen the hand of service providers. In general, as doing business on the Net ceases to be a novelty, customers will quickly come to expect a uniformly high level of professionalism and performance in all functions related to e-business. Anything less than industry-leading performance will soon be unacceptable, and purchased services will soon be the most economic way to deliver the kind of performance that customers demand.