One of challenges of cyber security at the CXO executive level is that legacy cyber security solutions have historically been seen as just an expense for the most part.   However, next-generation solutions are poised to become one of biggest profit opportunities for many firms.   Senior management has been reluctant to move on these next-generation solutions very quickly however, and it’s no surprise.  They have spent millions (or in some cases billions) on legacy security solutions that simply don’t work.   Many managers know this truth first hand while others have only read about it.

Some senior executives know their present security solutions are not working but don’t want to pay twice or three times for what they feel they should have gotten from the first investment.   They and their IT staff also lack the know-how to assess new solutions.  Other companies see this merely as a “tech-buying” budget decision.  Many of these managers are reluctant to admit that what they have is not working, while simultaneously hoping they don’t get hacked.

The fact is, next generation cyber security is poised to create one of the largest opportunities to enhance profits available to business today.   Why?  Because legacy solutions are not just flawed, they eat up to 80% of network bandwidth capacity and computer processing power.  They are at risk for large chunks of downtime.  This means large chunks of money right off bottom line profits (just ask Sony), to say nothing of the cost of fixing compromised systems and networks when the attacks are over (U of M and Saudi Aramco).   This failure to achieve real cyber security also stifles new and innovative product and service offerings because these products cannot be secured for export.  IP is too easily stolen, copied or counterfeited  (Analyst Report IDC Oct. 2008).

What we have learned over the years is that firms don’t focus on what they are not measuring.  In the telecom industry it was revenue-assurance solutions that were quickly created when telecom providers began to measure unbillable network call records for the first time and discovered that it had grown to over six percent of their total revenue from a fraction of one percent ten years earlier.   Last year President Obama said the world is losing a trillion dollars to cyber related crime each year.   The U.S. government is beginning to measure this but most firms still don’t.

In the near future, products, services and online platforms that have next-generation, built-in security and privacy features (so that customer information and the products/services themselves cannot be easily be hacked) will be given higher valuations by Wall Street and investors.  The lack of such a strategy for enhancing profit and shareholder value will eliminate many firms as serious competitors in their market space.

Posted by Ed Brinskele on Sunday, May 5, 2013