Security Management Bodes Well For NetIQ

The report, titled "Security Event Management Systems Defend Against Information and Regulatory Overload," indicates the SEM market is on the rise and could grow to $430 million by 2008. Report author Phebe Waterfield, an analyst at Yankee Group, said that as security becomes a greater concern for network administrators, SEM systems that enable them to identify, manage and respond to virus and hacker threats will become more prevalent.

"Integrating a systems management solution with risk management has the potential to revolutionize the way enterprises manage security risks," Waterfield said. "[There is] an increasing opportunity for overlapping network and systems management vendors to add value by integrating with a new breed of security solutions."

SEM systems burst onto the scene in the late 1990s, when security vendors created them to help network administrators cope with information overload generated by security devices. Since then, as network security has become more of an issue, administrators have signed up in droves.

Today, the SEM market is estimated at about $90 million. In her report, Waterfield said the market could witness consolidation of as much as 50 percent in 2004, a phenomenon she said would spark expanded channel efforts among those companies that survive. For SEM-oriented systems integrators, these predictions could mean big bucks in a burgeoning area of the managed services marketplace.

"What SEM provides to the channel is an opportunity to go up the food chain a bit," said Matt Dircks, vice president of security management products at San Jose, Calif.-based NetIQ. "Vendors that have traditionally sold well in particular verticals can now say, 'I'm not just a guy who helps you sell one thing but instead can help you take information from that one thing, correlate it with other security information and help you get more exponential value overall.' "

NetIQ, which specializes in general systems and security management, was one of 19 companies that Waterfield singled out in her report as major vendors in the SEM space. The company already offers an extensive channel program and plans to expand that program exponentially as the SEM industry grows, Dircks said.

These plans are good news for New York-based Gotham Technology Group, one of NetIQ's current channel partners. Gotham CTO Ken Phelan estimates that he receives a majority of his business from customers seeking NetIQ solutions for event management. As the SEM market shrinks and the need for NetIQ technologies grows, Gotham's business is expected to skyrocket accordingly, he said.

"Customer [requirements] drive a valid solution in this space," Phelan said. "Security has been [our] largest practice area for the last two years, and building interest around event management [means] even more business for us."

Expectations were equally positive at other vendors and systems integrators. At netForensics, for example, Bob Cariddi, vice president of worldwide sales, said he believes Waterfield's estimates are conservative. He predicts the SEM industry will top $1 billion by 2008. In particular, Cariddi said he sees huge potential for growth in overseas markets.

Cariddi's company is not alone. Security information management vendor Network Intelligence is employing a similar worldwide expansion strategy. The Walpole, Mass.-based company already has amassed 40 channel partners in North America and plans to expand the program overseas in the coming year, said Matt Stevens, vice president of marketing and technology.

"Once the SEM market hits a critical mass, it will start to garner more attention [from] the powerful channel resellers out there," Stevens said. "When that happens, we'll be ready. This is an industry we do not want to miss out on."