Continuing our thread on commoditization, I want to extend some of Rich’s thoughts on commoditization and apply them to back-office data center products. In all honesty I did not want to write this post, as I thought it was more of a philosophical FireStarter with little value to end users. But as I thought about it I realized that some of these concepts might help people make better buying decisions, especially the “we need to solve this security problem right now!” crowd.
Commoditization vs. Innovation
In sailboat racing there is a concept called ‘covering’. The idea is that you don’t need to finish the race as fast as you possibly can – just ahead of the competition. Tactically this means you don’t place a bet and go where you think the wind is best, but instead steer just upwind of your principal competitors to “foul their air”. This strategy has proven time and again a lower-risk way to slow the competition and improve your own position to win the race. The struggles between security vendors are no different.
In security – as in other areas of technology – commoditization means more features, lower prices, and wider availability. This is great, because it gets a lot of valuable technology into customers’ hands affordably. Fewer differences between products mean buyers don’t care which they purchase, because the options are effectively equivalent. Vendors must bid against each other to win deals during their end-of-quarter sales quota orgies. They throw in as many features as they can, appeal to the largest possible audience, and look for opportunities cut costs: the very model of efficiency.
But this also sucks, because is discourages innovation. Vendors are too busy ‘covering’ the competition to get creative or explore possibilities. Sure, you get incremental improvements, along with ever-increasing marketing and sales investment, to avoid losing existing customers or market share. Regardless of the quality or relevance of features and functions the vendor has, they are always vigorously marketed as superior to all the competition. Once a vendor is in the race, more effort goes into winning deals than solving new business problems. And the stakes are high: fail to win some head-to-head product survey, or lose a ‘best’ or ‘leader’ ranking to a competitor, and sales plummet.
Small vendors look for ‘clean air’. They innovate. They go in different directions, looking to solve new problems, because they cannot compete head to head against the established brands on their own turf. And in most cases the first generation or two of products lack quality and maturity. But they offer something new, and hopefully a better/faster/cheaper way to solve a problem. Once they develop a new technology customers like, about six milliseconds later they have a competitor, and the race begins anew. Innovation, realization, maturity, and finally commoditization. To me, this is the Yin and Yang between innovation and commoditization. And between the two is the tipping point – when start-ups evolve their features into a viable market, and the largest security vendors begin to acquire features to fold into their answering ‘solution’.
Large Enterprises and Innovation
Large customers drive innovation; small vendors provide it. Part of the balancing act on the innovation-vs.-commoditization continuum is that many security startups exist because some large firm (often in financial services) had a nasty problem they needed solved. Many security start-ups have launched on the phrase “If you can do that, we’ll pay you a million dollars”. It may take a million in development to solve the problem, but the vendor bets on selling their unique solution to more than one company.
The customers for these products are large organizations who are pushing the envelope with process, technology, security, and compliance. They are larger firms with greater needs and more complex use requirements. Small vendors are desperate for revenue and a prestigious customer to validate the technology, and they cater to these larger customers.
You need mainframe, Teradata, or iSeries security tools & support? You want to audit and monitor Lotus Notes? You will pay for that. You want alerts and reports formatted for your workflow system? You need your custom policies and branding in the assessment tool you use? You will pay more because you are locked into those platforms, and odds are you are locked into one of the very few security providers who can offers what your business cannot run without. You demand greater control, greater integration, and broader coverage – all of which result in higher acquisition costs, higher customization costs, and lock-in. But there is less risk, and it’s usually cheaper, to get small security firms to either implement or customize products for you. Will Microsoft, IBM, or Oracle do this? Maybe, but generally not.
As Mike pointed out, enterprises are not driven by commoditization. Their requirements are unique and exacting, and they are entrenched into their investments. Many firms can’t switch between Oracle and SAP, for example, because they depend on extensive customizations in forms, processes, and applications – all coded to unique company specifications. Database security, log management, SIEM, and access controls all show the effects of commoditization. Application monitoring, auditing, WAF, and most encryption products just don’t fit the interchangeable commodity model. On the whole, data security for enterprise back office systems is as likely to benefit for sponsoring an innovator as from buying commodity products.
Mid-Market Data Center Commoditization
This series is on the effects of commoditization, and many large enterprise customers benefit from pricing pressure. The more standardized their processes are, the more they can take advantage of off-the-shelf products. But it’s mid-market data center security is where we see the most benefit from commoditization. We have already talked about price pressures in this series, so I won’t say much more than “A full-featured UTM for $1k? Are you kidding me?” Some of the ‘cloud’ and SaaS offerings for email and anti-spam are equally impressive. But there’s more …
- Plug and Play Two years ago Rich and I had a couple due-diligence projects in the email and ‘content’ security markets. Between these two efforts we spoke with several dozen large and small consumers, in the commercial and public sectors. It was amazing just how much the larger firms required integration, as content security or email security was just their detection phase, which was then supported by analysis, remediation, and auditing processes. Smaller firms bought technology to automate a job. They could literally drop a $2,000 box in and avoid hiring someone. This was the only time in security I have seen products that were close to “set and forget”. The breadth and maturity of these products enabled a single admin to check policies, email quarantines, and alerts once a month. 2-3 hours once a month to handle all email and content security – I’m still impressed.
- Expertise: Most of the commoditized products don’t require expertise in subjects like disk encryption, activity monitoring, or assessment. You don’t need to understand how content filtering works or the best way to analyze mail to identify spam. You don’t have to vet 12 different vendors to put together a program. Pick one of the shiny boxes, pay your money, and turn on most of the features. Sure, A/V does not work very well, but it’s not like you have to do anything other than check when the signature files were last updated.
- Choice We have reached the interesting point where we have product commoditization in security, but still many competitors. Doubt what I am saying? Then why are there 20+ SIEM / Log Management vendors, with a new companies still throwing their hats into the ring?. And choice is great, because each offer slight variations on how to accomplish their missions. Need an appliance? You got it. Or you can have software. Or SaaS. Or cloud, private or public. Think Google is evil? Fortunately you alternatives from Websense, Cisco, Symantec, and Barracuda. We have the commoditization, but we still have plenty of choices.
All in all, it’s pretty hard to get burned with any of these technologies, as they offer good value and the majority do what they say they are going to.