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Thursday, May 17, 2012
Department: July 2006
Defense Mechanisms
Local tech prepares to take a big bite out of the security sector
Story by Jack Crawford Jr.
Can you remember your student ID number? I can, and not because I have an Amazing Kreskin-caliber memory.
My Arizona State student ID number was the same as my Social Security number. That made perfect sense, since the Social Security number is the only unique identifying number that follows every U.S. citizen from his first job to, well, beyond the grave. Information security used to consist of keeping your identification in your wallet. Chances are, if it ever got stolen, the thief took the cash and threw the Social Security card away.
Times have changed. Today, your identification is more valuable than the cash in your wallet. The digital world has created the means to exploit unsecured information within minutes of theft.
The recent news of a stolen laptop containing the Social Security numbers and identities of 26 million military veterans is only one of the latest episodes. The takeaway lesson is clear: Bits and pieces of our personal and business lives are stored on unknown hard drives connected through a complex global network — and information security is a critical component of ensuring the integrity of the systems we use to manage our lives, our businesses and our government.
As the U.S. attempts to preserve and protect its leadership role in the global economy, information security for American corporations has become a top priority for our government. In fact, proprietary information held by U.S. corporations competing in the global economy makes information security a key issue for our national security.
National security? That’s right. If foreign corporations are profiting by capturing the confidential information of American corporations, our government, particularly the FBI, is aggressively going after the foreign entities.
Security has gone mainstream, with Internet-savvy consumers paying as much attention to it as businesses and government. According to the National Cyber Security Alliance, roughly eight in 10 Americans who use the Internet conduct online financial transactions.
The NCSA’s recent online-fraud report also found that two-thirds of consumers who conduct online financial transactions are extremely concerned about giving their personal or financial information to a fake Web site and having hackers steal financial information from their computer.
On a global scale, organizations like the global IPv6 Forum (Ipv6 stands for Internet Protocol Version 6) are working to establish a more secure Internet. This global nonprofit, which includes many of the fathers of the Internet, is working on the security, scalability and interoperability of the next-generation Internet. IPv6 has been estimated to be a $25 billion industry.
Information security used to mean keeping your ID in your wallet.
Now, security compliance is a $15 billion market.
In the U.S., compliance and security have intersected to create enormous market opportunities. Regulations impacting technology and information security, including Sarbanes-Oxley in the corporate financial sector and the Health Insurance Portability and Accountability Act in the healthcare sector, are the key drivers in the $15 billion-plus compliance market, according to the nationally recognized advisory firm AMR Research. Clearly, the key component of compliance in these data-sensitive market sectors is security.
Locally, technology for security applications is growing at an accelerated rate, and organizations in our region are making measurable contributions to the industry. These organizations include the Sacramento Valley Hi-Tech Crimes Task Force, which uses technology to fight white-collar crime; an information-security initiative at the University of California, Davis, with ties to the National Science Foundation; and deep information-security expertise at Sacramento State.
These groups are now networking with the California IPv6 Task Force (and Velocity Venture Capital) to establish a center of excellence for information security in the Greater Sacramento region.
In addition to the growing activity within government organizations and local universities, companies in Sacramento are focused on information security in healthcare, financial and communications sectors. Intel has announced plans to build an eighth building at its Folsom campus, with intentions to begin filling it with employees focused on a major digital-healthcare initiative.
From a financial perspective, local companies such as Intrix Systems are securing and processing credit card transactions with technology solutions approved by Visa. In the communications sector, a promising local information-security startup called Coversant is quickly securing customer traction by selling services and software for secure instant messaging to top-tier organizations including the Department of Defense, Lockheed Martin, Northrop Grumman, Hewlett-Packard and Sony.
As regional efforts focus to establish the Sacramento region as a center of excellence in life sciences, clean technology and media and entertainment technologies, don’t be surprised if those industries are eventually equaled — particularly given the global size of the market and substantial implications for the Internet — by the fast-growing information-security sector.
Jack Crawford Jr. (jack@velocityvc.com) is the general partner at Velocity Venture Capital, the seed-stage and early-stage venture fund exclusively focused on the Sacramento region.
