As we closed out 2021 and began 2022, one thing that is clearer than ever before is that cybersecurity needs to be a priority for every organization and individual.
With that in mind, NightDragon hosted a special NightVision event on Jan. 4 to discuss the State of the Cybersecurity Industry. Throughout the three-part event, we took a unique look at what products are being adopted by cybersecurity buyers, what financial analysts are watching around skyrocketing valuations and what investors are watching for the next frontier of innovation.
The event was moderated by NightDragon Founder and Managing Director Dave DeWalt and included perspectives on Optiv CEO Kevin Lynch and Ingram Micro VP of Cybersecurity and Data Center Eric Kohl on go-to-market trends, JP Morgan Managing Director Sterling Auty and Piper Sandler Managing Director Rob Owens on Wall Street trends, and Team8 Founder and Managing Partner Nadav Zafrir on investment trends.
The full recording of each segment can be found below. Here are also some of the key takeaways from the industry leaders on where the cybersecurity industry is headed in 2022 and beyond:
Growth Isn’t Slowing Down Anytime Soon – The cybersecurity industry saw immense growth in 2021, and that trajectory isn’t expected to slow down anytime soon. Wall Street leaders said they predict cybersecurity spending will continue to increase at current rates or greater in 2022. Go-to-market leaders agreed, with Optiv, for instance, saying it expects 2021 to be its biggest year ever and its pipeline conversations show 2022 will be an even bigger year, and Ingram said it is also expecting to see strong double-digit growth in the market. “This train isn’t slowing down,” Ingram’s Kohl said.
Scaling of startups is also happening much faster than ever before, with the pace of a company’s ability to go from zero to $1 billion happening at “unprecedented rates,” said J.P. Morgan’s Auty, allowing for a faster pace of innovation and access to public markets. One factor driving this dynamic is the shift to cloud and SaaS-delivered products and services, he said. Growth remains a focus for organizations in that process, over profitability, the investor panel said.
New Categories to Watch – Participants called out many categories they think will be prominent in 2022 and beyond. Those categories included identify, threat hunting, managed XDR, vulnerability management, and security awareness training. They also said they were watching emerging technology areas such as 5G, IoT, quantum computing and cryptocurrency.
We’re on Track to See Our First $100B Company – 2021 saw multiple companies in cybersecurity exceed $50 billion market caps, but the market growth isn’t slowing down. “We’re relatively early in this opportunity,” said Piper Sandler’s Owens, citing the escalating attacks such as ransomware and on critical infrastructure, as well as developing technology trends such as OT, cloud, remote work and more. He estimated it is plausible we may see the first hundred-billion-dollar company in the next three to five years on the assumption of normalized growth rates. J.P. Morgan’s Auty agreed, saying we are at the “fourth, fifth inning at most” when it comes to growth in cybersecurity.
Amidst Abundance of Capital, Founders Looking for Value – 2021 broke records for venture capital funding poured into cybersecurity. According to Crunchbase, venture capital and institutional investors poured more than $20 million into the sector during the year. With capital more abundant than ever, Team8’s Zafrir said that founders are looking for “real value-add” from their investors and specialization.
Zero Trust is Here to Stay – While Zero Trust as a concept has been around for some time, organizations have realized its criticality to their cybersecurity strategies as their digital landscapes expand, cloud adoption increases, the network perimeter shifts, and remote work becomes more common. “Zero Trust is the new perimeter,” said Optiv’s Lynch, adding that he thinks we’re just at the beginning of organizations embarking on true Zero Trust journeys.
Lack of Talent Remains One of Biggest Threats – Talent continued to be a major challenge for the cybersecurity industry in 2021 and the situation is dire. “This is the single biggest threat to our ability to deliver for a client in the end, in my opinion. No question about it,” said Optiv’s Lynch. He said his organization is doubling down on investments in its teams and is significantly expanding its employee base to account for demands for services, technologies bookings and overall capabilities.
Trusted partnerships and alliances will be key in helping customers navigate this dynamic, Ingram’s Kohl said. Meanwhile, vendors are looking for partners to help evolve their maturity to reach these customers and support their needs. “The role of channel and distribution has never been more important, and it’ll be front and center, in my opinion, to the way in which we solve these things,” NightDragon’s DeWalt said.
Security as a Forethought, Not an Afterthought – While cybersecurity in the past has often lagged as a priority behind digital transformation goals, that is now changing. “I think now you’re going to see people say they can’t afford to have the time and resources to do security after the fact. It’s too expensive…It’s got to be a forethought,” said Optiv’s Lynch.
The concept of integrating cybersecurity earlier into the development process to combat rising numbers of vulnerabilities across applications and supply chains has prompted an expansion of the shift left movement and the move to DevOps. “With constant innovation and frequent updates, there’s a much better awareness that security needs to be coincident with the development of whatever productivity is happening,” said J.P Morgan’s Auty. “With digital transformation, I think that explosion is going to continue to drive the awareness and the demand for cybersecurity for years to come.”
Attack Landscape Continues to Evolve – While cybersecurity innovation is at an all-time high, so too is the innovation from the attackers. Ransomware and other threats will continue to evolve in 2022 and beyond, said Team8’s Zafrir, and organizations need to be on high alert.
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