Centralized Computing Creates New Opportunities for Security and Infrastructure Companies

By Rob D. Owens, VP and senior research analyst, Infrastructure and Security Software, Pacific Crest Securities

The pendulum is swinging back from a distributed computing model to centralized computing. Driving this migration are lower total cost of ownership provided by next-generation, centralized computing architectures; their lower cost of application deployment and maintenance; and increased requirements for security and privacy. Consolidation of the data center, the growth of server-based computing and the development of service-oriented architecture, on-demand applications and application streaming also are driving the change.

Centralized computing means an increase in infrastructure requirements. A natural by-product of data-center consolidation is higher demand for application delivery, application switching and wide-area network (WAN) optimization. Consolidating applications and data in a central location often strains an organization’s WAN. But the data-intensive nature of next-generation applications such as Voice over Internet Protocol (VoIP) and video conferencing are intensifying the problem.

The proliferation of devices and ubiquitous connectivity are driving the network access control (NAC) model. The edge of the network is blurring. Whether it is being caused by a myriad of new smart devices that require access to corporate resources, or partners or consultants needing connectivity to corporate resources, progressively more information technology is being required to grant access to unknown and/or roaming devices. We believe this will increase the demand for device integrity provided by NAC architecture, and also increase the demand for authentication and infrastructure capable of delivering mission-critical applications from a central location.

In addition, identity becomes paramount in a centralized model. Ubiquitous access on a multitude of devices will require enterprises to enhance their authentication capability to satisfy growing legal requirements for data protection and audit. We expect this to increase the need for security solutions such as PKI, biometrics, tokens, single sign-on and provisioning.

Furthermore, data management becomes critical. Data management is increasingly complex because data resides in many locations throughout most networks, access is granted to a multitude of devices, and removable storage devices are commonplace. Numerous regulatory requirements for data privacy and the need to stop internal data breaches should increase the market for encryption and data-leakage prevention, in our view.

About the author
Rob D. Owens, vice president and senior research analyst, joined Pacific Crest in 1994 and manages the firm’s security and infrastructure software practice. Mr. Owens’ team focuses on analyzing and communicating the key drivers of enabling technologies for Internet and corporate infrastructure. Mr. Owens has appeared on CNBC, and is frequently quoted in financial and industry trade publications such as The Wall Street Journal, Forbes and Investor's Business Daily. Accolades include a third-place ranking in The Wall Street Journal’s “Best on the Street” for his earnings forecasting, sixth in a survey by Reuters for his quality of research in the software sector and a ranking in Institutional Investor’s 2003 All-American Research Team. He is a member of the Portland Society of Financial Analysts, Software Association of Oregon, American Electronics Association, and Washington Software and Digital Media Alliance. Mr. Owens graduated cum laude with a BS in mathematics and finance from Linfield College.

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