Increasing security threats, operational and cost benefits and staffing pressure drive market growth.
Small and midsize businesses (SMBs) are driving growth as they are becoming increasingly aware of security threats. They are also seeing that cloud deployments provide opportunities to reduce costs, especially for powering and cooling hardware-based security equipment and data centre floor space.
"The cloud medium is a natural fit for the needs of SMBs. Its ease of deployment and management, pay-as-you-consume pricing and simplified features make this delivery model attractive for organisations that lack staffing resources," said Mr Contu.
The enterprise sector is also driving growth as they realise the operational benefits derived from a cloud-based security delivery model.
"Cloud-based delivery models will remain a popular choice for security practices, with deployment expanding further to controls, such as cloud-based sandboxing and WAFs," said Mr Contu. According to a global survey conducted by Gartner at the beginning of 2016, public cloud will be the prime delivery model for more than 60% of security applications by the end of 2017.
"The ability to leverage security controls that are delivered, updated and managed through the cloud — and therefore require less time-consuming and costly implementations and maintenance activities — is of significant value to enterprises," said Mr Contu.
Cloud-based security services market growth presents opportunities and challenges for providers.
"On the one hand, new greenfield demand arising from emerging requirements from SMBs is driving growth. On the other hand, new competitive dynamics and alternative pricing practices threaten traditional business models," said Mr Contu. Providers need to adapt to the shift from an on-premises to a cloud-delivery business model. "Overall, one of the main focus areas for providers relates to the shift from owning and selling a product, to selling and supporting ongoing service delivery." 
