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Gov't network monitoring contracts to yield $6 billion

Network monitoring contracts with U.S. federal agencies could mean as much as $6 billion in new revenue for security firms, according to a report by eWeek. In 2013, discovery of theft of U.S. military secrets by hackers from China could prompt the Obama administration to more stringently fortify the nation’s cyber data.

It is estimated that China steals nearly $300 billion worth of intellectual property from the U.S. government and American companies each year.
It is estimated that China steals nearly $300 billion worth of intellectual property from the U.S. government and American companies each year.
Photo by Win McNamee/Getty Images

It is estimated that China steals nearly $300 billion worth of intellectual property from the U.S. government and American companies each year. Protecting proprietary information is now being seen as a mission critical function because data volume is exploding.

According to a December 2012 report from IDC, "from 2005 to 2020, the digital universe will grow by a factor of 300, from 130 exabytes to 40,000 exabytes, or 40 trillion gigabytes (more than 5,200 gigabytes for every man, woman, and child in 2020). From now until 2020, the digital universe will about double every two years."

Nearly two dozen companies are competing for contracts on systems that will continuously monitor the security and performance status of networks. Additionally, governments around the world are ordering network monitoring hardware and software systems.

In the United States, federal agencies are required to ensure their networks are secure under the Federal Information Security Management Act (FISM). Congress passed the law in 2010. However, bureaucratic red tape, incompetence, and a lack of urgency have slowed down compliance with FISMA.

The Department of Homeland Security only issued a request for quote (RFQ) in December 2012 for companies to bid on monitoring and diagnostic systems for its networks – more than two years after the passage of FISMA. The agency is setting aside $170 million for the project.

Taxpayer groups are observing whether the government uses these funds efficiently and effectively. In April 2013, the Pentagon reported that it has squandered nearly $1 billion in taxpayer funds by failing to implement an electronic health records initiative.

Service providers are seeing a significant uptick in new business from the public sector both in the United States and abroad. For instance, NETSAS, an IT network company, is growing its revenues because of contracts with the Australian government.

One project involved the installation of its flagship Enigma NMS product that manages and monitors an organization’s network infrastructure. “Enigma NMS was first deployed in the Queensland Department of Main Roads [Australia] . . . and proved to be a . . . success,” said CEO Mikhail Chelomanov in a 2013 interview with InvestmentUnderground.com.

His company installed a bill validation module which reduced errors for thousands of customers. “Validating telecommunications bills is a specialized, labor intensive, tedious and error-prone activity. If the client doesn’t have the time, resources and tools to validate telecommunications bills, they are just being paid,” said Chelomanov.

However, data security and network integrity continue to be a problem for many government agencies. Many departments don’t have the budget, resources or technical skills to use emerging technologies that monitor their networks for vulnerabilities and threats.

Only 22 percent of agencies had met the original FISMA deadline for deploying a continuous monitoring system by September 2011, according to a survey released by RedSeal Networks. The FISMA deadline was extended to September 2012. Only 45 percent of federal agencies were able to comply by this date.

Many of the IT staff in government agencies continue to be bogged down by antiquated legacy systems that are incompatible with modern architectures and systems. Thus, network performance management becomes a problematic issue for organizations that must reconcile emerging technologies with legacy infrastructure, incompatible devices, and ineffective software.

A 2012 survey by SevOne found that 90 percent of IT managers “do not have confidence in themselves to find problems before users are impacted”. The findings found that the vast majority of IT departments have an inability to quickly detect problems in their network systems.