Disparate Cyber Security Spending Projections Highlight Budget Ambiguities

by Lloyd McCoy Jr., Consultant

IDC Government Insights recently released “Business Strategy: U.S. Federal Government IT Security Spending Forecast and Market Outlook,” a report which estimates that IT security spending will top $6.1 billion in 2014 and will climb 3-6% each year through 2017. This is in marked contrast to other projections made by industry and government.

immixGroup assesses the federal government will spend about $13 billion on cyber security in FY14 and will surpass $17 billion in spending by 2017. Cyber security spending includes IT investments that help protect federal networks, our critical infrastructure, as well as R&D efforts. Defense cyber security spending alone will account for $4.65 billion this fiscal year, dropping to $4.53 billion by 2017. Our projections are based on analysis of budget documents and federal cyber security programs, as well as official government budget estimates.

However, we acknowledge measuring cyber security spending is an inexact science. Even the federal government has had difficulty determining its cyber security spend. The total federal cyber security spend could in fact be higher than immixGroup’s estimates, as these figures do not account for all of such spending within major weapons programs. Adding to the uncertainty, a portion of cyber security monies are allocated to personnel and other line items that are not products or services related.

Despite these information gaps, we are confident the government will spend far more on cyber security in 2014 than the $6 billion predicted by IDC. According to our market sizing analysis, approximately 10-15% of the $13 billion federal cyber security spend will be dedicated to purchasing cyber security products. Thus the total addressable market for cyber security products vendors in FY14 will be between $1.3 billion and $1.9 billion.