Industry Insights Report: 3/2018 Future Productivity

SCP

Delivering economic growth: cyber security as a vertical and horizontal enabler

The global economy relies on cyber resilient digital technologies, making cyber security critical to the growth of today’s economy and societies – and for all future generations.

The Australian cyber security sector is an essential part of securing Australia’s online environment and expanding into the burgeoning global cyber security market.

Having a more dynamic, scalable and responsive cyber security sector will enhance Australia's global reputation as a trusted and secure business environment and trade partner – while significantly contributing to Australia’s own cyber resilience. This could increase demand for the export of other Australian goods and services, and over time will mitigate costs related to data breaches and malicious cyber activity for Australian organisations.

While every sector of the economy is affected by technological change and the need to leverage the power of data science, perhaps none is impacted more than the cyber security sector. Several major trends are likely to unfold in coming years, shaping the structure and nature of cyber security markets. For some organisations, many of the technological changes will be disruptive; with positive and/or negative impacts depending on how change is embraced.

AustCyber – the Australian Cyber Security Growth Network – was established as an industry-led entity by the Australian Government’s Industry Growth Centres Initiative to help our domestic cyber security sector to grow and become globally competitive. This will deliver Australia significant economic benefit, while enabling public and private sector organisations alike to source solutions closer to home.

Part of the Government’s National Innovation and Science Agenda and Australia’s Cyber Security Strategy, AustCyber brings together governments, businesses and researchers to provide a foundation for the development of next generation solutions required to live and work securely in our increasingly connected world.

The global opportunity

Cyber resilience adds economic and social value to all sectors of the economy. Australian organisations with cyber security front of mind will be best placed to maximise the benefits of the digital age and realise the long-term growth potential of cyber-physical systems.

The Internet of Things, Cloud Computing and the convergence of IT and operational technology are some of the current disruptive technological trends that may provide opportunities for Australian industry and increase the future demand of cyber security solutions.

They could increase demand for all forms of cyber security, including non-technical areas such as education, business development, legal services and policy implementation. These disruptive technological trends will continue to evolve, and as they do, they will likely bring demand for new cyber security solutions.

The global cyber security market is currently valued at around US$126 billion and is projected to increase to US$251 billion over the next decade. Around three-quarters of the global expenditure on cyber security comes from cyber security ‘users’ (organisations and individuals seeking to defend themselves against malicious cyber activity) who purchase solutions from external cyber security ‘providers’ (both specialist cyber security firms and IT or telecommunications firms with cyber security offerings).

Australia’s potential

Total expenditure on cyber security in 2016 was approximately A$4.3 billion, equating to 5 per cent of the Australian information technology sector.

Cyber security in Australia is a rapidly growing industry. Currently, the sector employs approximately 19,000 people in technical roles – either as part of an organisation’s internal cyber security workforce or through external cyber security providers. Total expenditure on cyber security in 2016 was approximately A$4.3 billion, which equates to around five per cent of the Australian information technology sector.

Australian demand and employment are dominated by outsourced cyber security services, and more than three-quarters of this market is controlled by foreign firms—mostly operating from local bases and employing Australians. Software and hardware markets are also dominated by imports.

There are however, opportunities for local firms to penetrate the market – and this is now happening at pace across the country and across capability strengths. Australia can concentrate its limited resources on parts of the cyber security sector that are experiencing growth in local demand and where Australia can compete most effectively.

Analysis suggests that this includes software in areas of distinctive research capability, services in the cyber protection stack and in underlying processes. While these segments will be the initial focus of industry development, many of the actions of government, AustCyber and others will also support the competitiveness of the sector as whole.

Over the next decade, the current demand pattern is set to intensify as organisations are expected to make even greater use of outsourced services to manage growing security needs and a proliferation of security threats.

This means that cyber security services will likely experience a much stronger growth in demand than cyber security hardware and software. This basic trend applies to both Australia and the world, but in Australia the additional demand for cyber security solutions is expected to bolster a broad spectrum of different security services—from the protection stack to underlying processes—whereas globally demand is expected to strengthen most notably for security operations services.

Despite the economic potential, there are structural and cultural factors that challenge the growth outlook for Australia's cyber security sector. Fortunately, AustCyber provides the Australian economy with a dedicated focus on addressing these; acting as a multiplier and connector across governments, academia and industry.

AustCyber’s contribution

Since AustCyber was established in January 2017, a foundation has been built to grow Australia’s cyber security sector by delivering practical support to Australian cyber security entrepreneurs and activated buyers at home and abroad. AustCyber has quickly established itself as a visible independent advocate for the competitive and comparative advantages of Australian technical and non-technical cyber security capabilities and has re-shaped cyber education in Australia. In a previously austere environment, AustCyber has marshalled passionate Australian cyber businesses, academics and governments into a genuine community.

AustCyber operates independently at the nexus of national and jurisdictional policies that span economic growth, national security, education, innovation, law enforcement and more. These diverse areas reflect the diverse opportunities for the cyber security sector. AustCyber operates across government, industry and academic stakeholder groups to identify and, where possible, remove barriers to the growth and success of the sector.

AustCyber’s decade-long value proposition is stated in Australia’s inaugural Cyber Security Sector Competitiveness Plan (April 2017). Three strategic objectives underpin AustCyber's operating model, business plan and all its activities:

An update to the Cyber Security Sector Competitiveness Plan is scheduled for release in November 2018 and explores AustCyber’s progress, confirms ever-growing market demand and provides new data on sector growth.

The Australian Cyber Security Industry Roadmap, developed by AustCyber in partnership with CSIRO Futures, will be released this year as well, and shows how AustCyber will amplify growth in other sectors by embedding cyber security as a requirement for success.

By working with public and private partners across the ecosystem, AustCyber is providing Australian cyber security companies with the foundation to grow and scale, which creates the step-change required to help Australia transform into a true and trusted knowledge economy.

  • Grow an Australian cyber security ecosystem.
  • Export Australia's cyber security to the world.
  • Make Australia the leading centre for cyber education.