Will crisis in financial sector affect tech and security?

Financial crisis is going to overflow from financial sector to real sector. It can result in slowdown and less spending for technology, higher unemployment rate etc. Results also can be in growth in the use of open source, cloud computing and virtualization technology as consumers cut back on their “discretionary” purchases while businesses, strapped for credit (because banks won’t have it to lend), decide to make the best of what they’ve got and squeeze the last possible drops of life from the hardware they have, while reducing costs on software as far as possible.

Security business will be certainly affected. Many managers consider this spending as something what does not give proper ROI (return of investment).  Effects of improper security processes, services and products are usually seen as only negative reference. Management will not prize people and teams responsible for security based on what could happen but not happened because you implemented proper security processes, mechanisms, policies, products, services. But, in case of security incident you will get negative publicity. It is role similar to goal keeper in football team.

Security researchers and developers will certainly face with cut of funds for this purpose in first sign of overflow of crisis from financial sector to, so called, real sector.

Is that good? Definitely it is not at all.

In vulnerable systems which are more than 90% systems in use at present, this will open new holes. Financial sector will be strongly affected. As result of ruined confidence to that industry, lack of proper security in future will continue derogation and eventually will result in lost confidence in sector. This is going to lead to new problems.

Some tradeoff should be found. That is tradeoff between necessary spending and mechanisms, products and services that can provide better security for less money.

Another view on result of economic crisis toward tech sector spending can be seen here. It says:

Meanwhile, for those aiming to start technology businesses, it might – ironically enough – be slightly easier than before to get venture capital cash. That’s because the people who have money need to find somewhere to invest it. Gold? Oil? USTreasury bonds? All are a rollercoaster right now. Finding a company with a really good idea and business plan – preferably not reliant only on advertising – looks, by contrast, like an excellent way to make money. After all, in 1976, when Apple was founded, US unemployment was 8.5% and inflation was 8.9%; at present the comparable numbers are 6.1% and 5.4%. But of course in 1976 the US was coming out of recession. Now? It’s anyone’s guess how bad it will get.

The squeeze will also push companies towards open-source models, since those don’t require expensive licenses as well as expensive support. That could be a threat to Microsoft and other big ones.
I would say that this is good chance for clever and bright people with good ideas to create next big things. Or said in different words: someone will take crisis as problem, somebody as challenge and opportunity. It is time to consider next big move.

As result of this crisis, we can expect not only problems but also some good outcomes. Every crisis teaches us something and makes us stronger.

So, go back question in title of post. Answer is: yes, it is almost certain now. We still don’t know level and impact. But, impact doesn’t have to be only negative. It can have positive outcomes as well.

Update on October 19, 2008: I’ve added question from title as poll with three possible choices as answers:

  • Yes
  • No
  • I don’t know

I wish to hear your opinion on this topic.

3 Responses

  1. Dragan on Security

    Connected to Virus Writers?…

    New question is related to long lasting rumors that some security software companies are connected to virus writers and use them as helpers to increase revenues.

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