Perspectives on Reopening the IoT Economy

by Francis Cianfrocca

Of course, we were all hoping we would be there by now. But whenever the economy slowly starts to reopen, here’s what I see playing out from our little corner of the cybersecurity world.

  • CEOs will err on the side of caution when waiting for revenue expectations to normalize. This means that capital spending to support revenue-generation will come back sharply, but spending on IT and cybersecurity will lag. (Of course, sectors like airlines and oil/gas will see permanent changes.)

  • The Great Reopening will have a very long tail. A large percentage of people, perhaps half, will be reluctant to travel for business or even go to their offices, even after conditions normalize.

All of this means that, not only will the pressure for telework continue, but also that cybersecurity attacks will remain high because many security operations depend on people being present. These processes and procedures will continue to shift to telework, which adds tremendous pressure.

We will see a huge increase in opportunity for SD-WAN, but traditional firewall-based security management won’t be up to the challenge. Something transformative will take place here.

The obvious possibility is for existing cybersecurity vendors to mash-up existing portfolios of point solutions and somewhat-integrated platforms. But the cost and manageability profile of this path will be daunting because CSOs will push back hard. (Although with their budgets in deep-freeze, CSOs will have no choice in the matter.)

This presents a tremendous opportunity for new approaches to meet the combinations of vendor fatigue and extreme cost sensitivity, which were already in play and have been strongly enhanced by the pandemic. Next, there will be radical changes in threat-vector composition and vulnerability profiles arising from the sudden, unplanned move to telework across all business functions.

We don’t yet know which new approaches will emerge, or whether the incumbent security players will manage to push the mash-up concept. What we do know is that whatever comes next will be far less costly than what we have now relative to the value delivered.

The question is whether the value delivered will be a lot higher than we have now, or not.

The Awakening

This reminds me of Star Wars: The Force Awakens, where Supreme Leader Snoke says, “There has been an awakening. Can you feel it?”

However, in this case, it’s not our Supreme Leader who is feeling this awakening. Rather it’s those responsible for Security in almost every sector (Building, Physical, Cyber, Facilities, Public Services, and so on). This awakening is the reality that, despite every common-sense measure, we have to contend with the fact that our Supreme Leader (and others around him) has called for the re-opening of the American economy.

This will be a historical milestone for a lot of sectors, but let’s focus on finance for a moment. In my Wall Street days, and my days helping the Senate Finance Committee get through the financial crisis, I studied a lot of financial history. As often happens, the really interesting stuff isn’t in the textbooks. You need to get your hands on old papers from the Fed and old bond-market reports. Until about 1970 or so, the bond markets were the dog, and the stock market was just the tail.

One of the most fascinating times was the 1945-1950 period, when the Fed was trying to normalize the financial system and the federal government was trying to normalize the broader economy after World War II.

There are a lot of weird and wild things that went on outside of public notice, primarily because very few people truly understand the structure and functioning of financial markets. And the most spectacular thing about 1945-50 period is that the events that actually transpired were exactly the opposite of what all the policymakers and experts expected, in almost every respect of relevance to business planning and fiscal policy. I could give half a dozen examples off the top of my head.

At the current time, we are coming out of another World War, financially speaking. None of the huge crises since 1945 compares to this. Not the 1984 Continental default, not the 1987 crash, not the “Asian Flu,” not the Internet crash, not 9/11, not even the subprime crisis. The entire global economy was euthanized in a way that hitherto has only happened during World Wars.

During the awakening, as in 1945, the best bet is that what will happen will be damned close to the opposite of what everyone predicts.

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