Computerworld - In the world of IT security, showing a return on investment can be an elusive proposition. But for The Regence Group Inc., a four-state Blue Cross/ Blue Shield insurance administrator in Portland, Ore., the payback from one initiative was real and fast.
Since outsourcing its security event monitoring 18 months ago to Counterpane Internet Security Inc., The Regence Group has reduced staffing costs in its monitoring operations center by 80%. The center watches over the company's 200 perimeter devices, 600 internal Windows NT servers and some of its mainframes, says David McLeod, assistant director of IT security at Regence.
Outsourcing the security monitoring function has also completely eliminated intrusions thus far, he says. That's pretty impressive, considering that Regence had 145,000 security events that required scrutiny in the last quarter of 2001 alone.
"The FBI reported in January that 1% of all attempted hacks are successful, so there should have been some breach of our systems. But there hasn't been," McLeod says.
In addition to being familiar enough with the Regence network to detect abnormal activity, Counterpane also provides an early-warning system that has protected Regence from Nimda, Code Red and other destructive worms and viruses, McLeod says.
Counterpane does this by correlating events occurring at its client sites located in earlier time zones and alerting McLeod's IT team hours before such malicious programs hit the West Coast. For East Coast clients, early-detection information is passed along in real time from client sites in the Pacific Rim and other clients on the East Coast.
Founded in 1999 by well-known cryptographer Bruce Schneier, Counterpane has been a company on the rise, consistently scoring high marks from analysts for its services and channel marketing strategies. Counterpane is now reselling through vendors such as VeriSign Inc. in Mountain View, Calif., and Check Point Software Technologies Ltd. in Redwood City, Calif. The company also earned praise for reducing its pricing model from a starting point of $10,000 per month for small networks - too high for some customers - to $5,000 per month.
But John Pescatore, an analyst at Gartner Inc. in Stamford, Conn., says he questions whether a single-service delivery model can sustain Counterpane's dominance in the managed security monitoring market. Gartner predicts that the managed security services market, of which monitoring is a subset, will reach $5.27 billion by 2005.
"We think a mix of 70% managed security revenues and 30% consulting revenues is what's needed to succeed," Pescatore says. "We do give Counterpane marks for its incident response consulting, but those services are already wrapped into their fees. Sothey're shortchanging themselves by not putting these people into consulting delivery."
But according to a 2001 report from Giga Information Group Inc. in Cambridge, Mass., by staying focused on monitoring services alone, Counterpane remains the only vendor-neutral company in its category. And Counterpane's channel customers can provide the consulting services when needed, adds Schneier.
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