Investors Pour Money into Startups Killing the Data Center Firewall

This week, Guardicore, a cloud and data center security startup that specializes in a cybersecurity technique called micro-segmentation, announced $60 million in new funding, bringing its total funding to $110 million.

And it’s not alone. Investors have been pouring money into new security technologies that help companies get away from outdated and increasingly inadequate firewalls in their data centers and shift to flexible, software-defined, cloud-native networking security and segmentation platforms.

According to industry research group Owler, the top ten players in this market have raised $750 million altogether.

"What people were doing previously was leveraging perimeter-based firewall technology and virtual local area networks to create network segments," Dave Burton, VP of marketing at Guardicore, said. "This is becoming increasingly difficult due to the rate of change – and it's almost impossible to do in public cloud, because you don't have access to the underlying infrastructure."

Micro-segmentation prevents attackers from moving laterally, from system to system, greatly shrinking the potential attack surface.

There's an added compliance benefit. For example, a company can isolate health care data that falls under HIPAA regulations on its own network segment, separate from normal user access. Companies with payment systems that fall under PCI regulations can segment out the card-data environment.

Related:How the Cloud Killed the Firewall

Guardicore's service is delivered via the cloud. Instead of buying network appliances, customers install lightweight agents or hypervisor components. The data collected can then flow into the company's security information and event management (SIEM) system.

The setup process is ten to twenty times faster than traditional approaches, Burton said, and keeping up with changing environments is also significantly easier.

The system works across multiple cloud environments, including Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure, and Google Cloud Platform. It can also be deployed in on-premises enterprise data centers.

"You need to have a way to do this in a software-defined fashion so that as workloads change, or are added, your security policies can follow that workload wherever it is," said Burton.

Customers are typically large and mid-sized enterprises that use the platform to protect their data centers. They include Deutsche Bank, Frontier Airlines, Spain's Santander Bank, and Tivo.

The multi-cloud approach Guardicore and its competitors are taking is particularly important today, said Derek Brost, director of professional services for security at InterVision Systems, a Santa Clara, California-based technology consulting firm.

Related:How Data Centers Can Use the New Smart Cybersecurity Tools

Otherwise, data center managers are stuck trying to juggle different technologies.

"In order not to have to keep track of the VMware method, the AWS method, the Cisco method, etcetera, it can be very advantageous to bring the micro-segmentation technology away from just the network and pull it down to the individual endpoint systems," he said.

When choosing a platform for hybrid and multi-cloud data center environments, this kind of capability is essential, he said.

Data centers should also choose platforms that allow for granular policy-based security controls with reliable orchestration methods, he added, "and which provide meaningful visibility and analytics for audit and iterative improvement."

According to Forrester analyst Chase Cunningham, the more mature organizations are leading the way in deploying this technology.

"But it's gaining ground across the industry," he said. "It should mean that it's easier for data center managers to have command and control of their infrastructure and greater capability to dial in security based on granular controls."

And there's been substantial interest from investors, he added. "We've probably seen a few hundred million dollars worth of investment in this particular area in the last 12 months."

The news also illustrates a trend toward delivering enterprise security via a SaaS model, said Alex Young, VP of engineering at Cloud Academy.

Last month, for example, there was a $70 million funding round for Expanse, another cloud-based security vendor, bringing its total funding to $135 million.

"Both of these companies are providing increased and proactive solutions for managing an increasing threat from cyberattacks, both external and on network," he said. "At the same time, we see larger plays on the network side like Cloudflare, which closed a $150 million round this month to expand its active threat prevention offerings."

The data center security market is ripe for disruption, said Guardicore's Burton.

"There's transformation and change happening in the data center," he said. "There's more virtualization in on-prem data centers, and more hybrid deployments, often times multi-cloud."

Deutsche Bank, for example, is using Guardicore to protect critical assets both on premises and in the cloud, Alan Meirzon, director of the chief information security office at Deutsche Bank, said in a statement.

"Guardicore gives us an effective way to protect our critical assets through segmentation," he said.

Microsegmentation is also a key step toward building zero-trust networks, or, as Gartner calls it, "continuous adaptive risk and trust assessment," or CARTA

According to Gartner, by 2020, 25 percent of new digital business initiatives will adopt a CARTA approach, up from less than 5 percent in 2017.

And the first step, Gartner says, is deploying context-aware, adaptive, and programmable security platforms.