The Future of Cloud Security Companies

Cloud computing is undoubtedly the way of the future. In its fifth annual State of the Cloud Survey, RightScale found that a whopping 95 percent of companies surveyed use cloud infrastructure, to one extent or another.
Granted, RightScale interviewed 1,060 IT professionals, who are all in the sweet spot for cloud adoption. Nonetheless, the sheer magnitude of these numbers illustrates the prevalence of cloud technology.

Cybersecurity a top concern

Of course, every new technology comes with its own anxieties and, for a long time, the major concern associated with cloud computing was the problem of cybersecurity. Dramatic breaches to cloud platforms have been well documented in the news, impacting everyone from Target (NYSE:TGT) shoppers to employees of the federal government. Therefore, it stands to reason that, since 2013, the State of the Cloud Report found security to be the top challenge in the cloud.

Potential upset for the market

This shifted in 2016, as a lack of resources and expertise took the top spot for the major challenge to cloud investing. However, this isn’t as dramatic a shift as it might initially seem. In 2015, 27 percent of respondents cited this as their top concern. This year, the percent bumped up five points to reach 32 percent. This anxiety is directly tied to the growing prevalence of cloud infrastructure in companies. As businesses entrust more and more to the cloud, the need for expertise, additional IT training and development staff increases.

Bright future for the cloud security companies

So what does this mean for cybersecurity? Well, to put it simply, cloud security companies still have an important role to play in the market. The percentage of survey respondents who cite security as a top concern even grew over the past two years, moving from 28 percent last year to 29 percent in 2016.

Investor uptake

All told, cloud security companies appear to be a very promising area of investment. Cloud Security Corporation (OTCMKTS:CLDS) is one good example. The company is an early-stage security and information access technology software company, which delivers immediate information with secure access to computer desktops and other electronic devices. Since the start of the year, stock price has increased by 48.5 percent to reach $4.00.

Meanwhile, VIQ Solutions (TSXV:VQS) represents another promising cloud security option. The company is engaged in developing software solutions that capture, digitize and compress audio and video data, that is then securely stored in a multi-tiered server system. In the past six months, stock price for the company has gone up 160 percent. As CEO Sebastien Pare told the Investing News Network, “it’s all about linking cybersecurity with whatever is most important for the company we’re working with.” From healthcare to the justice system, VIQ is offering cyber solutions across several verticals to assuage concerns about cloud security.
Therefore, despite shifting market concerns in the cloud sector, it’s not time to give up on cloud security companies. These businesses are still witnessing significant demand and substantial growth.
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Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.