2013 global encryption trends study

2013 Global Encryption Trends Study Encryption continues along its path to mainstream adoption but key management concerns highlight potential barriers to deployment.

Ponemon Institute© Research Report

Sponsored by Thales e-Security Independently conducted by Ponemon Institute LLC Publication Date: February 2014

Thales e-Security & Ponemon Institute© Research Report Page 1

2013 Global Encryption Trends Study

Table of Contents From Page

To Page

Part 1. Executive Summary 2 4

Part 2. Key Findings 5 36

Strategy and adoption of encryption 5 7

Trends in encryption adoption 8 10

Encryption and security effectiveness (SES) 11 13

Threats, main drivers and priorities 14 19

Deployment choices and decision criteria 20 22

Encryption features considered most important 23 23

Attitudes about key management 24 27

Importance of the key management interoperability protocol (KMIP) 28 29

Importance of hardware security modules (HSM) 30 32

Budget allocations 33 35

Part 3. Methods & Limitations 37 39

Appendix: Consolidated Findings 40 47


2013 Global Encryption Trends Study1 Ponemon Institute, February 2014

Part 1. Executive Summary

Ponemon Institute is pleased to present the findings of the 2013 Global Encryption Trends Study, sponsored by Thales e-Security. We surveyed 4,802 individuals across multiple industry sectors in eight countries - the United States, United Kingdom, Germany, France, Australia, Japan, Brazil and, for the first time, the Russian Federation.2 The purpose of this research is to examine how the use of encryption has evolved over the past nine years and the impact of this technology on the security posture of organizations. The first encryption trends study was conducted in 2005 for a US sample of respondents.3 Since then we have expanded the scope of the research to include respondents in all regions of the world. This year, for the first time, the survey included respondents in the Russian Federation. In our research we consider the threats organizations face and how encryption is being used to reduce these risks. As in prior years, we asked questions about the types of encryption technologies deployed, the most salient threats to sensitive and confidential information, data protection priorities, and budgeted expenditures for encryption and key management activities. Following is a summary of our most salient findings. More details are provided for each key finding listed below in the next section of this paper. We believe the findings are important because they demonstrate the relationship between encryption and a strong security posture. As shown in this research, organizations with a strong security posture are more likely to invest in encryption and key management to meet their security missions. Summary of key findings: More organizations are adopting an enterprise encryption plan or strategy rather than relying on ad hoc requirements or informal policies. Since the first study, the number of respondents reporting that their organizations have a comprehensive encryption strategy versus those who say their organizations do not have such a strategy has increased. Today, organizations that have a comprehensive strategy outnumber those that do not have such a strategy by more than two to one. Business unit leaders are gaining influence over their company’s use of encryption solutions. IT leaders are still most influential in determining the use of encryption. However, non-IT business managers are becoming more influential. This indicates that business unit leaders are taking a greater role in determining the encryption technologies their organizations need to ensure data security and privacy.

1 This year’s study was completed in December 2013 for eight country samples. 2 In the figures, countries are abbreviated as follows: Germany (DE), Japan (JP), United States (US), United Kingdom (UK), Australia (AU), France (FR), Brazil (BZ) and Russia (RF). 3 The trend analysis shown in this study was performed on combined country samples spanning nine years (since 2005).

Following are big encryption trends over nine years:

Steady improvement in the security posture of participating companies.

Increase in the use of encryption as part of an enterprise strategy rather than a point solution.

More influence at the business unit level in choosing and deploying encryption technologies.

Decrease in the importance of compliance as a main driver to encryption adoption as focus shifts to honoring privacy obligations.

Continued awareness of the key management interoperability protocol (KMIP) and adoption hardware security modules (HSM).

Increase in spending on encryption and key management as a percentage of the IT budget.


Encryption usage is an indicator of a strong security posture. Organizations that deploy encryption extensively throughout the enterprise as opposed to limiting its use to a specific purpose (i.e., point solutions) appear to be more aware of threats to sensitive and confidential information and spend more on IT security. In other words, encryption use makes a strong contribution to an organization’s overall security posture. Furthermore, organizations with a strong security posture are three times more likely to have an encryption strategy than those with a lower security posture. Employee mishap is considered the main threat to sensitive and confidential data. Concerns over accidental data leakage outweigh fears about attacks by malicious insiders or hackers by almost a factor of two. The main driver for using encryption is lessening the impact of data breaches. This represents a shift in priorities. In previous years, the primary driver was protecting brand or reputation. In Australia and France the main reason for encryption is to comply with privacy or data security regulations and requirements. Encryption has a major impact on the perceived need to disclose data breaches. There is a wide range in attitudes regarding the perceived need to disclose a breach. However, the findings indicate that respondents in all countries recognize that data encryption minimizes notification requirements to breach victims. The discovery of data at risk and the actual deployment of encryption are the top two challenges. Of least concern are allocating budget, selecting the right encryption solution and options and measuring effectiveness. The use of encryption is steadily growing in all categories. The encryption of external public networks, databases and backup files are most likely to be extensively deployed throughout the enterprise. Deployment of encryption in cloud environments remains low. Seventy percent of respondents report they are deploying five or more different types of encryption. Financial service companies are most likely to use encryption technologies throughout the enterprise. In contrast, manufacturing and retail organizations are less likely to extensively deploy encryption. The strongest growth in adoption of encryption is seen in the financial services and hospitality sectors. German, US and Russian companies are most likely to use encryption technologies throughout the enterprise. Australian, French and Japanese companies are the least likely to extensively use encryption technologies. Most important features of encryption technology solutions are system performance and latency, automated management of keys and automated enforcement of policies. The least important features are support for longer encryption keys and support for formal preserving encryption. The importance of all aspects of functionality has increased as more organizations deploy encryption. The issue of whether the encryption solution conforms to security standards has become more significant. Key management is painful for most organizations. More than half of all respondents rated the “pain” associated with key management to be 7 or higher (based on a scale of 1 = minor to 10 = severe). Even though more than 75 percent of respondents report that key management is a well-defined discipline in their organizations, only 23 percent say that the task of managing keys has dedicated resources or tools. Key management standards and hardware security modules (HSM) are increasing in importance for participating companies. Key management interoperable protocol (KMIP) and HSMs provide mechanisms for unifying and automating key management activities and reducing the risk of key management processes being subverted as a way to gain illicit access to encrypted data.


Part 2. Key Findings Strategy and adoption of encryption Since conducting this study, there has been a steady increase in organizations with an encryption strategy applied consistently across the entire enterprise. In turn, there has been a steady decline in organizations not having an encryption plan or strategy. Figure 1 shows these changes over the past nine years. Figure 1. Trends in encryption strategy

According to Figure 2, the prevalence of an enterprise encryption strategy varies among the countries represented in this research. The highest prevalence of an enterprise encryption strategy is reported in Germany followed by the US and Japan. Respondents in Australia and Brazil report the lowest adoption of an enterprise encryption strategy. Figure 2. Differences in enterprise encryption strategies by country

15% 18%

20% 19%

25% 26% 26%

35%

38%

33% 32% 33%

28% 28% 26%

22%

15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Company has an encryption strategy applied consistently across the entire enterprise

Company does not have an encryption strategy.

40%

31%

53%

33%

22%

36%

24%

34%

0%

10%

20%

30%

40%

50%

60%

US UK DE FR AU JP BZ RF

Company has an encryption strategy applied consistently across the entire enterprise

Average


Figure 3 shows the most influential functional areas for defining the company’s encryption strategy. The figure shows that IT operations are deemed most influential in determining the organization’s enterprise encryption strategy. In this study, “lines of business” are defined as those with commercial or executive responsibility within the organization. Figure 3. Most influential for determining the company’s encryption strategy

Figure 4 shows that the IT operations function has consistently been most influential in framing the organization’s encryption strategy over nine years. However, that picture is steadily changing with business unit leaders gaining influence over their company’s encryption strategy. We posit that the rising influence of business leaders reflects a general increase in consumer concerns over data privacy and the importance of demonstrating compliance to privacy and data protection mandates. It is also probable that the rise of employee owned devices or BYOD and the general consumerization of IT has had an effect. It is interesting to note that the influence of the security function on encryption strategy has been relatively constant (flat line) over the past year years. Figure 4. Influence of IT operations, lines of business and security

1%

3%

15%

19%

26%

35%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Compliance

Finance

Security

No single function has responsibility

Lines of business or general management

IT operations

53% 51%

45% 48%

42% 45%

39% 37% 35%

10% 13% 11%

19% 15%

19% 21% 22% 26%

12% 13% 13% 14% 13% 14% 14% 15%

0%

10%

20%

30%

40%

50%

60%


IT Operations Lines of business Security


Figure 5 shows the distribution of respondents who rate IT operations, LOB and security as most influential in determining their organization’s encryption strategy. This chart shows IT operations as most influential followed by business managers in six of eight countries. Japanese, German and Australian respondents see the influence of IT at a much higher level than business managers and security. In contrast, the US and UK see business managers as more influential than IT operations. In addition, respondents in US and Australia rate security as having a higher level of influence on setting their organization’s encryption strategy than in other countries. Figure 5. Influence of IT operations, LOB and security by country

20%

31%

33%

33%

34%

38%

44%

54%

27%

26%

33%

25%

34%

13%

27%

17%

20%

15%

14%

16%

13%

19%

12%

9%

0% 10% 20% 30% 40% 50% 60%

US

BZ

UK

RF

FR

AU

DE

JP

Security Lines of business IT operations


Trends in adoption of encryption Since we began tracking the enterprise-wide use of encryption in 2005, there has been a steady increase in the encryption solutions used by organizations.4 Figure 6 summarizes enterprise-wide usage consolidated for various encryption technologies over nine years. This continuous growth in enterprise deployment suggests encryption is important to an organization’s security posture. Figure 6 also shows the percentage of the overall IT security budget dedicated to encryption-related activities. As expected, the patterns for deployment and budget show a strong correlation. Figure 6. Trend on the extensive use of encryption technologies

4The combined sample used to analyze trends is explained in Part 3. Methods.

16%

20% 19% 22% 23% 23%

25% 27%

30%

10% 10% 14% 13%

16% 14% 15%

18% 18%

0%

5%

10%

15%

20%

25%

30%

35%


Extensive deployment of encryption

Percent of the IT budget earmarked for encryption


Figure 7 shows a positive relationship between encryption strategy and the deployment of encryption. German organizations have the highest percentage of companies with an enterprise encryption strategy and they are the most extensive users of encryption technologies. In contrast, Australia has the lowest percentage of companies with an enterprise strategy for encryption. Figure 7. Extensive use and prevalence of an enterprise encryption strategy by country

34% 28%

39%

24% 23% 24%

32% 34% 40%

31%

53%

33%

22%

36%

24%

34%

0%

10%

20%

30%

40%

50%

60%


Extensive deployment of encryption (average of 13 categories)

Encryption strategy applied consistently across the entire enterprise


Figure 8 shows the extensive usage of encryption solutions for 10 industry sectors over two years. With one exception (retailing), results suggest a steady increase in all industry sections between 2012 and 2013. The most significant increases in encryption usage occur in financial services and hospitality. Figure 8. The extensive use and availability of an enterprise strategy by industry

19%

21%

24%

25%

26%

31%

33%

35%

39%

43%

17%

21%

23%

24%

21%

29%

31%

33%

37%

38%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Manufacturing

Retailing

Public sector

Consumer products

Hospitality

Health & pharma

Technology & software

Transportation

Services

Financial services

Extensive use for FY2012 Extensive use for FY2013


Encryption and Security Effectiveness (SES) To estimate the security posture of organizations, we used the Security Effectiveness Score or SES as part of the survey process.5 The SES range of possible scores is +2 (most favorable) to -2 (least favorable). We define an organization’s security effectiveness as being able to achieve the right balance between efficiency and effectiveness across a wide variety of security issues and technologies. A favorable score indicates that the organization’s investment in people and technologies is both effective in achieving its security mission and is also efficient. In other words, they are not squandering resources and are still being effective in achieving their security goals. Following is a summary of the average SES for each country sample for two years. Germany achieves the highest score, while Brazil has the lowest score over the past three years. Figure 9. Average security effectiveness score (SES) in ascending order by country *2011 and 2012 data is not available for the RF sample

5The Security Effectiveness Score was developed by Ponemon Institute in its annual encryption trends survey to define the security posture of responding organizations. The SES is derived from the rating of 24 security features or practices. This method has been validated from more than 45 independent studies conducted since June 2005. The SES provides a range of +2 (most favorable) to -2 (least favorable). Hence, a result greater than zero is viewed as net favorable.

-0.21

0.12

0.33

0.47

0.61

0.8

1.02

1.25

-0.25

0.03

0.25

0.56

0.74

0.98

1.27

-0.48

-0.02

0.25

0.45

0.66

0.77

1.19

-0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4

BZ

FR

AU

RF*

UK

US

JP

DE

SES FY2011 SES FY2012 SES FY2013


Figure 10 reports the SES results compiled from encryption trend studies conducted over nine years. The trend line shown below is increasing, which suggests the security posture of participating companies has increased over this time period. Figure 10. Trend in average Security Effectiveness Score (SES)

Figure 11 summarizes a cross-tab analysis of SES and the percentage of organizations that have an enterprise-wide encryption strategy and the percentage that have an extensive deployment of encryption. We divide the overall sample into four quartiles based on SES. We see that organizations in the highest SES quartile sub-sample are nearly three times more likely to deploy a holistic encryption strategy than companies in the lowest SES quartile sub-sample (41 percent versus 16 percent). This figure also shows organizations in the highest SES quartile sub-sample are more than two times more likely to be extensive users of encryption technologies than companies in the lowest SES quartile sub-sample (38 percent versus 15 percent). The pattern of quartile averages in Figure 11 provides strong evidence that both encryption strategy and the use of encryption make an important contribution to organizations’ security posture. Figure 11. Analysis of encryption strategy and use by SES quartile (security posture)

0.04

0.13 0.12

0.31 0.26

0.54

0.40

0.51 0.55

-

0.10

0.20

0.30

0.40

0.50

0.60


SES Average

0.41

0.33 0.28

0.19

0.45

0.38

0.32

0.26

- 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50

First quartile (SES=1.29)

Second quartile (SES=.81)

Third quartile (SES=.23)

Fourth quartile (SES=.01)

Extensive deployment pf encryption (average of 13 categories)

Encryption strategy applied consistently across the entire enterprise


Figure 12 reports a scattergram showing the interrelationship between the respondents’ encryption use profile and SES. The encryption use profile is a ratio variable between +1 and -1 compiled from the extensive use of 11 encryption technologies.6 This diagram clearly shows a clustering of data points that form a positive (upward sloping) relationship, which suggest that encryption use and a strong security posture (high SES) are inextricably linked. Figure 12. Scattergram depicting the relationship between encryption use ratio and security posture

6Each respondent was assigned a profile score based on their organizations’ extensive use of encryption technologies. Those respondents who said their organizations extensively deployed all 11 encryption technologies were rated +1. Those respondents who said they did not extensively deploy any one of the 11 encryption technologies were rated -1. Hence, most respondents earned a rating between these two limits.

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

-2 -1.5 -1 -0.5 0 0.5 1 1.5 2

Encr

yptio

n us

e pr

ofile

Low SES High


Threats, main drivers and priorities Figure 13 shows for the past two years the most significant threats to the exposure of sensitive or confidential data is employee mistakes, legal and law enforcement requirements and system process malfunctions. In contrast, the least significant threats to the exposure of sensitive or confidential data include temporary or contract workers and third-party service providers. Concerns over inadvertent exposure (employee mistakes and system malfunction) outweigh concerns over actual attacks by hackers and malicious insiders. Figure 13. The most salient threats to sensitive or confidential data

1%

8%

9%

10%

13%

15%

15%

27%

1%

8%

9%

11%

14%

15%

16%

26%

0% 5% 10% 15% 20% 25% 30%

Other

Third party service providers

Temporary or contract workers

Malicious insiders

Hackers

System malfunction

Legal & law enforcement

Employee mistakes

Main threats FY2012 Main threats FY2013


Figure 14 lists in ascending order the top five perceived data threats by country.7 It shows marked differences among country samples. Accordingly, respondents in Japan, Australia and the UK rate employee mistakes at a much higher level than respondents in other country samples. In contrast, Japanese respondents are least likely to rate system malfunction as a top security threat. Figure 14. Top five perceived threats by country

7The consolidated average percentage for each threat category is presented in Figure 13.

11%

13%

17%

15%

26%

11%

13%

16%

8%

33%

10%

13%

22%

18%

20%

12%

15%

21%

10%

21%

9%

12%

10%

21%

38%

9%

17%

3%

17%

39%

9%

12%

12%

22%

17%

11%

13%

17%

13%

24%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Malicious insiders

Hackers

System malfunction

Legal & law enforcement

Employee mistakes

RF BZ JP AU FR DE UK US


The main driver for using encryption is reducing the impact of data breaches. Six drivers for deploying encryption are presented in Figure 15. Respondents report lessening the impact of data breach (46 percent) and protecting the organization’s brand or reputation (44 percent) are the two top reasons for using encryption technologies. Other top drivers for encryption usage include honoring the organization’s privacy commitments (42 percent) and complying with privacy and data security regulations (40 percent). Figure 15. The main drivers for using encryption technology solutions More than one choice permitted

6%

22%

40%

42%

44%

46%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

To avoid having to notify customers or employees after a data breach occurs

To reduce the scope of compliance audits

To comply with privacy or data security regulations and requirements

To ensure that our organization’s privacy commitments are honored

To protect our organization’s brand or reputation

To lessen the impact of data breaches


Figure 16 illustrates marked country differences.8 As shown, US respondents provide their top rating to lessening the impact of data breaches. Japanese respondents provide their highest rating to protecting the organization’s brand or reputation. Australian and French respondents provide their highest rating to compliance with privacy or data protection regulations. Figure 16. The top five drivers for using encryption

8The consolidated average percentage for each driver is presented in Figure 15.

17%

36%

32%

45%

59%

20%

40%

42%

47%

46%

31%

30%

48%

42%

47%

25%

58%

44%

33%

35%

20%

63%

39%

35%

40%

17%

21%

48%

60%

49%

25%

35%

45%

47%

42%

25%

43%

39%

44%

43%

0% 10% 20% 30% 40% 50% 60% 70%

To reduce the scope of compliance audits

To comply with privacy or data security regulations and requirements

To ensure that our organization’s privacy commitments are honored

To protect our organization’s brand or reputation

To lessen the impact of data breaches

RF BZ JP AU FR DE UK US


Respondents believe data encryption reduces their organization’s obligation to notify individuals in the event data loss or theft. Figure 17 shows the results of a question asking respondents “Would your organization be required to notify customers after the data breach involving the loss or theft of their personal information?” This question presented two separate conditions: (1) breached data is encrypted and (2) breach data is not encrypted. As can be seen, respondents in all countries recognize that data encryption minimizes notification requirements to breach victims. US respondents appear to be most sensitive to this data breach notification requirement than those in all other countries. The overall average response to notification in the case of unencrypted data loss or theft is 37 percent. In contrast, the average response to notification in the case of encrypted data loss or theft is only 20 percent. Figure 17. Would a data breach of customers’ personal data require notification?

61%

46%

35% 33% 31%

25%

11%

30% 33%

24% 20%

13% 15% 16%

10%

16%

0%

10%

20%

30%

40%

50%

60%

70%


Customer data was not encrypted Customer data was encrypted


Discovering where sensitive data resides in the organization is the biggest challenge. Figure 18 provides a list of six aspects that present challenges to the organization’s effective execution of its data encryption strategy in descending order of importance. Sixty one percent of respondents say discovering where sensitive data resides in the organization is the number one challenge. In addition, 50 percent of all respondents cite deploying encryption technology as a significant challenge. Figure 18. Biggest challenges in planning and executing a data encryption strategy Two choices permitted

11%

18%

24%

37%

50%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Measuring the effectiveness of the data encryption technologies deployed

Determining which encryption technologies are most effective

Obtaining the budget to deploy

Classifying which data to encrypt

Deploying the encryption technology effectively

Discovering where sensitive data resides in the organization


Deployment choices and decision criteria We asked respondents to indicate if specific encryption technologies are widely or only partially deployed within their organizations. “Extensive deployment” means that the encryption technology is deployed enterprise-wide. “Partial deployment” means the encryption technology is confined or limited to a specific purpose (a.k.a. point solution). As shown in Figure 19, no single technology dominates because organizations have very diverse deployments. Encryption of external public networks, databases and data backup are the most likely to be deployed. In contrast, encryption for smart phone and tablets and external cloud services are the least likely to be deployed. Figure 19. Consolidated view on the use of encryption technologies

18%

24%

27%

27%

25%

32%

32%

31%

32%

33%

43%

33%

35%

19%

40%

44%

48%

52%

45%

46%

47%

47%

47%

38%

48%

47%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

External cloud services

Smart phone & tablet

Cloud encryption gateways

File server

Email

Laptop

Internal networks

Desktop & workstation

Software applications

Data center storage

Backup files

Databases

External public networks

Extensive deployment Partial deployment


Figure 20 provides a histogram showing the percentage frequency of 13 encryption technologies deployed by respondents in all country samples combined. As can be seen, 70 percent of the consolidated sample says their organizations use five or more separate encryption technologies with 44 percent of organizations deploying between four and six different types of encryption technology. Figure 20. Histogram of 13 encryption technologies deployed

The use of encryption varies among countries. Figure 21 reports the extensive and partial deployment data of encryption technologies for eight countries. As shown, respondents in Germany US and Russia have the highest encryption deployment rates than other countries. Figure 21. Extensive and partial deployment of data encryption technologies consolidated for 13 encryption technologies

4%

8% 8%

10%

19%

15%

13%

8%

4% 5%

3% 2%

1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 2 3 4 5 6 7 8 9 10 11 12 13

Number of seperate encryption technologies deployed

39% 34% 34% 32% 28% 24% 24% 23%

47% 49% 47% 44%

41% 40% 40% 39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DE US RF BZ UK JP FR AU

Extensive deployment Partial deployment


Figure 22 presents a proportional analysis of 13 encryption technologies extensively deployed within eight country samples. Specifically, Germany and the US are the most extensive users of the encryption technologies listed in the figure. In contrast, France, Japan and Australia seem to be the least extensive users of encryption. Please note that the percentage shown in each cell represents the extensive usage rate only. Because organizations are using multiple encryption tools as indicated in the histogram in Figure 20, the sum of these cells across encryption categories and countries exceed 100 percent. Figure 22. The extensive use of 13 encryption technologies by country

28%

29%

25%

29%

31%

40%

34%

42%

30%

36%

37%

44%

39%

17%

22%

22%

25%

25%

30%

29%

28%

23%

33%

34%

33%

41%

18%

28%

41%

34%

36%

36%

40%

39%

46%

40%

41%

45%

62%

17%

28%

21%

19%

26%

22%

26%

19%

22%

25%

28%

28%

29%

12%

12%

15%

19%

20%

17%

31%

21%

29%

28%

30%

32%

34%

14%

16%

15%

21%

19%

31%

25%

30%

26%

31%

25%

22%

35%

9%

29%

25%

33%

26%

29%

33%

36%

43%

29%

32%

33%

57%

19%

28%

32%

31%

31%

35%

34%

38%

37%

35%

36%

40%

51%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

External cloud services

Smart phone & tablet

Email

File server

Cloud encryption gateways

Desktop & workstation

Software applications

Laptop

Internal networks

Data center storage

Databases

External public networks

Backup files



Encryption features considered most important Respondents were asked to rate encryption technology features considered most important to their organization’s security posture. According to consolidated findings, system performance and latency, automated management of encryption keys and automated enforcement of policy are the three most important features. The ratings of encryption technology features are listed in descending order of importance in Figure 23. In comparing this year to last year’s results, it is interesting to see 10 of 12 encryption technology features receiving a higher rating. The most significant difference concerns conformance with security standards (Diff = 12 percent). Figure 23. Most important features of encryption technology solutions Very important response

19%

26%

28%

28%

30%

39%

39%

41%

44%

47%

52%

56%

16%

19%

29%

25%

33%

35%

27%

38%

40%

43%

47%

51%

0% 10% 20% 30% 40% 50% 60%

Supports longer encryption keys

Support for format preserving encryption

Support for emerging algorithms

Formal product security certifications

Support for the widest range of applications

Centralized management interface

Conformance with security standards

Tamper resistance by dedicated hardware

System scalability

Automated enforcement of policy

Automated management of keys

System performance and latency

Very important response FY2012 Very important response FY2013


Attitudes about key management Using a 10-point scale, respondents were asked to rate the overall “pain” associated with managing keys or certificates within their organization (where 1 = minimal impact, risk and cost to 10 = severe impact, risk and cost). Figure 24 clearly shows that 53 percent of respondents chose ratings at or above seven – suggesting a fairly high pain point. Figure 24. The overall impact, risk and cost associated with managing keys or certificates

Figure 25 shows the so-called “pain index” for respondents in eight countries. As can be seen, the extrapolated average in all country samples is above the scale median of 5.5, which suggests that most respondents view managing keys and certificates as a challenging activity. The highest value is 6.94 in Brazil and the lowest value is 5.60 in Japan. Figure 25. The average overall impact, risk and cost associated with managing keys or certificates

11%

16%

21% 24%

29%

0%

5%

10%

15%

20%

25%

30%

35%

1 to 2 3 to 4 5 to 6 7 to 8 9 to 10

Rating of the overall impact, risk and cost associated with managing keys or certificates where 1 = nominal to 10 = severe

6.40 6.74 6.00

6.52 6.44 5.60

6.94 6.74

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00


Average rating on impact, risk and cost Average Median


Figure 26 lists what respondents view as the primary drivers for developing a key management strategy. Increased business efficiency and reduced operational cost are the top two issues for the past two years. The largest difference between 2013 and 2012 is an eight percent increase in operating cost as a primary driver for building a key management strategy. In other words, cost reduction is a higher priority in 2013 than 2012. Figure 26. Primary drivers for developing a key management strategy

4%

28%

30%

36%

50%

52%

4%

31%

30%

33%

42%

50%

0% 10% 20% 30% 40% 50% 60%

None of the above

Reduce complexity

Demonstrate compliance

Improve security

Reduce operational cost

Increase business efficiency

Primary drivers FY2012 Primary drivers FY2013


Figure 27 reports how key management tasks are viewed within respondents’ organizations. More than half (52 percent) of respondents believe their key management tasks are constrained because their organizations do not have dedicated staff or tools to perform key management tasks. Only 23 percent of respondents say their organizations are performing key management with a dedicated expert staff and specialized tools according to well defined practices. Figure 27. Key management deployment models

Figure 28 compares country samples for one of the conditions indicated in the above chart. Accordingly, following are the yes responses to the selection that key management is a distinct discipline performed by dedicated staff and specialized tools according to well-defined practices (a.k.a. the nirvana state). While all responses are fairly low, respondents in Germany have the highest percentage yes response while respondents in Japan have the lowest percentage yes response. Figure 28. Perceptions about the key management nirvana state Percentage Yes response

23%

25%

52%

0% 10% 20% 30% 40% 50% 60%

Key management is viewed as a distinct discipline that is defined or performed by

dedicated or specialist staff and associated tools according to well defined practices

Key management activities are ad-hoc with minimal or no formal definition

Key management tasks are well defined but the organization does not have dedicated staff or

tools to perform key management tasks

23% 23%

28%

22%

26%

17%

24% 25%

0%

5%

10%

15%

20%

25%

30%


Key management is viewed as a distinct discipline that is defined or performed by dedicated or specialist staff and associated tools according to well defined practices

Average


Figure 29 reports the percentage of respondents that report their organizations operate an internal public key infrastructure (PKI). US organizations appear to have the highest percentage rate at 35 percent, while organizations in France has the lowest percentage rate at 15 percent. Figure 29. Percentage of respondents’ organizations that operate an internal PKI

35%

24%

31%

15% 17%

26%

18% 19%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Percentage of organizations that operate their own internal PKI Average


Importance of the key management Interoperability protocol (KMIP) Figure 30 summarizes the response to the question,” Does your organization deploy encryption or key management products that support the KMIP key management standard?” As can be seen, 35 percent of respondents say they plan to make KMIP support a future requirement. Only 13 percent of respondents say KMIP support is a primary requirement today. Figure 30. Is KMIP supported as a primary or secondary requirement?

Figure 31 summarizes the yes responses in the above chart for eight country samples. As shown, 47 percent of German respondents say their organizations presently support KMIP as either a primary or secondary requirement. Only 28 percent of respondents in Australia, Brazil and Russia say their organizations support KMIP as a primary or secondary requirement. Figure 31. KMIP support as a primary or secondary requirement by country

13%

14%

19%

19%

35%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Yes, KMIP support is a primary requirement

No, KMIP support is not relevant

No, we have not considered KMIP support

Yes, KMIP support is a secondary requirement

No, but we plan to make KMIP support a future requirement

Does your organization deploy encryption or key management products that support the KMIP key management standard?

30% 30%

47%

30% 28%

34%

28% 28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Yes, KMIP support is either a primary or secondary requirement Average


According to 54 percent of respondents, KMIP is most important for cloud based applications and storage. This represents a 12 percent increase between 2013 and 2012. As shown in Figure 32, KMIP appears to be least important for end user devices such as laptops, tablets and smart phones or remote applications such as retail locations. Figure 32. Where KMIP is most important Two choices permitted

9%

13%

16%

34%

35%

37%

54%

11%

12%

16%

35%

35%

36%

42%

0% 10% 20% 30% 40% 50% 60%

None

End user devices

Remote applications

Network infrastructure

Application infrastructure in the data center

Storage systems

Cloud based applications and storage

Where is KMIP most important, FY2012 Where is KMIP most important, FY2013


Importance of hardware security modules (HSM)9 Figure 33 summarizes the percentage of respondents in eight countries that deploy HSMs as part of their organization’s key management program or activities. As can be seen, the rate of HSM deployment increased in the US, UK, Germany, Australia, Japan and Brazil between 2012 and 2013. Similar to last year, the pattern of responses suggests Japanese and German respondents are more likely to deploy HSMs to their organization’s key management activities than other countries. The overall average deployment rate for HSMs as part of key management activities this year is 28 percent – representing six percent growth from last year’s average deployment rate. Figure 33. Deployment HSMs as part of key management activities *2012 data is not available for the RF sample

9HSMs are devices specifically built to create a tamper-resistant environment in which to perform cryptographic processes (e.g. encryption or digital signing) and to manage the keys associated with those processes. These devices are used to protect critical data processing activities associated with server based applications and can be used to strongly enforce security policies and access controls. HSMs are typically validated to formal security standards such as FIPS 140-2.

30%

26%

35%

24% 25%

38%

20% 23%

27%

23%

34%

25% 24%

35%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

US UK DE FR AU JP BZ RF*

HSM deployment rate in FY2013 HSM deployment rate in FY2012


Figure 34 summarizes the percentage of respondents in eight countries that rate HSM as either very important or important to their organization’s key management program or activities. It is interesting to note that the importance level appears to be increasing between 2012 and 2013 for eight country samples. Similar to last year, the pattern of responses suggests Japanese and German respondents are most likely to assign importance to HSMs to their organization’s key management activities. The overall average importance rating in the current year is 46 percent. Last year’s average importance rating was 39 percent. Figure 34. Perceived importance of HSM as part of key management activities *2012 data is not available for the RF sample

49% 51% 55%

45%

36%

56%

29%

40% 45% 43%

48%

33% 29%

51%

26%

0%

10%

20%

30%

40%

50%

60%

US UK DE FR AU JP BZ RF*

Important or very important FY2013 Important or very important FY2012


Figure 35 summarizes the primary purpose or use cases for deploying HSMs. As can be seen, the number one purpose is authentication followed by SSL and database encryption. This chart also shows differences between today’s HSM use and deployment in 12 months. The most significant increases predicted for the next 12 months, according to respondents, are code signing, document signing and database encryption. Figure 35. How HSMs are deployed or planned to be deployed in the next 12 months More than one choice permitted

8%

15%

26%

35%

37%

47%

48%

54%

21%

23%

30%

41%

42%

54%

49%

56%

0% 10% 20% 30% 40% 50% 60%

Code signing

Document signing

PKI or credential management

Payments processing

Application level encryption

Database encryption

SSL

Authentication

HSMs planned to be deployed in the next 12 months HSMs deployed today


Budget allocations The percentages below are calculated from the responses to survey questions about resource allocations to IT security, data protection, encryption, and key management. These calculated values are estimates of the current state and we do not make any predictions about the future state of budget funding or spending. Figure 36 reports the average percentage of IT security spending relative to total IT spending over the last nine years. As shown, the trend appears to be upper sloping, which suggests the proportion of IT spending dedicated to security activities including encryption is increasing over time. Figure 36. Trend in the percent of IT security spending relative to the total IT budget

Figure 37 shows the percent of current IT security spending relative to the total IT budget for individual countries. As shown, Germany and Japan report the highest proportional ratings and UK and Brazil report the lowest proportional ratings. Figure 37. Percent of current IT security spending relative to the total IT budget by country

7.5% 7.2% 7.5% 7.9% 9.1% 8.6% 8.8% 9.1%

9.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


Percentage of IT security spending relative to the total IT budget Average

10.1%

7.8%

12.2%

9.9% 8.6%

13.7%

7.4%

9.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%


Percentage of IT security spending relative to the total IT budget Average


Budget allocated to data protection. Figure 38 reports the percentage of data protection spending relative to the total IT security budget over nine years. This trend appears to be slightly upward sloping, which suggests data protection spending as a proportion of total IT security is on the rise. Figure 38. Trend in the percent of IT security spending dedicated to data protection activities

Figure 39 shows the average percent of current IT security spending dedicated to data protection spending by country sample. As shown, the percentage of data protection spending relative to total IT security is highest in the UK and Germany and lowest in Brazil and Australia. Perhaps more important is the consistency in percentage values observed across most countries. Figure 39. Percent of current IT security spending dedicated to data protection activities by country

22.7% 24.9% 23.6%

26.1% 25.9%

34.5% 32.7% 29.7%

32.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%


Percentage of IT security spending dedicated to data protection activities Average

31.4%

38.3% 38.2%

31.2% 28.4%

31.1% 28.4%

32.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%


Percentage of IT security spending dedicated to data protection activities Average


Budget allocated to encryption. Figure 40 reports the nine-year trend in the percentage of encryption spending relative to the total IT security budget. Again, the trend appears to be increasing from a low of 9.7 percent in 2005 to 18.2 percent in the present year’s encryption trends study. Figure 40. Trend in the percent of IT security budget dedicated to encryption

Figure 41 reports the percentage of IT security spending dedicated to encryption.10 Again, the country comparisons are very consistent. Respondents in Germany show the highest average percentage of encryption spending, while those in the UK show the lowest average percentage spending levels. Figure 41. Percent of the IT security budget dedicated to encryption by country

10The figures in this graph suggest that encryption spending represents nearly 60 percent of the total data protection budget (which is a subset of the total IT security budget). However, debriefing interviews with a subset of respondents revealed that encryption spending might not be contained solely in the data protection category, but rather other earmark categories such as security technologies.

9.7% 10.3%

13.8% 13.1%

15.7% 14.6% 15.1%

17.6% 18.2%

0.0% 2.0% 4.0% 6.0% 8.0%

10.0% 12.0% 14.0% 16.0% 18.0% 20.0%


Percentage of IT security spending dedicated to encryption Average

16.6% 15.8%

21.7%

17.4% 18.1% 19.7% 19.1%

16.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%


Percentage of IT security spending dedicated to encryption Average


Budget allocated to key management. Figure 42 reports the three-year comparison in the percentage of encryption key management spending as a proportion of the overall encryption spend, showing a six percent increase.11 Figure 42. Budget allocation to key management

Figure 43 reports the proportion of spending on key management relative to the total spending on encryption solutions for country samples. Perhaps the most interesting finding is the consistency in spending on key management across all eight countries, with the exception of Australia and Brazil. Figure 43. Percent of encryption spending dedicated to key management activities by country

11The analysis of key management spending was first conducted in 2011 and, hence, we don’t have the ability to conduct a full trend analysis.

23.5%

29.5% 31.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

FY2011 FY2012 FY2013

Percentage of encryption spending dedicated to key management Average

33.6% 31.1%

37.0%

32.7%

27.2%

34.9%

27.5% 31.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%


Percentage of encryption spending dedicated to key management Average


Part 3. Methods & Limitations Table 1 reports the sample response for eight separate country samples. The sample response for this study was conducted over a 49-day period ending in December 2013. Our consolidated sampling frame of practitioners in all countries consisted of 118,423 individuals who have bona fide credentials in IT or security fields. From this sampling frame, we captured 4,802 returns of which 547 were rejected for reliability issues. Our final consolidated 2013 sample was 4,275, thus resulting in a 3.6% response rate. The first encryption trends study was conducted in the US in 2005.12 Since then we have expanded the scope of the research to include eight separate country samples. Trend analysis was performed on combined country samples. As noted before, we added the Russian Federation in this year’s study.

Table 1. Sample response in eight countries Countries Sampling frame Total returns Rejected surveys Final sample

United States 26,553 1,001 109 892 United Kingdom 15,995 688 71 637 Germany 16,030 650 48 602 France 15,916 558 80 478 Australia 9,503 456 42 414 Japan 14,020 569 48 521 Brazil 14,371 603 73 530 Russian Federation 6,035 277 76 201 Total 118,423 4,802 547 4,275

As noted in Table 2, the respondents’ average (mean) experience in IT, IT security or related fields is 10.25 years. Approximately 25 percent of respondents are female and 75 percent male.13

Table 2. Other characteristics of respondents Experience levels Mean years Gender Combined% Overall experience 11.02 Female 25% IT or security experience 10.25 Male 75%

12The following matrix summarizes the samples and sample sizes used in all figures showing trends. Country/year 2013 2012 2011 2010 2009 2008 2007 2006 2005 Australia 414 938 471 477 482 405 0 0 0 Brazil 530 637 525 0 0 0 0 0 0 France 478 584 511 419 414 0 0 0 0 Germany 602 499 526 465 490 453 449 0 0 Japan 521 466 544 0 0 0 0 0 0 Russian Federation 201 0 0 0 0 0 0 0 0 United Kingdom 637 550 651 622 615 638 541 489 0 United States 892 531 912 964 997 975 768 918 791 Total 4,275 4,205 4,140 2,947 2,998 2,471 1,758 1,407 791

13This skewed response showing a much lower frequency of female respondents in our study is consistent with earlier studies – all showing that males outnumber females in the IT and IT security professions within the seven countries sampled.


Figure 43 summarizes the approximate position levels of respondents in our study. As can be seen, the majority (52 percent) of respondents are at or above the supervisory level. Figure 43. Distribution of respondents according to position level Consolidated from eight separate country samples

Figure 44 reports the respondents’ organizations primary industry segments. As shown, 16 percent of respondents are located in the financial services industry, which includes banking, investment management, insurance, brokerage, payments and credit cards. Another 11 percent are located in public sector organizations, including central and local government.

Figure 44. Distribution of respondents according to primary industry classification Consolidated from eight separate country samples

3%

18%

32%

44%

3%

Executive/VP

Director

Manager/Supervisor

Associate/Staff/Technician

Other

16%

11%

10%

7% 7% 7%

7%

5%

5%

5%

5%

4% 4%

3% 2% 2%

Financial services Public sector Manufacturing Healthcare & pharma Retailing Services Technology & software Hospitality & leisure Consumer products Transportation Communications Entertainment & Media Energy Education & research Defense Other


According to Figure 45, the majority of respondents (70 percent) are located in larger-sized organizations with a global headcount of more than 1,000 employees.

Figure 45. Distribution of respondents according to organizational headcount Consolidated for eight separate country samples

Limitations There are inherent limitations to survey research that need to be carefully considered before drawing inferences from the presented findings. The following items are specific limitations that are germane to most survey-based research studies. Non-response bias: The current findings are based on a sample of survey returns. We sent

surveys to a representative sample of IT and IT security practitioners in eight countries, resulting in a large number of usable returned responses. Despite non-response tests, it is always possible that individuals who did not participate are substantially different in terms of underlying beliefs from those who completed the survey.

Sampling-frame bias: The accuracy of survey results is dependent upon the degree to which our sampling frames are representative of individuals who are IT or IT security practitioners within the sample of eight countries selected.

Self-reported results: The quality of survey research is based on the integrity of confidential responses received from respondents. While certain checks and balances were incorporated into our survey evaluation process including sanity checks, there is always the possibility that some respondents did not provide truthful responses.

12%

18%

29%

26%

11% 4%

Less than 500

500 to 1,000

1,001 to 5,000

5,001 to 25,000

25,001 to 75,000

More than 75,000


Appendix 1: Consolidated Findings The following tables provide the percentage frequencies for all survey questions combined for eight country samples (weighted by sample size). All survey responses were gathered over a 49-day period ending in December 2013. Please note that certain survey questions were omitted if not utilized in the report. Part 1: Your organization’s encryption posture Q1. Please select one statement that best describes your organization’s approach to encryption implementation across the enterprise. Consolidated We have an overall encryption plan or strategy that is applied consistently across the entire enterprise 35% We have an overall encryption plan or strategy that is adjusted to fit different applications and data types 26% For certain types of sensitive or confidential data such as Social Security numbers or credit card accounts we have a limited encryption plan or strategy 24% We don’t have an encryption plan or strategy 15% Total 100% . Q2a. Does your organization encrypt sensitive and confidential data when sending it by email? Consolidated Yes, most of the time 25% Yes, some of the time 52% No 23% Total 100% Q2b. Does your organization encrypt sensitive and confidential data stored on shared file servers? Consolidated Yes, most of the time 27% Yes, some of the time 48% No 25% Total 100% Q2c. Does your organization encrypt sensitive and confidential data stored on a laptop computers? Consolidated Yes, most of the time 32% Yes, some of the time 45% No 23% Total 100% Q2d. Does your organization encrypt sensitive and confidential data stored on a desktop PCs or workstations? Consolidated Yes, most of the time 31% Yes, some of the time 47% No 22% Total 100% Q2e. Does your organization encrypt sensitive and confidential data stored on a mobile data-bearing device such as a smart phones or tablets? Consolidated Yes, most of the time 24% Yes, some of the time 40% No 36% Total 100%


Q2f. Does your organization encrypt sensitive and confidential data stored on backup files or tapes before sending it to off site storage locations? Consolidated Yes, most of the time 43% Yes, some of the time 38% No 19% Total 100%

Q2g. Does your organization encrypt sensitive and confidential data when sending it by external public networks such as the Internet or VPN (for example using SSL or IPSec)? Consolidated Yes, most of the time 35% Yes, some of the time 47% No 17% Total 100% Q2h. Does your organization encrypt sensitive and confidential data when sending it by internal networks (i.e., within your own private network)? Consolidated Yes, most of the time 32% Yes, some of the time 46% No 22% Total 100%

Q2i. Does your organization encrypt sensitive and confidential data located in databases? Consolidated Yes, most of the time 33% Yes, some of the time 48% No 18% Total 100% Q2j. Does your organization encrypt sensitive and confidential data within business software applications that are exposed to it? Consolidated Yes, most of the time 32% Yes, some of the time 47% No 21% Total 100% Q2k. Does your organization encrypt sensitive and confidential data that is passed to external cloud based services using cloud encryption gateways? Consolidated Yes, most of the time 27% Yes, some of the time 44% No 29% Total 100% Q2l. Does your organization encrypt sensitive and confidential data using encryption capabilities within external cloud based services? Consolidated Yes, most of the time 18% Yes, some of the time 19% No 63% Total 100%

Q2m. Does your organization encrypt sensitive and confidential data stored within your datacenter storage environment? Consolidated Yes, most of the time 33% Yes, some of the time 47% No 20% Total 100%


Q3. Please rate the following list of 13 encryption technologies based on the importance of each technology in protecting your organization’s sensitive or confidential data. Percentage very important and important responses combined. Consolidated Email encryption 42% File server encryption 49% Laptop encryption 52% Desktop or workstation encryption 42% Smart phone or tablet encryption 35% Data center storage encryption 27% Back-up or tape encryption 66% Encryption of external public networks 62% Encryption on internal networks 57% Database encryption 65% Application level encryption 39% Cloud encryption gateways 27% Encryption within cloud based services 24% Average 45% Q4. In your organization, who has responsibility or is most influential in directing your organization’s strategy for using encryption? Please select one best choice. Consolidated No single function has responsibility 19% IT operations 35% Finance 3% Lines of business (LOB) or general management 26% Security 15% Compliance 1% Other 0% Total 100% Q5. What are the reasons why your organization encrypts sensitive and confidential data? Please select the top two reasons. Consolidated To lessen the impact of data breaches 46% To avoid having to notify customers or employees after a data breach occurs 6% To ensure that our organization’s privacy commitments are honored 42% To protect our organization’s brand or reputation 44% To comply with privacy or data security regulations and requirements 40% To reduce the scope of compliance audits 22% Total 200% Q6. In your opinion, would your organization be required to notify customers after the data breach involving the loss or theft of their personal information? Q6a. If the data that was lost or stolen was not encrypted (in clear text) Consolidated Yes 37% No 54% Unsure 9% Total 100% Q6b. If the data that was lost or stolen was encrypted Consolidated Yes 20% No 71% Unsure 9% Total 100%


Q7. What are your organization’s biggest challenges in planning and/or executing its data encryption strategy? Please select the top two challenges. Consolidated Classifying which data to encrypt 37% Discovering where sensitive data resides in the organization 61% Determining which encryption technologies are most effective 18% Deploying the encryption technology effectively 50% Obtaining the budget to deploy 24% Measuring the effectiveness of the data encryption technologies deployed 11% Total 200% Q8. What are the main threats that might result in the exposure of sensitive or confidential data? Please select the top two choices. Consolidated Hackers 13% Malicious insiders 10% System or process malfunction 15% Employee mistakes 27% Temporary or contract workers 9% Third party service providers 8% Legal and law enforcement (e.g., e-discovery) 15% Other (please specify) 1% Total 100% Q9. How important are the following features associated with encryption solutions that may be used by your organization? Most important and Important response combined. Consolidated Automated enforcement of policy 69% Automated management of keys 71% Support for the widest range of applications 52% Centralized management interface 69% System scalability 63% Tamper resistance by dedicated hardware (e.g. HSM) 57% Conformance with security standards 65% Support for format preserving encryption (FPE) 52% System performance and latency 71% Support for emerging algorithms (e.g. ECC) 66% Supports longer encryption keys 49% Formal product security certifications (e.g. FIPS 140) 55% Average 62% Part 3. Encryption key management Q11a. In general, how does your organization view key management tasks? Please select only one choice. Consolidated Key management is viewed as a distinct discipline that is defined or performed by dedicated or specialist staff and associated tools according to well defined practices 23% Key management tasks are well defined but the organization does not have dedicated staff or tools to perform key management tasks 52% Key management activities are ad-hoc with minimal or no formal definition 25% Total 100%


Q11b. What are, or would be, the primary drivers for developing a key management strategy? Please select the top two choices? Consolidated Increase business efficiency 52% Reduce operational cost 50% Reduce complexity 28% Demonstrate compliance 30% Improve security 36% Other (please specify) 0% None of the above 4% Total 200% Q13. Please rate the overall “pain” associated with managing keys or certificates within your organization, where 1 = minimal impact, risk and cost to 10 = severe impact, risk and cost Consolidated 1 to 2 11% 3 to 4 16% 5 to 6 21% 7 to 8 24% 9 to 10 29% Total 100% Q14. Does your organization operate its own internal PKI? Consolidated Yes 25% No 75% Total 100% Q15. What best describes your level of knowledge about KMIP? Consolidated Very knowledgeable 20% Knowledgeable 30% Not knowledgeable (Go to Q18) 49% Total 100% Q16. Does your organization deploy encryption or key management products that support the KMIP key management standard? Consolidated Yes – KMIP support is a primary requirement 13% Yes – KMIP support is a secondary requirement 19% No, but we plan to make KMIP support a future requirement 35% No - KMIP support is not relevant 14% No – we have not considered KMIP support 19% Total 100% Q17. In what areas of your encryption and key management strategy is KMIP most important? Please select you top two choices. Consolidated Storage systems 37% Application infrastructure within the datacenter 35% End user devices e.g. laptops, tablets or smart phones 13% Remote applications e.g. retail locations 16% Cloud based applications and storage 54% Network infrastructure 34% Other (please specific) 1% None 9% Total 200%


Q18. What best describes your level of knowledge about HSMs? Consolidated Very knowledgeable 26% Knowledgeable 43% Not knowledgeable (Go to Part 5) 30% Total 100% Q19a. Does your organization deploy HSMs? Consolidated Yes 28% No (go to Part 5) 72% Total 100% Q19b. For what purpose does your organization presently deploy or plan to deploy HSMs? Please select all that apply. Q19b-1. HSMs deployed today Consolidated Application level encryption 37% Database encryption 47% SSL 48% PKI or credential management 26% Document signing (e.g. electronic invoicing) 15% Code signing 8% Authentication 54% Payments processing 35% Not used 7% Other (please specify) 0% Total 279% Q19b-2. HSMs planned to be deployed in the next 12 months Consolidated Application level encryption 42% Database encryption 54% SSL 49% PKI or credential management 30% Document signing (e.g. electronic invoicing) 23% Code signing 21% Authentication 56% Payments processing 41% Not planning to use 2% Other (please specify) 0% Total 319%

Q20. In your opinion, how important is HSM to your encryption or key management strategy? Very important and Important responses combined. Consolidated Q20a. Importance today 46% Q20b. Importance in the next 12 months 53%

Q21. Who are your primary vendors for HSM products and services? Please select all that apply. Consolidated Thales/nCipher 17% SafeNet/Eracom 23% IBM 27% Utimaco 7% HP/Atalla 15% FutureX 4% Bull 7% None of the above 24% Not using HSM 7% Total 131%


Part 4: IT security & encryption budget Q22a. Are you responsible for managing all or part of your organization’s IT budget in 2013? Consolidated Yes 58% No (Go to Part 5) 42% Total 100% Q22b. Approximately, what is the dollar range that best describes your organization’s IT budget for 2013? NA Extrapolated average value in millions (billions for JPY & RUB) Extrapolated values computed from scaled responses Consolidated Q22c. Approximately, what percentage of the 2013 IT budget will go to IT security activities? 10% Q22d. Approximately, what percentage of the 2013 IT security budget will go to data protection activities? 33% Q22e. Approximately, what percentage of the 2013 IT security budget will go to encryption activities? 18% Q22f. Approximately, what percentage of the 2013 encryption budget will go to key management activities? 32% Q23b. Approximately, what percentage of the 2014 IT security budget will go to encryption activities? 35% Q23c. Approximately, what percentage of the 2014 encryption budget will go to encryption key management activities? 29% Q23a. Please check the security initiatives that will be earmarked in the 2013 budget? Select all that apply. Consolidated Identity & access management 52% Intrusion detection and prevention systems 83% Data loss prevention 19% Encryption solutions 57% Key and certificate management 38% Security intelligence (e.g., SIEM) 29% Tokenization 19% Public key encryption (PKI) 36% Database monitoring & behavior analysis 53% Endpoint security 49% Average 44% Part 5: Security effectiveness Consolidated Computed value based on 48 items 0.60 Part 6: Role and organizational characteristics D1. What organizational level best describes your current position? Consolidated Senior Executive 1% Vice President 2% Director 18% Manager/Supervisor 31% Associate/Staff/Technician 44% Other 3% Total 100%


D2. Check the functional area that best describes your organizational location. Consolidated IT operations 60% Security 14% Compliance 8% Finance 3% Lines of business (LOB) 13% Other 3% Total 100% D3. What industry best describes your organization’s industry focus? Consolidated Financial services 16% Public sector 11% Technology & software 7% Health & pharmaceuticals 7% Manufacturing 10% Communications 5% Consumer products 5% Hospitality & leisure 5% Transportation 5% Retailing 7% Services 7% Defense 2% Education & research 3% Energy 4% Entertainment & Media 4% Other 2% Total 100% D4. What is the worldwide headcount of your organization? Consolidated Less than 500 12% 500 to 1,000 18% 1,001 to 5,000 30% 5,001 to 25,000 26% 25,001 to 75,000 11% More than 75,000 4% Total 100%


About Thales e-Security Thales e-Security is a leading global provider of data encryption and cyber security solutions to the financial services, high technology manufacturing, government and technology sectors. With a 40-year track record of protecting corporate and government information, Thales solutions are used by four of the five largest energy and aerospace companies, 22 NATO countries, and they secure more than 70 percent of worldwide payment transactions. Thales e-Security has offices in France, Hong Kong, Norway, United States and the United Kingdom. www.thales-esecurity.com. About Thales Thales is a global technology leader for the Defense & Security and the Aerospace & Transport markets. In 2011, the company generated revenues of €13 billion with 68,000 employees in more than 50 countries. With its 22,500 engineers and researchers, Thales has a unique capability to design, develop and deploy equipment, systems and services that meet the most complex security requirements. Thales has an exceptional international footprint, with operations around the world working with customers as local partners. www.thalesgroup.com. About Ponemon Institute Ponemon Institute is dedicated to independent research and education that advances information security, data protection and privacy management practices within businesses and governments. Our mission is to conduct high quality, empirical studies on critical issues affecting the security of information assets and the IT infrastructure. As a member of the Council of American Survey Research Organizations (CASRO), we uphold strict data confidentiality, privacy and ethical research standards. www.ponemon.org.