NCC’s Dutch adventure signals global ambitions
NCC Group is to acquire the Dutch cyber security outfit Fox-IT for €133m (£93.5m). Fox-IT is said to have a number of Dutch government department clients as well as global organizations. Although unrelated to the sale, exposure to the public sector can only be an advantage in the current heightened awareness of potential cyber attacks by terror groups on critical infrastructure. The UK government has announced an extra £2bn allocation to cyber security, claiming ISIS will use cyber weapons against the UK.
The 16 year old company, borne out of the old National Computing Group, made its first foray into cyber security with the acquisition of Secure Test, a UK penetration testing business. It has been steadily growing its cyber presence since with a number of testing and services companies added.
But the acquisition of Fox-IT is a real statement of intent that NCC now wants to be a big player. Fox-IT’s sales were up 19% last year to £25m (with pre-tax profit almost tripling to £3.2m), and its headcount currently stands at around 250 employees. This is relatively modest in the wider IT services world, but makes it a pretty big fish in cyber. It can now claim to be one of the largest security services specialists in Europe (although we're always a bit wary of calling NCC a "security specialist" given its substantial escrow business).
I see this acquisition as an opportunity for NCC to morph its component part security proposition into a full blown MSSP. Out sourced and consultancy based security services are likely to become more attractive as the challenges of digital transformation and IoT highlight the continuing lack of in house resources and skills - particularly among SMEs and cash strapped public sector organizations. Perhaps the key to the seemingly high cost of the acquistion is access to Fox-IT's threat intelligence expertise - another must have for any ambitious services player. With Fox-IT it looks like NCC has bought itself the real deal, ie some actual threat intelligence.
Although a hardware player, the acquisition of Mandiant has proved pivotal for FireEye as the world shifts from fixed defensive security postures to proactive, scalable intelligence based systems. NCC will be hoping for some of the same stardust.
In its offcial statement, NCC said that the purchase provides it with a step change in its ability to provide contextual security analysis, advanced threat intelligence and online fraud detection. But the three most important lines in that satement I think are:
Replicate service lines internationally.
Diversify into an area of complementary services and products.
Provide a complete security proposition to customers globally.
They used the both global and internationally, just in case you didn't get it. The group will also benefit from Fox-IT’s army of technical security experts as well as its cryptology and forensics capabilities, it said.
In any case, NCC’s cyber proposition was getting noticed before this deal. In September, it was described in the Financial Times as a “cyber security business” and as one of 12 rising Northern England tech “foals” (baby unicorns, in case you're wondering) by investment bank G P Bullhound, which opened a Manchester office in 2014. This kind of recognition is probably exactly what the group wants, as it seeks to bolster its presence in a fast changing global cyber market.