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Investors, including venture capitalists (VCs), are betting $359 million that secure access service edge (SASE) will become a primary consolidator of enterprise security tech stacks.
Cato Network’s oversubscribed Series G round last week demonstrates that investors view SASE as capable of driving significant consolidation across its core and adjacent markets. Now valued at $4.8 billion, Cato recently reported 46% year-over-year (YoY) growth in annual recurring revenue (ARR) for 2024, outpacing the SASE market. Cato will use the funding to advance AI-driven security, accelerate innovation across SASE, extended detection and response (XDR), zero trust network access (ZTNA), SD-WAN, and IoT/OT, and strengthen its global reach by scaling partner and customer-facing teams.
Gartner projects the SASE market will grow at a compound annual growth rate (CAGR) of 26%, reaching $28.5 billion by 2028.
The implied, real message is that SASE will do to security stacks what cloud computing did to data centers: Consolidate dozens of point solutions into unified platforms. Gartner’s latest forecast for worldwide SASE shows organizations favoring a dual-vendor approach, shifting from a 4:1 ratio to 2:1 by 2028, another solid signal that consolidation is on the way.
Cashing in on consolidation
Consolidating tech stacks as a growth strategy is not a new approach in cybersecurity, or in broader enterprise software. Cloud-native application protection platform (CNAPP) and XDR platforms have relied on selling consolidation for years. Investors leading Cato’s latest round are basing their investment thesis on the proven dynamic that CISOs are always looking for ways to reduce the number of apps to improve visibility and lower maintenance costs.
VentureBeat often hears from CISOs that complexity is one of the greatest enemies of security. Tool sprawl is killing the ability to achieve step-wise efficiency gains. While CISOs want greater simplicity and are willing to drive greater consolidation, many have inherited inordinately complex and high-cost legacy technology stacks, complete with a large base of tools and applications for managing networks and security simultaneously.
Nikesh Arora, Palo Alto Networks chairman and CEO, acknowledged the impact of consolidations, saying recently: “Customers are actually onto it. They want consolidation because they are undergoing three of the biggest transformations ever: A network security transformation and a cloud transformation, and many of them are unaware … they’re about to go through a security operations center transformation.”
A recent study by IBM in collaboration with Palo Alto Networks found that the average organization has 83 different security solutions from 29 vendors. The majority of executives (52%) say complexity is the biggest impediment to security operations, and it can cost up to 5% of revenue. Misconfigurations are common, making it difficult and time-consuming to troubleshoot security gaps. Consolidating cybersecurity products reduces complexity, streamlines the number of apps and improves overall efficiency.
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