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Securing An Advantage

The news bulletin is all too familiar: "Large, well-known financial institution announces security breach; millions of customers' data feared lost." This reality has sparked a fire under many a CIO to propose additional spending on security technologies to avoid becoming the next victim.

But scare tactics to increase the security budget may do little more than elicit a "show me the money" response from top management. Traditional ROI metrics are still difficult to prove, especially to executives who focus on the business value of better security strategies.

In light of this, CIOs and IT executives are finding new ways to justify security investments. Some experts are now saying that building a reputation as protector of data security—even after an embarrassing public headline—can deepen customer loyalty, build business value, and improve a company's stock price. Other analysts recommend positioning security as a business enabler, boosting productivity for remote workers and securing portals to let enterprises work with suppliers and partners in real time.

Proactively prioritizing IT security can pay off in several ways, observes Larry Ponemon, chairman and founder of the Ponemon Institute. "Our research shows that companies with superior information security and privacy practices reap market benefits," he says. The Institute works with Fortune 500 companies to address data protection, risk management, and security requirements for IT organizations. As businesses build a reputation for prioritizing security, they benefit from higher trust levels among customers, increased loyalty, and decreased customer turnover or churn rates, Ponemon says.

In a recent study, Ponemon's organization found that companies with superior data-protection practices earn a 2.5% higher participation (opt-in) rate and a 0.32% higher conversion (click-through) rate in online marketing promotions. While these percentage increases may seem small, they can translate into substantial profitability gains for a company building a business online, Ponemon says. Additionally, as companies adopt superior data protection, they can obviously reduce business-process and IT costs because of fewer data breaches and increased data accuracy of business or customer information.

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