To Catch a Data Leak
By Susanna Hamner

(Business 2.0) – So far this year, data breaches have tainted the reputations--and the security--of 80 organizations, from Bank of America to ChoicePoint to Time Warner. That's bad news for the 51 million people whose identities were exposed, but it's a boon for a burgeoning crop of startups. Because more than 50 percent of data leaks involve insiders, corporations are turning to content-monitoring companies such as Reconnex and Vontu to scan their networks and find the culprits. Paul Proctor, VP for research at Gartner Group, estimates that this market will be worth about $40 million by year's end. As more players, including Tablus and Vericept, join in, content monitoring could be a $160 million business by 2007.

The grizzled veteran is four-year-old Vontu, whose client list includes heavyweights like Charles Schwab and Pitney Bowes. Vontu's software creates and indexes digital signatures for sensitive data--say, intellectual property or Social Security numbers. If an employee tries to send that data outside the company's network, Vontu blocks it from leaving. Analysts expect the company's revenues to hit $10 million by the end of 2005. Reconnex, meanwhile, is using software-embedded appliances to scan corporate networks. Founded in 2003, the Mountain View, Calif., company lets clients flag words, like "terrorist" or "confidential," and then uses forensics to determine who exposed flagged information. With WebEx as a client and NASA as a pilot customer, Reconnex CEO Donald Massaro says sales could exceed $8 million in the next 12 months. "At first it was a tough sell," he says. "Now the market is exploding."