• October 31, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Smart Cards: The Keys to Future Business Security

The wireless work culture and its as-yet unfulfilled need for effective security and privacy methods has created a growing role for user authentication and verification technology, such as that promised by smart cards. This will lead to growth in the world corporate security market, including both logical and physical access control, to the tune of more than 58 percent over the next six years, according to figures released by Frost & Sullivan today. The corporate security market stood at $94.7 million in 2004, and the firm expects this to grow to $149.9 million by 2010. Information security through better access control is at the heart of technology development in this area, both of smart cards and competing solutions. Smart cards are considered by experts to be a secure option because they contain an embedded microprocessor that allows more complex security programming. Last week, the U.S. State Department announced it had finalized plans to add RFID chips, essentially contactless smart cards, to all new and renewed passports by October 2006. In addition, says Jafizwaty Ishahak, senior analyst for Frost & Sullivan, "The International Civil Aviation Organization combined contactless chips and face recognition biometrics technology to create biometric-enabled passports. Such smart card-based ID card projects by several governments around the world has created awareness and encouraged the acceptance of this technology." Smart cards' greater capacity for data storage and for cryptographic security than competing solutions is well known, but so is their higher implementation cost, according to Karthik Nagarajan, Frost & Sullivan program manager. This cost has delayed adoption in businesses, many of which have recently invested in other security systems and balk at having to do so again. "Some education is still necessary, since awareness of smart cards is not as strong as with other, legacy solutions [such as magnetic stripe, proximity cards, and barcode readers], but CIOs of companies who are considering implementation know the effectiveness," Nagarajan says. "But the initial cost is high. Profits from smart cards, which prevent loss, are difficult to calculate, resulting in North American manufacturers' hesitancy about immediate adoption." Legacy security systems like proximity sensors have a relatively limited cost to deploy, but their effectiveness is likewise limited. Such solutions allow a person to gain access to business premises simply by possessing a pass. Access to data via barcode-readers is similarly limited to what information is in the barcode when it is created. Smart cards can combine physical and logical security into one item, with the added protection of continual updates to encryption. "Companies are looking at converging physical and logical security solutions, a single card to allow access to the premises and to control information access," Nagarajan says. He observes that companies are starting small with smart cards, using them for physical access control with plans to expand to other security roles as prices decrease. "Costs will go down, but they are still a deterrent," he says. "They are going down now, and based on current trends, I expect that price will no longer be a barrier in two to three years. By 2010, the physical and logical access control market in corporate security will be a mature market, if not saturated." Related articles: RFID Yields ROI Over Time
RFID: Ready for Industry Deployment?
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