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Medium-sized companies (those with 100-999 employees) in the United States will spend nearly $8 billion this year on data storage and security -- a 12 percent increase over what they spent last year. One major factor in that growth is the need to guard against security breaches and to ensure that sensitive data is kept confidential.

Research by Access Markets International (AMI) Partners revealed that as much as 86 percent of medium businesses (MBs) reported a security breach or data loss over the past 12 months, while 77 percent said they had experienced a hard-drive failure in the same time period. Nichelle McKenzie, a research analyst with AMI Partners, said that the cost of security breaches is about $7,000 annually.

Data Breaches Spur Investment

With data breaches occurring more frequently than ever (and receiving ever-higher profiles), organizations are moving toward security and storage investments that they hope will help prevent loss. McKenzie said that most MBs are investing in data backup and recovery software. Those investments are aimed at preventing hard-drive failures and outside attacks, while also providing sufficient storage.

"The types of storage investments that are popular among U.S.-based MBs are in the areas of upgrading and purchasing storage hardware," McKenzie told us. "For example, MBs are spending roughly $1.4 billion for storage hardware that includes fibre-channel storage area networks, IP storage area networks, network attached storage, PC-attached storage, SAN switches, server-attached storage, and tape-backup devices."

These investments are needed to constantly manage the growing volume of e-mail data, ensure business continuity, make storage management/maintenance easier, and ensure legal compliance.

In terms of security, companies are investing in technologies that will keep them safe from hackers, as well as secure in case of a disaster.

McKenzie said that security hardware, managed security services and security software -- such as antivirus,...