New White House Zero Trust push

[rdgyy]

I find the below news from today intriguing and bullish for some of the stocks covered on the board, more specifically ZS, NET, CRWD, S and OKTA.

What is interesting here is that there is an actual deadline in place.

“Federal departments will have two months to outline their response”

What’s also interesting that this push comes on the day in which the US and NATO have delivered a response to Putin’s demands.

The log4j vulnerability and increased tensions in Eastern Europe provide the perfect environment for increased cyber security incidents in 2022.

The Verge: White House instructs government agencies to beef up cybersecurity, adopt ‘zero trust’ in new memo.
https://www.theverge.com/2022/1/26/22902630/white-house-inst…

[wsm007]

This is indeed extremely interesting. The actual doc from the White House is even more specific - basically giving all agencies 30 days to designate a lead, 60 days to formulate a plan, and 2 years to have it implemented. On page 4 it states (under “Actions”) the following (bolding is from the document):

https://www.whitehouse.gov/wp-content/uploads/2022/01/M-22-0…

"This memorandum requires agencies to achieve specific zero trust security goals by the end of Fiscal Year (FY) 2024. These goals are organized using the zero trust maturity model developed by CISA. CISA’s zero trust model describes five complementary areas of effort (pillars) (Identity, Devices, Networks, Applications and Workloads, and Data), with three themes that cut across these areas (Visibility and Analytics, Automation and Orchestration, and Governance).
The strategic goals set forth in this memorandum align with CISA’s five pillars:

1. Identity: Agency staff use enterprise-managed identities to access the applications they use in their work. Phishing-resistant MFA protects those personnel from sophisticated online attacks.

2. Devices: The Federal Government has a complete inventory of every device it operates and authorizes for Government use, and can prevent, detect, and respond to incidents on those devices.

3. Networks: Agencies encrypt all DNS requests and HTTP traffic within their environment, and begin executing a plan to break down their perimeters into isolated environments.

4. Applications and Workloads: Agencies treat all applications as internet-connected, routinely subject their applications to rigorous empirical testing, and welcome external vulnerability reports.

5. Data: Agencies are on a clear, shared path to deploy protections that make use of thorough data categorization. Agencies are taking advantage of cloud security services to monitor access to their sensitive data, and have implemented enterprise-wide logging and information sharing."

This is quite bullish for the companies we follow, by my reading, as follows:
1 → Okta
2 → Crowdstrike, SentinelOne
3 → Zscaler
4 → Crowdstrike, SentinelOne, Datadog
5 → Datadog

Anyone have more insight on this?

-WSM

(Long DDOG, S, ZS)

[etagordon]

NET also fits into the network portion. It has implemented a zero trust network for teams. I have watched this space for some time, every since investing in ZS some years back. While ZS maybe the first, most companies involved in network security are incorporating zero trust in their solutions.

Gordon

[ronjonb]

Hi wsm007, I mostly agree with your list of beneficiaries of this White House memorandum.

The “Security Bucket” that I like to call my investments in this this space comprises Zscaler, SentinelOne and CrowdStrike and I believe all of them will benefit greatly as a result of this directive.

Note that CrowdStrike should come out a winner due to their close partnership with CISA and their platform being FedRAMP-authorized

Maybe most of the investors of CrowdStrike know this ( as it’s not new news) but incase you missed…

“To help U.S. public sector organizations of all types reverse this imbalance, CrowdStrike is proud to announce that Falcon Complete™, our industry-leading managed detection and response (MDR) solution, is now available on CrowdStrike Falcon for GovCloud — our FedRAMP-authorized endpoint protection platform — to provide cloud-native MDR for the public sector. For the first time, government organizations are able to get the 24/7 expertise they need to defend against today’s most advanced threats, in a cloud-native solution that is easy and inexpensive to operate, while maintaining the highest level of control over high value assets, mission critical IP and other sensitive data.”

And the fact that they’re still the leader in the Gartner Magic Quadrant for Endpoint Protection Platforms will be very helpful.

Also I think Zscaler is in a very sweet position. Perhaps the best.

“Zscaler’s FedRAMP and DoD IL 5 authorized solutions enable federal agencies to embrace cloud with confidence through a modern zero trust approach.”

And yes, of course Datadog will do well too…with their Security Monitoring for DevSecOps and news was out just yesterday about their FedRAMP Moderate-Impact Authorization.

References:

ref:https://go.crowdstrike.com/2021-Gartner-Magic-Quadrant-Epp-R…

https://www.crowdstrike.com/blog/falcon-complete-available-o…

Just my 2 cents!

Cheers!
ronjonb ( @ronjonbsaas on twitter)

P.S. My current allocations in this space: DDOG 22%, $ZS 20%, $S 10%, CRWD 5%

[ronjonb]

When I said…

“Also I think Zscaler is in a very sweet position. Perhaps the best.”

“Zscaler’s FedRAMP and DoD IL 5 authorized solutions enable federal agencies to embrace cloud with confidence through a modern zero trust approach.”

I should have also added…and it makes a lot of when you reflect on what Jay Chaudhry said during the Q4 2021 Zscaler Earnings Call…

“…Finally, we continue to invest to capture our large federal opportunity. With a sizable Fed sales team and the highest FedRAMP certifications, we count well over 100 government agencies and federal integrators as customers. In Q4 alone, we added over 20 new federal customers, including 4 with over $1 million in annual contract value, each purchasing ZIA and ZPA together. Driven by the President’s recent Executive Order, we are seeing increased interest in our Zero Trust Exchange across all levels of the government. We are among a select group of companies chosen by NIST, a national standards body, to run a pilot program in support of the Executive Order. We are excited about this opportunity to help our country dramatically improve our security posture while significantly reducing legacy IT costs…”

Cheers!

ronjonb

[SoonerAJ]

This is quite bullish for the companies we follow, by my reading, as follows:
1 → Okta
2 → Crowdstrike, SentinelOne
3 → Zscaler
4 → Crowdstrike, SentinelOne, Datadog
5 → Datadog

Anyone have more insight on this?

Yes, very bullish. The government is always far behind industry; I’d estimate by about 10 years. And if I had to guess how many federal government systems were migrated to the cloud now, I’d place it at around 0.25%. They have a long, long ways to go. I would also guess that this 2 year deadline takes the government about 6 years to implement, knowing the speed at which they work, but its deadlines like this that definitely get things going!

-AJ