A survey of more than 900 IT managers shows that adoption of encryption in their organisations is being driven by two main factors, anxiety about possible cyberattacks and the need to meet the payment card industry (PCI) data security standards.

According to the Ponemon Institute's "2010 Annual Study: US Enterprise Encryption Trends," 69% of the 964 IT managers responding to the survey said the need to meet regulatory compliance was the driving force behind deployment of encryption in their organisations. And the most important regulatory factor to them was the need to meet encryption requirements of the PCI data security standard.

It was the first time that respondents to the annual study listed regulatory compliance as "the main reason, for using encryption," according to the report, which was sponsored by Symantec. In the past, the need to simply protect data at rest was often the reason stated.

"Interestingly, PCI requirements have seen the greatest increase in influence by far over the past years, rising 49 points from 15% in 2007 to 64% this year," the report notes. Other regulations, such as state data privacy laws in California and Massachusetts, for instance, as well as the Health Information Portability and Accountability Act (HIPAA) and Sarbanes-Oxley still count, but have far less impact overall than PCI.

"PCI is becoming one of the most important drivers to action because failure to comply means organisations can't do credit card transactions, which holds organisations to a much higher level of accountability," the 2010 Ponemon study on encryption says.   

Another important factor spurring organizations to adopt encryption is fear related to cyberattacks. Some 88% of organisations in the survey acknowledged at least one data breach, up three points from 2009. "And of those, "23% had only one breach and 40% had two to five breaches." These numbers were consistent with last year's results, but those experiencing more than five data breaches a year was up 3% from 2009.

For the first time since the annual study has been done, "Nearly all respondents (97%) list cyber attacks as the most severe threat to their ability to successfully carry out their mission."

The annual study has been done for six years now with five years of comparable data and methodology, says Institute director Larry Ponemon. "Encryption is a tool here to stay," he notes. He points out that this year's study shows growing adoption and some preference for whole disk encryption. One reason is that research shows "end users manipulate file encryption" by sometimes turning it off when they think it's slowing down computer use, Ponemon says. "Foolishly, they're trying to do an end run around it."

When the survey asked about budgeting for data security, the answers suggest that 89% were earmarking for perimeter security controls, including intrusion detection and prevention, with anti-malware, and identity access and management also prominent. Sixty-nine percent planned for at least one type of encryption deployment. "Earmarks for encryption were up 9 points from 2009 and 12 points from 2008," the report says.

Nevertheless, the report reaches the conclusion that "data protection is not a high priority in most organizations," because "59% of this year's respondents spent only 5% to 10% of the IT budgets on data protection activities."

Encryption got a much smaller percentage of that, with 37% of respondents, for example, spending less than 5% of their IT budgets on it.