Regulatory compliance and protecting intellectual property (IP) are among the top reasons driving demand for security products – not phishing, worms, spyware and hack attacks, according to a recent report.

Some 50 North American chief information security officers (CISOs) participated in the Merrill Lynch & Co. Inc. survey. Put simply, they said regulatory compliance ranks as the top business reason driving demand for security software. Next came protecting access by unauthorized intrusions and unplanned downtime.

Security software and infrastructure represents a relatively small portion of their respective company's IT budgets, with 78 percent report allocating less than 10 percent of overall spend. Respondents, however, expect to increase spending an average of 11.4 percent during the next 12-18 months.

Respondents expect to increase spending for endpoint security an average of 32 percent during the next 12 months, with Symantec products garnering the strongest preference in this category. Strong authentication followed with an average expected spending increase of 27 percent, with RSA Security in the lead.

Intrusion detection and prevention followed with an average expected annual spending increase of 21 percent and employee Internet management with 20 percent. Antivirusapplications ranked the lowest with a 6 percent increase, followed by anti-spam at 8 percent, firewall and virtual private network (VPN) at 12.5 percent and anti-spyware at 15 percent, Merrill Lynch said.

When asked the vendors that will become more strategic to their organization's IT security strategy, respondents noted the top five as Microsoft at 84 percent; Symantec, 80 percent; Cisco Systems, 78 percent; RSA Security, 64 percent; and Internet Security Systems, 36 percent. More than one answer applied.

The top five vendors that respondents said are becoming less strategic in security strategies include Computer Associates, Secure Computing, Trend, IBM and Citrix.

Twenty percent of respondents cited Symantec as the technology company deserving more recognition for their products; followed by Cisco at 8 percent; Trend Micro, 6 percent; Microsoft, 6 percent; and Internet Security Systems, 6 percent; and Veritas, 4 percent. Others include Cybertrust, Lancope, NetContinuum, Solidcore, Vontu, Vormetric, BDNA and Postini.

What companies area over-rated when it comes to security applications, asked Merrill Lynch in the survey. Respondents said Microsoft came in first with 10 percent; followed by Symantec with 4 percent; Trend Micro, 4 percent; and Cisco Systems, 4 percent. Other vendors receiving a mention include IMlogic, McAfee, Tipping Point, Symantec’s ESM, Microsoft Anti-Spyware, Webroot and Linux.