Andy Bogdan, head of channel, UK, Kaspersky
An ongoing channel transformation
The partner ecosystem continues to change, affecting all parties. Each new business model demands new skills and processes from partners and vendors alike. For those companies committed to the two-tier distribution model, just like Kaspersky, it is extremely important to track these changes and help partners evolve accordingly.
Businesses are increasingly delegating their cybersecurity and wider IT functions to third-party service providers or trusted advisors. In fact, in our global survey in 2018, we found that half (50%) of businesses intend to use or increase the use of outsourced IT support companies or managed service providers. It is no surprise. Thanks to outsourcing, they can have assistance managing their core processes, whilst saving on human resources and money. Partners, therefore, need to mirror this trend and meet customers’ desire to purchase services instead of products.
In many ways, switching to a value added model is not even a trend, it is a necessity. Partners who still only do simple offer transactions can’t remain profitable anymore. The margin of transactions is very low. This has driven the emergence of value added business models, such as managed service providers (MSPs) and managed security service providers (MSSPs).
Need for growth through diversification
In the Anglo-Saxon economic model, a business needs to grow each year to be successful. To do so, service providers either need to attract new customers, sell more services to existing customers, diversify their solution portfolio, or develop expertise in additional specialisms. In cybersecurity, this could be offering security operation centers, threat intelligence or industrial network assessment and protection.
By all means, a vendor may be useful for its partners in both sales and specialisations. For the first two growth points, a partner’s sales and marketing can be supplemented by a vendor’s sales and marketing campaigns. For the final point, a vendor can help a partner establish or strengthen specializations it already provides its customers, through the partner program. This can be done via education, training, an improved knowledge base and expert support. If a service provider is proven to be a specialist in one or another product or service, it gives them a substantial competitive advantage.
Evergreen challenges: talent, product and business processes
As is the case with many tech companies, IT service providers struggle to find highly qualified tech people. It is a problem that effects a variety of businesses in the industry. It is no surprise either, considering the shortfall of almost three million cybersecurity specialists globally. Two-thirds of MSPs admit that a shortage of qualified IT security professionals has contributed to the challenge of ramping up their cybersecurity offerings[1]. A service provider business is built on human resources, and if a company cannot actually find resources it may struggle to grow.
To overcome this challenge, service providers often try to train up specialists in-house by recruiting them straight from university without any experience. Whilst this demands big investments and may not be the option for companies wanting specialists right away, vendors can help by sharing their expertise. This is especially useful in dynamic subject areas such as cybersecurity.
A vendor needs to adapt its offerings to better match what a partner can offer its customers. Otherwise the partner will be forced to charge clients for the fiscal risk it is making elsewhere.
Often, the vendor’s billing model doesn’t match the service provider’s. A vendor generally sells subscriptions on an annual basis, but a partner sells services on a monthly one because customers tend to pay for services per month so that they maintain flexibility to shifting needs. As a result, a partner must risk buying a solution from a vendor for one year that may only be wanted by a customer for six months. If the vendor doesn’t minimise this risk, then the reseller will have to pass on the cost to its customers.
Partners want to feel comfortable when working with suppliers. That’s why the ease of doing business is a key success factor with a vendor. Regardless of the product and its profitability, if the process of working with that vendor is too painful – be it poor automation of license management or mediocre support – it won’t be worth it in the long run.
The other two important factors are price and functionality. For an MSP, the price is more important because it directly affects how they can generate money. Usually their clients don’t care which specific product is used for their regular cybersecurity protection; therefore, price and margin are the decisive factors. With MSSPs, however, the situation is different as they are competing for the quality of their services. Their customers need specific high-quality services so MSSPs should care about the functionality of product they use.
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The transition to an effective service model can be challenging for partners, but for vendors, it can present a good opportunity to lead the process. With a proper partner program, vendors can support partner growth and expand their partner ecosystem. To share expertise and create new opportunities for partners it is worth supplementing the program with a range of financial, marketing, education support and privileges. These can include transparent rebates on target achievement, product discounts and marketing funds, base of knowledge and educational materials. A program can also help partners develop in-depth expertise in specialised domains. This is important. After all, a partner having dedicated certification in specific products and services will ultimately benefit the vendor.
[1] According to Kaspersky Lab report “MSP: Trends, Challenges and the Keys to Success in Managed Security in 2017”