June 27, 2017
**Editor’s Note: Distributor Report is a recurring column featuring thought leadership from IT and cloud distributors. We’re looking for insights into evolving business models in this new era of distribution, product and technical service offerings, education and training, marketing/branding, credit and a myriad of other services.**
By Peter DiMarco
As the modern workplace evolves, small businesses are looking to consolidate costs and infrastructures by migrating some of their systems to the cloud. At the same time, the business community continues to face cybersecurity threats like the WannaCry cryptoworm – which has disrupted global commerce – and sweeping compliance regulation initiatives that have been implemented to guard against breaches, including the European Union’s GDPR (General Data Protection Regulation), which becomes law next May.
“The Consumer Loss Barometer,” a survey of 400 corporate executives, conducted by KPMG, reveals a stunning statistic: Eighty-one percent of executives admitted to experiencing a cybersecurity compromise in the past 24 months. What’s more, nearly half of the executive respondents (49 percent) said they didn’t invest in IT security in the past year.
Such concerns have ushered in what The Atlantic Monthly calls, “the emergence of cybersecurity as a business, not just an isolated IT problem.” These encroaching threats present a wide-reaching opportunity for solutions providers, especially those who serve the SMB marketplace, where organizations often are shy of in-house IT staff and are looking to consolidate costs through hosted solutions.
Resellers can develop a manageable, cloud-based security-as-a-service offering for their customers, capitalizing on the rise of hosted services to deliver antivirus, anti-malware, mobile device protection, email spam filtering, and other cyber security disciplines — all in conjunction with sophisticated hosted platforms such as Microsoft Office 365 and Microsoft Azure.
As the offloading of network functionality to the cloud becomes more ubiquitous in the “as a service” economy, resellers can leverage these services as ongoing revenue opportunities. This will allow solution providers to become less dependent on the traditional, break-fix models and address the evolving needs of the modern workplace, focusing on long-term applications delivery as opposed to just hardware deployments.
The Benefits of Hosted Offerings
An annuity-based cybersecurity offering is attractive for both the end customer and the reseller. A percentage of the end-user’s infrastructure costs will move from the capital budget to the operational budget and are spread over time, empowering companies to implement applications and technologies that deliver greater capabilities via a more affordable financing structure, including for security solutions. It also allows end users to automatically receive updates as they become available.
The model creates a more consistent level of compensation for the VAR, ideally generating long-term contracts across a list of customers. Such services carry higher margins than hardware-focused installations, especially since they’re conducted virtually, reducing the need for on-site visits. At the same time, they can facilitate ongoing dialogues with clients, which in addition to strengthening this relationship can also open the door to upsell discussions.
For example, Microsoft Office 365 and Microsoft Azure accommodate a roster of hosted functionality in addition to security, ranging from Exchange email and SharePoint services, to peripheral functions such as hosted web services and off-site printing. Microsoft’s new Enterprise Mobility and Security (EMS) tools offer virtualization-based and hardware-based security, including enhanced application management that “whitelists” approved apps. Other complementary solutions include backup and disaster recovery solutions.
And, as an ongoing provider of cybersecurity and disaster recovery, the VAR is protecting not only its customer’s network but also its own position as an IT provider by keeping those companies viable, secure and less vulnerable to potential compliance penalties (from regulations ranging from HIPAA to the new GDPR). It therefore behooves a solution provider to execute these services on a regular basis and “own” the results.
Leveraging Partner Programs for Hosted Security Offerings
Due to the expanding base of applications that now lend themselves to the SaaS model, the reseller’s greatest challenge is often deciding which offerings are the most appropriate for their practices — and for each of their customers’ businesses.
It’s our role as distributors to provide guidance and support for VARs as they evolve their practices, identifying the services that will best fit their business models, in as streamlined a manner as possible. Distribution services can provide a broad assortment of product via a unified interface, plus resources dedicated to specific verticals such as health care, financial services, education and manufacturing. The use of a partner-based annuity program for hosted services can help resellers make a more seamless transition to this model, providing a menu of services that can be delivered consistently and automatically, month to month, across a list of clientele and markets.
In the end, resellers can achieve the coveted position of a trusted and valuable IT adviser, taking a more proactive, long-term, and vested role in the operation of their clients’ networks — ultimately furthering the success of those end customers as secure, agile and technologically-sophisticated organizations.
Peter DiMarco is vice president of VAR sales for D&H Distributing’s computer products division. D&H focuses small business resellers, helping them developing their practices and become more competitive in the marketplace.
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