More Consolidation, Standardization on the Horizon for MSSPs

The MSSP landscape faces big changes in the months ahead from widespread consolidation that likely will lead to standardization of services.

That’s according to Mike LaPeters, AlienVault’s vice president of global channel sales. He and Paul Barnes, Webroot’s senior director of product strategy, spoke with Channel Futures’ MSSP Insider about the challenges MSSPs face and why there likely will be fewer and fewer good MSSPs despite the booming market.

The global managed security services market was valued at $16.6 billion in 2016 and is projected to reach $56.4 billion by 2024, with a compound annual growth rate (CAGR) of 16.6 percent, according to Esticast Research and Consulting. With the surge in cybercriminals and cyberattacks, organizations are compelled to either enhance their in-house security systems or outsource the managed security services from the best MSSPs, it said.

The MSSPs that are doing “really well” are being acquired or consolidated into other organizations, LaPeters said.

“There’s a big consolidation that’s going on right now that will probably be announced in the next four weeks or so, and that’s going to be significant because it will be consolidation of probably four or five different midsize MSSPs into one organization,” he said. “I think that’s the type of stuff that we’re seeing across the market right now.”

One of the benefits of consolidation will be less niche and more standardized services, LaPeters said.

AlienVault’s Mike LaPeters

“There [are] more of them that are just saying, ‘We’ve worked with hundreds of customers or thousands of customers, and we’ve determined that these three steps of service offerings fit 90 percent of the customers, so pick your offering and then we’ll go from there,’” he said.

One potential drawback that could result from consolidation could be a “slowing of the ‘evolution of ability,’” Barnes said.

“I hope we don’t see that in this space because, with the fact that security is evolving so quickly, you need those crazy, fringe people to go out there and really dive deep into solving problems,” he said. “So my hope is that with this consolidation, we’ll still have the ability to continue to solve really tough problems in really kind of unique situations. My hope for the future is that we take advantage of what consolidation brings, but we don’t let it lead us to complacency.”

There are three major challenges that MSSPs are facing, LaPeters said.

“First off, there is this rapid or super-accelerated proliferation of threats,” he said. “MSSPs, while it’s a huge opportunity for them to offer services to help customers react and respond to this, it’s really challenging to be prepared to respond to that. Challenge No. 2 is hiring and retaining a staff that can help address these problems. And when they do get somebody who’s really good, their competitors, other vendors, the customers, are tapping those experts on the shoulder and trying to recruit them away.”

The third challenge is …