3 Key Trends Shaping the Cybersecurity Channel in 20233 Key Trends Shaping the Cybersecurity Channel in 2023
Vendor-partner collaboration is key to delivering improved managed XDR services to meet industry growth.
July 3, 2023
The global economic landscape is shifting, bringing uncertainty and a host of challenges. Inflation, rising interest rates and lingering supply chain disruptions are resulting in customer budget pressures and corporate cutbacks. Many business leaders are concerned about what the future holds, and channel partners are feeling squeezed between rising vendor prices and the increased cost of doing business.
And yet, demand for IT managed services remains high, and expectations for growth in 2023 are strong. Cybersecurity is at the top of the executive agenda for many companies and is one area in which businesses are unwilling to cut spending. A recent Canalys report, commissioned by WatchGuard, forecasts 13% global growth for cybersecurity products in 2023, with the highest demand in endpoint and network security, and vulnerability and security analytics.
3 Trends in Cybersecurity
Channel partners will be instrumental in meeting this cybersecurity growth. Below are three trends shaping how activity within the cybersecurity channel will look throughout the rest of this year.
Channel partners fuel industry gains. MSPs are poised to drive the most cybersecurity growth as businesses struggle with the increasing complexity of the threat landscape. Canalys found that 54% of channel partners expect more than 10% growth in cybersecurity in 2023, while 27% believe their cybersecurity business will grow more than 20%. Additionally, channel partners expect managed services growth to hit double digits in 2023, as 51% of channel partners expect this growth to be over 10%, while 27% believe managed services revenue will grow more than 20%. Some of the key growth areas include extended detection and response (XDR), managed on-premises infrastructure for midmarket and enterprise customers and identity and access control services.
To find success, it will be important for partners to develop new skills with existing resources. Common hurdles that persist among partners and vendors in the managed cybersecurity space include complexity in the end-customer IT environment, the need to reduce internal IT costs and difficulty with finding specialist skills. Businesses looking for more control over their security vulnerabilities will drive the adoption of a co-managed IT model with MSPs and MSSPs. Developing skills to manage a customer and work with their IT team may determine partner success in managed cybersecurity this year.
The opportunity around XDR. XDR capabilities can improve managed cybersecurity outcomes, providing a significant opportunity for channel partners. XDR unifies data feeds from different technologies in the overall security stack into one interface, allowing for improved detection and response. Among its benefits, XDR enables centralized oversight, alert automation, faster recovery, cost savings and improved margins for businesses. However, XDR also brings challenges. Its deployment and integration are complex, requiring strong consulting and technical resources. It also requires significant technical resources for effective monitoring and response.
Vendors can help partners build XDR businesses without a security operations center (SOC). To be successful, they must focus on a few key elements, which include identifying the right partners to create an XDR services reseller channel. Vendors must establish stronger integrations and marketing with other technology retailers in the areas of cybersecurity, RMM, PSA, backup, cloud and infrastructure. They must deliver training in sales and support at a local level and define clear data sovereignty and data center location information for each region in which they work. Finally, vendors must form appropriate use cases for each region. For instance, compliance may be a key sales driver in EMEA, while technological efficiency is a key driver in North America and cost control is a primary focus in APAC.
As XDR platforms grow, vendors must work with channel partners to deliver better-managed services. XDR’s complexity means it is resource-intensive and requires MSSP skills, but partners are looking for more automation and will work with third parties to deliver these services to small and midsize businesses.
M&A remains strong among MSPs. Mergers and acquisitions continue to be a pressing topic in the cybersecurity channel. Interest among resellers to acquire MSPs remains high, given their steady growth, recurring revenue and ability to scale.
While the Canalys report shows that MSP valuations have dipped slightly, VCs and private equity firms are still actively looking to invest. Canalys estimates 20% of today’s pure-play MSPs in North America and EMEA will be acquired or exit the market by 2025. In Latin America and APAC, Canalys predicts the number of pure-play MSPs will grow 8% annually until 2025. However, as new MSPs enter the market to capitalize on customer demand, it will become more difficult to achieve differentiation.
Vendor-Partner Collaboration Is Key
Vendor and partner collaboration will be key to delivering improved managed XDR services, and in turn, meeting high industry growth. As partners invest in consulting, technical managed services skills in detection and response, and sales, vendors can help by providing access to resources and more cost-conscious training.
If partners struggle with managing their vendors and technology, vendors can make it easier by improving their integrations and automation in threat detection and response. As MSPs build more differentiated cybersecurity solutions that are profitable and valuable, vendors that align their business practices with MSPs will grow with them. Finally, as XDR moves from an enterprise play into the midmarket, partners that do not have SOCs will look to hand off more of the technical resources to vendors and MSSPs. Vendors that enable this will benefit from a broader channel and, ultimately, enjoy higher growth.
Mark Romano is senior director of channel success at WatchGuard Technologies, where he is responsible for the health, growth and diversity of WatchGuard’s distribution and sales channel. A veteran of the technology industry, Romano brings over 20 years of experience in positions ranging from product manager to director of marketing for companies including WatchGuard, Hewlett-Packard, Dell, Hitachi and Motorola. You may follow him on LinkedIn or @watchguard on Twitter.
About the Author(s)
You May Also Like
AWS re:Invent Partner, Vendor News: Cisco, Salesforce, MoreDec 01, 2023
People on the Move: Comcast, Cisco, NICE, TPx, Barracuda, MoreNov 29, 2023
AWS re:Invent 2023 Partner News: Marketplace, Salesforce, Certs, MoreNov 29, 2023
AWS re:Invent Expo: VMware, Snyk, HPE, More Showcase Cloud, Security, AINov 28, 2023