Channeling Security: Cisco's Benvenuto Sees 30% Margins Continuing, Avnet Launches MSSP Service

Plus XO’s new DDoS mitigation service, Dell adds granular data protection.

Lorna Garey

November 18, 2016

6 Min Read

Cisco announced this week its FY17 Q1 earnings results, and security is again the company’s fastest-growing market segment, up 11 percent. Next-gen routing was the next most popular category, rising 6 percent, while switching revenue continued to slide, off 7 percent.

Steve Benvenuto, Cisco’s senior director, global security partner sales, global security sales organization, said security product revenue exceeds a $2 billion annualized run rate. Within the security portfolio, high points are 5,300 new customers for the ASA next-generation firewall product, bringing the base to 62,000, and growth in software, services and recurring revenue.

“Our software products in particular are seeing huge growth,” said Benvenuto. “Our Advanced Malware Protection [AMP] software that is deployed on top of other products grew 70 percent, reaching 22,000 customers globally.”

Benvenuto says that Cisco has been adding customers at over three times the rate of NGFW rival Palo Alto Networks, which reports its results on Nov. 21.

“Our most profitable Cisco partners are also the partners that sell the most security,” he says. Benvenuto told me distributors are also making significant investments in helping partners sell more Cisco security.

“In the past 12 months, our U.S. distributors have certified 450 new resellers with our Express Security and Advanced Security Specializations, and we are seeing similar adoption in other regions,” he said. “Our distributors are also mentoring the two-tier partners on professional services that allow them to conduct customer demos and onsite proof of value.”

Tech Data recently announced that it has been recognized as Cisco Distributor of the Year. Benvenuto says Cisco is also working with distributors to build out managed security services for partners.

We asked Benvenuto whether the benefits of those strong security sales are being passed on to partners.

“Yes, we have seen recent partner margins in excess of 30 percent,” he said. “Security is the most profitable architecture for our partners. Not only does security drive the greatest gross profit, but it also accounts for higher levels of services revenue and significant pull-through of other architectures, such as data center, enterprise networking and collaboration.”

He says the company has seen an up-to-ten-times multiplier for deal size.

Cisco, like Microsoft and most other tech giants, is pushing its partners to shift to a recurring revenue stream and selling software versus hardware.

“Our business model, along with our partners and customers, is changing,” he said. “In Q1 FY17, we saw a 48 percent growth in our product deferred revenue related to our recurring software and subscriptions. Overall, we’re making progress each quarter on our goal of driving more recurring revenue. Total deferred revenue grew 12 percent, with product up 19 percent and services up 8 percent. The portion of our product deferred revenue related to our recurring software and subscription businesses grew 48 percent, to $3.8 billion. Similarly, we are seeing high retention rates when our customers are renewing their subscriptions, with contract lengths up to five years.” 

Avnet Introduces “Recon” MSSP Program

Avnet partners in the U.S. and Canada looking to add security services take note: The distributor’s new Recon unified security management service can be sold either as a branded offering through a white-label approach or as an Avnet-branded service. It includes threat detection, vulnerability assessment, incident response, host-based intrusion detection and policy compliance, among other services, and comes in three levels suitable for midsize to large customers.

The Recon offering can be integrated with other security products and services from companies including Cisco, Check Point and F5.

Dell Adds NG Data Protection

Dell announced this week the addition of a new offering to its Data Security Solutions portfolio. Available Dec. 1, Secure Lifecycle protects business data at rest, in motion and in use, inside or outside of the customer’s network. It also provides the ability to define access rights at a granular level, helpful at ameliorating insider threats. Businesses can control how documents are being viewed, even set individual rights for different users viewing the same document.

The Secure Lifecycle bundle integrates data encryption, file access monitoring, data loss prevention and digital rights management under a single console. It works across devices and operating systems, on external storage including public cloud services, within collaborative tools such as Box and Dropbox, and on iOS and Android smartphones and tablets via a secure file container.

The product specifically targets Microsoft Office files, ensuring Word, Excel and PowerPoint files remain encrypted while in motion and in use.

XO Launches DDoS Mitigation

XO Communications has added a service to help stop distributed-denial-of-service attacks against customers of XO services that access the internet, such as Dedicated Internet Access, MPLS IP-VPN, SIP and IP Flex. The 24/7 XO DDoS Mitigation Service is priced based on the customer’s known circuit bandwidth.

“According to Radware, more than 90 percent of business executives reported that they experienced a cyberattack during the past year, and 50 percent of those companies were subject to a DDoS attack,” said Peter Taft, vice president of product management and strategy at XO.

This protection is well worth the cost should a customer come under attack. A prolonged DDoS onslaught can cost millions, and it’s impractical to install mitigation appliances in most networks.

Where the Money Is in 2017

Cato Networks released this week the results of its new global networking and security survey, with insight into spending priorities from more than 700 IT professionals.

“The results of this global survey highlight systemic weaknesses in network and security architectures currently built upon point products and dependent on hard-to-find skills,” said Shlomo Kramer, founder and CEO of Cato Networks. “The only way forward is a radical simplification.”

The report’s findings won’t surprise most partners. Security teams use between two and five security solutions on average, while 25 percent report having more than five solutions in place. As a result, complexity is holding back 40 percent of respondents from making significant upgrades to their networks in 2017.

Speaking of networks, 41 percent of organizations still secure internet services for remote locations by splitting traffic at the branch office and protecting it with a perimeter firewall. An additional 25 percent backhaul to a data center — and 43 percent report latency in remote branch locations when using WAN. About half say the cost of buying and managing security appliances and software is the biggest network security challenge they currently face, with enforcing security policies on mobile users a major pain point. Forty-eight percent rely on VPN services to provide mobile access to the cloud, while just 15 percent say they are using cloud access security brokers.

The report, worth a read for agents, also sheds light on issues like the high cost of MPLS, the continued pain of ransomware and the trend toward eliminating physical hardware.  

Ready, Set, Shop?

For partners supporting retail customers, this week is the calm before the storm commences on Black Friday and Cyber Monday. Morey Haber, vice president of technology at BeyondTrust, posted this week a list of dos and don’ts for merchants and consumers. Haber (and plenty of others) advise consumers to ensure a website is encrypting traffic using HTTPS before shopping. Sites lacking that basic security measure are likely to start being penalized by customers.

Follow editor-in-chief @LornaGarey on Twitter.

Read more about:


About the Author(s)

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like