Sealed With a KISS*

July 1, 2006

9 Min Read
Sealed With a KISS*

By Khali Henderson

Adam Edwards, CEO formaster agency Telarus Inc., has built up a respectable business selling access lines about 150 T1 circuits per month using an auto-quoting system available at and marketed by several hundred marketing agents and about 60 subagents. But its getting harder, says Edwards, noting prices have dropped 50 percent since Telarus started about three-anda- half years ago. With that price compression, we had to pick up production in terms of numbers of lines we sold in order to maintain our growth in previous months, so we started looking at things that would increase that and supplement the T1s we were selling.

Like many other telecom agencies, Telarus now is selling VoIP in combination with its access sales, but it also has begun offering managed security services as a way to differentiate its commodity access services. Any time we can put two or three services together, that customer becomes more sticky and our offering, our value is greatly increased, says Edwards.

The timing finally may be right for managed security services; Gartner Inc. says 60 percent of businesses are outsourcing some portion of their security requirements. The reason for this is not so surprising considering recent stats from the FBI claiming nearly nine of 10 companies were attacked in 2005 with 64 percent experiencing some form of financial loss in terms of downtime or stolen funds.

Telarus looked into becoming a managed security service provider, or MSSP, but instead opted to become an agent and signed up with ISP Telnes Broadband a few months ago. They layer it on top of any T1 we sell, he says, noting that many of the smaller customers that dont already have a security solution are buying the service, which is 100 percent network-based.

Now, Edwards is looking forward to a managed security service due out at the end of this month from access provider MegaPath Networks Inc., which, fresh from its merger with Netifice Communications Inc., is planning a rollout of its SecureConnect managed service. The difference, Edwards explains, is that the service will be pre-integrated and billed on a single invoice from MegaPath, making the service that much simpler.

Whats interesting is we scaled it down. Its turnkey and reasonably priced, says Dan Foster, senior vice president of sales for MegaPath.

SecureConnect is available standalone, but is designed to be sold as a bundle, says Foster. So, for example, the basic package including firewall and antivirus is priced at $99 per month on top of the T1 or DSL subscription price. Adding intrusion-prevention services (IPS), boosts the price to $149 per month. Uniquely, Foster says, MegaPath does not charge per user or server, but covers the entire site for the set fee. Agents earn up to 20 percent, based on their classification in the revamped MegaPath Partner Program, which was set to launch July 1 (see story online at

I do believe as you continue to sell access, what you realize is security is part of the bundle, Foster says. Its a real challenge to get people to understand you should sell open ports to the Internet, he adds, noting it takes only 14 minutes for an unprotected computer to become infected.

To address that MegaPaths SecureConnect is a unified threat management platform based on Fortinet Inc.s ASICbased computing solution, but with a software backend developed by MegaPath that lets users go in and look at threats to the network via a Web portal. The offer also uses Juniper Networks NetScreen for Web filtering.

Foster says a key component is the security operations and threat response team, which includes 65-70 of its own NOC staff backed by 500 Fortinet engineers. The company is committing to three-hour SLAs from identification of a threat to resolution. Additionally, MegaPath has a professional services team for design and implementation of solutions.

This is good for the channel because they dont usually have those competencies, says Foster.

Guy Fardone, executive vice president and general manager for reseller and MSSP ATX Communications Inc., agrees. An MSSP can do it faster, better, cheaper, he says. ATX offers a suite of managed security services it calls Frontline, which includes firewall, e-mail security, VPN, intrusion-detection services (IDS), data backup and recovery and Internet policy management. All are backed by a 24/7 technical operation center, which includes 40 people in two locations: Philadelphia and King of Prussia, Pa. We follow carrier-grade metrics things smaller VARs will find difficult to replicate on their own, says Fardone. Plus, he adds, They can do it cheaper through us and earn a monthly residual.

ATX counts more than 1,000 managed security customers and expects that to surpass 2,000 by the end of 2006, says Fardone, logging a 50 percent take-rate for the offer on top of sales of dedicated Internet access, DIA/VoIP bundles or SIP trunking. On average, customers choose 1.8 services for about $200 per month, he says. Agents earn 12 percent to 20 percent commission. ATX also offers an extra one-time spiff equal to one months subscription, or around $90.

ATX makes applications engineers accessible to the channels for training and joint sales calls. The sales process and time-torevenue can be longer, says Tim Allen, ATX executive vice president of sales. We think the way to decrease it is to make our experts available.

Cisco also has been tackling the managed security opportunity for the channel from a number of directions. The company, the No. 1 network security gear maker, provides equipment to VARs that want to become their own MSSPs. It also acquired an MSSP called Netsolve, through which it plans to offer a co-branded service, but is available for resale today under the Cisco Remote Operations moniker. Finally, 18 months ago, the company created the MSSP Advanced Technology Program to enable top pure-play MSSPs to sell through the Cisco VAR channel.

SecureWorks Inc. is one of the ATP participants. It offers a menu of six services network intrusion prevention, host intrusion prevention, vulnerability assessments, firewall management, e-mail filtering and e-mail encryption along with professional services. Most contracts are for a year term, starting at $6,000 annually. The company had relied on direct sales until about 18 months ago. It now has 16 partners, including BellSouth Corp., that resell and rebill its services. The program is not limited to Cisco VARs, says Andrew Szymendera, SecureWorks director of channels, but it fits well because of Ciscos focus on security. Often the service uses Cisco appliances, but SecureWorks supports other vendors like Check Point Software Technologies Ltd. and has its own intrusion-prevention appliance.

SecureWorks Vice President Kathy Jaques says the service is ideal for agents that arent versed in networking. We are used to working with end users, she says, explaining the company drop ships appliances that are hardened and only require two cables to be plugged in and a few minutes to configure with the tech on the phone. There is very little for them to do.

TrustELIs Eli is an enterprise-grade plug and protect appliance.

Szymendera says agents can earn margins of 10 percent to 20 percent on the subscriptions when they sell the service with their own hardware. (SecureWorks bundles the cost of its appliance into the price.) Reporting capabilities enable partners to provide a consultative service to the end customer and help keep clients longer. SecureWorks, itself, claims a 96 percent retention rate, he says.

Jaques says the reason customers stay is that most realize they are not equipped to do hand-to-hand combat with a hacker thats part of a Russian organized crime ring. From identities to trade secrets and intellectual property to account information, they are relentless, she says, noting that her company stops anywhere from 1 million to 13 million attacks on its clients every day.

The challenge for organizations is complex; managed services has simplified my approach, says Marshall Cromwell, CEO of SecureWorks reseller IXI Managed Services, a startup thats a Cisco partner and an agent for Covad Communications Groups hosted PBX and managed PBX products. Cromwell is selling or leasing customers Ciscos new Adaptive Security Appliance, which combines firewall and IPS, along with the SecureWorks service. What drives it is customers have bought appliances in the past, but they have had no people with the know-how or skills to manage it, he says.

IXI provides on-site service in the event that a device malfunctions or an upgrade is required; other than that, SecureWorks does the rest. This partnership arrangement, he says, allows IXI to focus on upfront sales.

Simplicity also is the hallmark of MSSP TrustELI Inc. The company makes a unified threat management appliance it calls Eli for SOHO and small businesses. The consumer offer is $199.99 plus $9.99 per month for up to five users. The small business version is $249.99 with pricing ranging from $19.99 for five users to $39.99 for 25 users. Sales partners earn 10 percent to 30 percent depending on their volume commitments.

Eli is easy to install and manage, says Susan Lutz, CEO for TrustELI. You set it and forget it. Once installed, you never have to take it out, she says.

One interesting feature of the system is dynamic policy management. Changes can be made on the fly, says Lutz, explaining users can make changes, such as adding a content filter from a Web portal. It instantly pushes the changes to Eli. In mid-June the company planned to roll out its new VPN-on-the-fly capability. Eli VPN removes the complexity associated with constructing VPNs while maintaining the required security. According to Lutz, this means VPNs can be set up and shut down in minutes rather than days in support of temporary needs.

TrustELI started its channel program two years ago and Lutz says she has been surprised that the telephony VARs are slower to adopt managed security services than she would have thought. She suspects this is beginning to change. Its getting competitive; they can no longer compete with just access, she says. TrustELI also is going to upgrade its appliance to support a SIP client for PC-based VoIP, offering yet another differentiator for sales partners.


ATX Communications Inc. www.atx.comCheck Point Software Technologies Ltd. www.checkpoint.comCisco Systems Inc. Communications Group www.covad.comFortinet Inc. www.fortinet.comGartner Inc. www.gartner.comInsight Research Inc. www.insightresearch.comIXI Managed Services www.ixims.comMegaPath Networks Inc. www.megapath.netSage Research Inc. www.sageresearch.comSecureWorks Inc. www.shopfort1.comTelarus Inc. www.telarus.comTelnes Broadband www.telnesbroadband.comTrustELI Inc.

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