The South African reseller channel has long been a playground for ambitious entrepreneurs. And while there are daily news reports about how many companies have struggled to survive in the last two years due to the pandemic, on the ground, I feel a surge of new energy.
The technology has proven its worth in the past two years, with remote work demanding a boost for the cloud, and data breaches and hackers warranting a heightened focus on cybersecurity.
The missing ingredient was the budget, and to a degree, COVID was a convenient excuse. More than one of us has borne the brunt of delayed purchase decisions, longer sales cycles, and errant decision makers in the past two years.
As we emerge and begin to rebuild, we can see that technology alone will only get us to the point where we should have been in 2022, without the pandemic.
What is emerging is a new wave of diversification. We are seeing resellers becoming managed service providers, particularly in the cyber security industry. Managed Security Service Providers (MSSPs) are taking full advantage of the market by collaborating closely with technology providers to deliver near-instantaneous services that would not have been possible before.
With the cloud in their pockets and a mature market for security, they are looking for turnkey solutions that will satisfy their customers’ thin margins and help them find growth again, maybe even grow fast enough to be noticed and acquired. .
Existing MSPs and MSSPs are looking for technologies that allow them to break the chains of stagnant margins.
And don’t be fooled, it’s not just the smallest players. Larger IT service providers, systems integrators, and established IT companies need to reinvent their offerings. Overhead always crushes the bottom line, and shareholders are increasingly demanding aggressive margin growth.
The MSSP market is claimed to grow from $30.6 billion annually in 2020 to $46.4 billion in 2025. That’s exciting growth, and we’re certainly seeing it starting to play out in the US Now it’s if it will reach our shores fast enough.
An example from the US is a reseller who recently took over security services, but in a way that meant the least risk to him. The reseller did not have the resources to invest or the dedicated staff needed to set up a security operations center. Instead, he built his managed security service offerings on the vendor to provide specific solutions and help along the way.
Building services from firewall management, email security, endpoint security, security assessments, to wireless network security, compliance, and expanded detection and response, flourished, soon reaching 550 customers.
The story does not end there. As its considerable success led to very attractive margins and a scalable model, it soon caught on and was acquired by a Managed Services Provider (MSP) in the Northeast US.
Interestingly, the secret ingredient was a white-label end-to-end cyber security platform offering SOC as a service and appealing to the entire industry, something the acquiring MSP had yet to build or offer.
There is a common theme that emerges in this story. SMEs are looking for cost-effective ways to protect themselves without costing the Earth. Small and midsize businesses desperately need cyber defenses that are easy to install, manage, and afford.
Existing MSPs and MSSPs are looking for technologies that will enable them to break the chains of stagnant margins and enable margin growth again.
The perfect match is beginning to occur between channel partners taking services and offering them as easy conversions, while getting better margins from their technology providers. At the same time, they are saving their customers time and money and providing real returns on investment in a short space of time.
Many companies lack the resources and in-house expertise to adequately defend their network infrastructure against the myriad of threats in our cyber world.
ADT, for example, launched its ADT-IQ service based on an aiMSSP solution. An aiMSSP model provides SOC as a service using artificial intelligence for much of the heavy lifting, saving time filtering logs and data. Through this white-label service, the platform enables ADT to provide affordable services to customers.
This example makes me wonder if someone could become an MSSP overnight, essentially by insourcing a larger vendor’s skills and resources, white-label expertise and services, and pursuing an opportunity. accelerated marketing. It’s a no-name brand model, which has done well in other industries for years.
There is an added bonus that as the MSSP grows its client base under this model, it increases its cybersecurity skills and experience, something that is definitely in short supply on the continent.
I can’t see a downside: if the vendor is solid and provides a good safety net, provides strong skills transfer, and reinvests the spoils in more research and development, surely this collaborative approach will help drive growth?