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New Year, New Opportunities: 2019 Channel Partner Trends

Happy New Year! As 2019 begins, we can expect changes, large and small, to take place within the channel partner ecosystem. Predicting what the year holds is hardly a science, not even one that artificial intelligence can foresee. However, when we listen to our customers, listen to our partner community, and observe shifting business dynamics, we can anticipate where the market is going and, more importantly, how our partners can maximize their success with us. Here are three trends that I expect to take off in 2019.

 

1. Expansion of Security Services-Led Practices

We can expect to see more channel partners focusing on the services component of their business. Some will strengthen existing services practices. Others will expand upon their services practices, adding new types of cybersecurity consultative, implementation, customization, and optimization services.

Offering more services translates to greater profitability for channel partners, and there is a higher demand for services than ever. Several factors contribute to this growing need for cybersecurity services, including:

Cloud adoption: Simply put, cloud adoption increases the risk of cyberattacks. Within a cloud or hybrid cloud environment, data is distributed across many locations within the network. All too often, IT teams lose visibility into their assets and the traffic flowing among them. This creates inconsistent security policies and unknown vulnerabilities, leaving many organizations prime targets for an attack. Organizations need help securing every access point across the entire network: endpoints, servers, data centers, and the cloud.

IT talent shortage: A shortage of IT talent compounds the challenges introduced by cloud adoption. More than half (51%) of organizations face a cybersecurity skills shortage, and the demand has reached a fever pitch. Globally, the projected demand will increase exponentially, with 3.5 million cybersecurity jobs needing to be filled by 2021.

Compliance and regulations: Obtaining a good compliance posture can be difficult to achieve and undoubtedly complex when deciphering the various guidelines that differ based on local, national, or industry origin. Maintaining a good compliance posture becomes an even greater struggle as rules and regulations change and update quickly.

Furthermore, it is no longer solely the IT department’s challenge to solve. Focus on responding to regulatory changes also comes from the boardroom. In early 2018, the United States Securities and Exchange Commission issued guidance to public companies that places responsibility on board members for planning and responding to cybersecurity breaches.

Organizations require the help of trusted security advisors to safely enable digital transformation via cloud adoption, fill in the cybersecurity skills shortage, and help them get ahead of compliance challenges.

 

2. Increase in Managed Security Services Providers (MSSPs)

Partners around the world are augmenting their business with managed services. We are seeing a rapid expansion into managed cloud and security services, plus an emergence of managed detection and response (MDR) services, an approach to identifying a breach and managing an incident through remediation.

According to Gartner, “By 2021, at least half of small and midsize enterprises will use managed services to secure their infrastructure, up from less than 20% in 2018.1” Factors driving adoption for managed security services, a few were already explained in my first prediction, include the growing complexity of enterprise IT infrastructure, IoT, cloud and multi-cloud, the shortage of security talent, continuously evolving cyberthreats, and the opex benefit.

IDC recently published their forecast that managed professional services around cloud adoption is the second largest cloud market opportunity that accounts for 31% of cloud-related spending through 20212. So almost a third of spending on the cloud will be used for managed professional services. Organizations want MSSPs to help them rapidly ramp up and scale their cloud environments while deploying security measures specifically designed to reduce the attack surface and secure critical applications and workloads.

MSSPs that adapt to the new dynamics and offer a full cycle of security services have vast opportunities in front of them and stand to gain a significant competitive advantage.

 

3. Changing Consumption Habits

Our industry, once dominated by hardware products, is dominated by software offerings today. Here at Palo Alto Networks, subscriptions and services make up 60% of our business, and this area is growing twice as fast as our hardware business.

Software as a service (SaaS) shows the most significant growth among software segments projected at more than 22% in 2019 compared to 6% for all other forms of software. In 2018, the average enterprise used 14 SaaS applications in their daily business. This will continue to increase exponentially, and 73% of organizations predict that nearly all their apps will be SaaS by 2020.

This prolific preference for cloud and SaaS has created a shift in customer consumption habits for “everything as a service.” Organizations have widely accepted the simple, easy-to-consume experience of SaaS, and it has fundamentally changed their expectations for procuring and licensing software. Enterprises are shifting to pay-per-use models that offer flexibility and speed to add or reduce capacity.

Our mutual customers are increasingly comfortable consuming mission-critical, cybersecurity SaaS offerings. This meets their preferences and brings many advantages to maintaining a strong security posture. SaaS cybersecurity products offer customers the ease and speed to which they have become accustomed. Plus, they enable vendors to automatically deploy updates and patches to protect against newly detected vulnerabilities.

As consumption habits change, our partners have a major role to play, based on my first two predictions. Our mutual customers have an ever-expanding need for partner services to successfully integrate cybersecurity offerings into a hybrid infrastructure, optimize security features, and secure the network from the endpoint to the cloud. Palo Alto Networks relies on our NextWave partners to serve this need and touch our more than 55,000 customers.

Now we start an exciting new journey. 2019 promises vast services opportunities that offer significant profitability gains for channel partners. We are committed to helping our loyal NextWave partners build their services-based practices to grow the business and bring greater value to our mutual customers. Our New Year’s resolution is to seize this opportunity together, with our partners.

 

1Gartner Infrastructure, Operations Management & Data Center Summit 2018

2IDC, Worldwide “Whole Cloud” Revenues Will Reach $554 Billion in 2021

 

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