WatchGuard Leader: 3 Keys To Profitable Managed Security Services Growth

WatchGuard Director of Product Management Himanshu Verma tells MSSPs at XChange 2019 that they can do a number of things to mature their business model and make themselves more relevant to customers.

The growth of the managed services market continues unabated, with the market expected to reach between $25 billion and $30 billion by 2022, according to WatchGuard's Himanshu Verma.

Roughly 40 percent of technology acquisitions next year are expected to be influenced by managed security services providers, according to Verma, director of product management for the Seattle-based cybersecurity vendor.

Managed security services has become an increasingly big slice of the managed services pie, Verma told attendees Monday at XChange 2019, and is expected to account for 80 percent of total enterprise security spending in 2019. Small businesses have been most impacted by the rise of managed security, Verma said, with 51 percent of managed services consumption happening in that space.

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The most successful MSSPs often have certain business practices, products, technologies and organizational traits in common. Here's a look at three things Verma said MSSPs should do to increase their relevancy and boost their profitability.

1. Get The Basics Right For Success

MSSPs must be able to identity the exact problem they're attempting to solve for the customer, Verma said. MSSPs can't just be broad security providers, Verma said, and instead need to identify a niche or specialized area such as endpoint security, infrastructure security, application security or network security so that they can stand apart from the pack.

Opex billing—or the ability to sell services on a monthly basis—is absolutely critical across the board, Verma said. The recurring revenue aspect allows MSSPs and customers alike to quantify the billing in smaller chunks, which Verma said is absolutely critical.

MSSPs also must optimize utilization by keeping total cost of ownership front and center, Verma said. TCO starts by incorporating product technology, he said, and then goes all the way down into how MSSPs do business as well as the tools and support system they have access to.

Unless MSSPs have a niche or specialty, potential customers end up lacking visibility into what’s available or what’s missing, said Steve Olp, president and CEO of Matthews, N.C.-based solution provider Team Technology.

2. Services Expansion Creates Ongoing Opportunities

Once an MSSP has identified a specific customer problem and worked to solve it, it is ready to move onto the next step, Verma said. If an MSSP has established expertise in one area of cybersecurity, Verma said that would be a good time to expand their service portfolio to include other security technologies.

MSSPs should look for services that can be easily attached or bundled on top of their existing use cases, Verma said. Cloud and mobile device adoption have made solving problems around security more critical, which in turn should drive MSSPs to expand their security portfolio.

From there, Verma recommended that MSSPs focus on providing advanced security services that are easy for customers to leverage.

3. Take Things To The Next Level With Automation

Automation is no longer optional since it's one of the key aspects of bringing profitability into any type of security services offering, Verma said. Automation can help with everything from predictive analysis and machine learning to artificial intelligence-type capabilities and delivering managed detection and response with automated remediation, Verma said.

MSSPs must not only select the right security stack and provide the right services, Verma said, but also must ensure that automated capabilities are infused throughout the process. Automation can streamline everything from service delivery tools, CRM and back-office to SOC and NOC services.

Fundamental business tools such as PSA and RMM have long been built to drive automation, Verma said. It's now time for MSSPs to move beyond business automation and focus on automating tools and processes in their security ecosystem, according to Verma.

Automation plays a massive role in making it less resource-intensive to provide security services, according to Olp. Automation also enables faster response since more tasks can be completed without human intervention, Olp said, shortening the queue MSSPs have.