Zscaler Aims For Bigger Reliance On Partners In Push For $5B ARR

The cybersecurity vendor is looking to achieve ‘full interlock’ between its sales and partner organizations and is doubling down on the channel through a number of investments, executives said this week during the Zenith Live conference.

Zscaler Channel Chief Karl Soderlund

Zscaler is rolling out numerous changes meant to enable the cybersecurity vendor to rely more heavily on channel partners as it seeks to accelerate its growth and reach $5 billion in annual recurring revenue, executives said this week.

In interviews with CRN—and during a partner summit Thursday at the company’s Zenith Live conference in Las Vegas—Zscaler executives outlined a number of new investments along with an overhaul to its sales process, all of which aim to bring much more of a channel-focused strategy for driving its next phase of growth.

The company also touted the massive opportunities available for partners in helping customers to shift from traditional network security technologies, such as firewalls and VPNs, to Zscaler tools that can help enable a zero trust security posture.

[Related: Zscaler CEO Jay Chaudhry’s 5 Boldest Statements At Zenith Live 2023]

“Up until now, our partners have been very important, but it’s almost been a complementary relationship,” said Karl Soderlund, senior vice president for worldwide partners and alliances at Zscaler, in an interview with CRN. “Moving forward, there will be full interlock between our sales force and the partner community to the point that we’re retraining our entire global sales organization on how to engage [the channel] and how to be better partners to our partner community.”

Zscaler is also planning to make “dozens” of new hires for its channel team over the next year, including in support roles for sales, technical, marketing and customer success, Soderlund said.

Jay Chaudhry, founder and CEO of Zscaler, told CRN that the company is “absolutely” planning to be more reliant on partners going forward.

Working with partners “is critical for us to accelerate our business growth to the next phase of $5 billion [in ARR] that we’re trying to get to,” Chaudhry said in the interview.

Zscaler has disclosed that it’s now generating more than $1.5 billion in annual recurring revenue, although it has not publicly shared a target date for reaching $5 billion in ARR. The company’s growth has been bolstered in recent years by rising customer demand for security technologies that can protect remote and distributed workforces, such as zero trust network access (ZTNA), which aims to offer improved security compared with VPNs for connections to corporate applications and data.

‘More Engagement’

Solution providers who spoke with CRN this week at Zenith Live said they’ve already begun to see increased attention from Zscaler.

“I’ve seen a huge shift in the past year or two of really more engagement from a partner level,” said Kurt Wagner, director of cybersecurity services at Austin, Texas-based BlackLake Security, No. 282 on CRN’s Solution Provider 500 for 2023.

Wagner said he has spoken recently with Soderlund and other members of the channel team at Zscaler, and it’s clear that the “channel seems to be taking priority.”

Peter Ballas, director of sales for New York and New Jersey at GuidePoint Security, No. 52 on CRN’s Solution Provider 500 for 2023, also said he’s seen Zscaler become “much more collaborative.”

“I have seen a notable shift in the way that they have approached us,” Ballas said. “I’ve been at GuidePoint for five years, and I think that the relationships have never been stronger with Zscaler.”

Eduardo Ibanez, co-founder and CEO of San Ramon, Calif.-based cybersecurity consultancy Dazzpers, applauded Zscaler’s commitments during the partner summit Thursday, including a pledge that channel partners will be invited to the vendor’s sales kickoff in August.

“The fact that we are welcome to join that sales kickoff—and be really aligned and trained on new features—is really cool,” Ibanez said.

Often, vendor sales kickoffs are restricted to internal team members, but some of the information that gets relayed to partners later on is lost in translation, he said.

“It’s better if you can receive that directly from the source,” Ibanez said. “The fact that they are thinking that way, I really like it.”

During the partner summit Thursday, Soderlund said that the changes Zscaler is making to ensure that its sales and partner teams are aligned should be noticeable very soon.

“In the short term, you’re not going to be able to tell the difference in who works in the sales organization and who works in the partner organization because we’ll all be executing in a similar fashion,” he said.

‘Consistent Improvements’

Soderlund, who joined Zscaler from rival vendor Palo Alto Networks in March, told CRN that the biggest changes during his initial few months at the company have included laying out the plan to boost its investment in partners, including through hiring for the channel team.

Zscaler is also increasing its operating budget, he said, “to do more events with partners, to drive more demand generation with them [and] to drive more funded head counts at partners.”

In terms of the partner program overall, “there will not be a big reveal” in terms of an updated new program being introduced in the near future, Soderlund said.

“What we’re trying to do is consistently make improvements [so that] every 90 days is better than the 90 days prior,” he said.

While Zscaler counts 40 percent of Fortune 500 companies in its customer base, the vendor plans to expand its strategy by increasingly targeting smaller businesses, executives said.

In part, Zscaler plans to do this by “increasing our investment in distribution,” Soderlund said, noting that the company plans to announce a global distribution leader “within weeks.”

Currently, the percentage of Zscaler’s overall business that goes through distribution is less than 10 percent, he said.

“If I compare that to other companies in the industry, it should be north of 50 percent. That’s the opportunity that we have,” Soderlund said.

For Zscaler, in terms of reaching smaller businesses, “the biggest hurdle is awareness,” he said. “The awareness comes through the partner community.”

Ultimately, “you’re going to see more of us” going forward, Soderlund told partners during the event Thursday. “We do not have travel restrictions. We will be in your offices.”

Zscaler’s message to partners is simple, he said: “We want to engage with you.”