3 Key Trends Shaping the Cybersecurity Channel in 2023

Mark Romano

The global economic landscape is shifting, bringing uncertainty and a host of challenges. Inflation, rising interest rates and lingering supply chain disruptions are resulting in customer budget pressures and corporate cutbacks. Many business leaders are concerned about what the future holds, and channel partners are feeling squeezed between rising vendor prices and the increased cost of doing business.

And yet, demand for IT managed services remains high, and expectations for growth in 2023 are strong. Cybersecurity is at the top of the executive agenda for many companies and is one area in which businesses are unwilling to cut spending. A recent Canalys report, commissioned by WatchGuard, forecasts 13% global growth for cybersecurity products in 2023, with the highest demand in endpoint and network security, and vulnerability and security analytics.

3 Trends in Cybersecurity

Channel partners will be instrumental in meeting this cybersecurity growth. Below are three trends shaping how activity within the cybersecurity channel will look throughout the rest of this year.

To find success, it will be important for partners to develop new skills with existing resources. Common hurdles that persist among partners and vendors in the managed cybersecurity space include complexity in the end-customer IT environment, the need to reduce internal IT costs and difficulty with finding specialist skills. Businesses looking for more control over their security vulnerabilities will drive the adoption of a co-managed IT model with MSPs and MSSPs. Developing skills to manage a customer and work with their IT team may determine partner success in managed cybersecurity this year.

Vendors can help partners build XDR businesses without a security operations center (SOC). To be successful, they must focus on a few key elements, which include identifying the right partners to create an XDR services reseller channel. Vendors must establish stronger integrations and marketing with other technology retailers in the areas of cybersecurity, RMM, PSA, backup, cloud and infrastructure. They must deliver training in sales and support at a local level and define clear data sovereignty and data center location information for each region in which they work. Finally, vendors must form appropriate use cases for each region. For instance, compliance may be a key sales driver in EMEA, while technological efficiency is a key driver in North America and cost control is a primary focus in APAC.

As XDR platforms grow, vendors must work with channel partners to deliver better-managed services. XDR’s complexity means it is resource-intensive and requires MSSP skills, but partners are looking for more automation and will work with third parties to deliver these services to small and midsize businesses.

While the Canalys report shows that MSP valuations have dipped slightly, VCs and private equity firms are still actively looking to invest. Canalys estimates 20% of today’s pure-play MSPs in North America and EMEA will be acquired or exit the market by 2025. In Latin America and APAC, Canalys predicts the number of pure-play MSPs will grow 8% annually until 2025. However, as new MSPs enter the market to capitalize on customer demand, it will become more difficult to achieve differentiation.

Vendor-Partner Collaboration Is Key

Vendor and partner collaboration will be key to delivering improved managed XDR services, and in turn, meeting high industry growth. As partners invest in consulting, technical managed services skills in detection and response, and sales, vendors can help by providing access to resources and more cost-conscious training.

If partners struggle with managing their vendors and technology, vendors can make it easier by improving their integrations and automation in threat detection and response. As MSPs build more differentiated cybersecurity solutions that are profitable and valuable, vendors that align their business practices with MSPs will grow with them. Finally, as XDR moves from an enterprise play into the midmarket, partners that do not have SOCs will look to hand off more of the technical resources to vendors and MSSPs. Vendors that enable this will benefit from a broader channel and, ultimately, enjoy higher growth.

Mark Romano is senior director of channel success at WatchGuard Technologies, where he is responsible for the health, growth and diversity of WatchGuard’s distribution and sales channel. A veteran of the technology industry, Romano brings over 20 years of experience in positions ranging from product manager to director of marketing for companies including WatchGuard, Hewlett-Packard, Dell, Hitachi and Motorola. You may follow him on LinkedIn or @watchguard on Twitter.