CRN Pipeline: "The unit economics of security is a challenge for MSPs"

The unit economics of cybersecurity is a big challenge for SMB IT firms, according to Reece Appleton, Regional Director, APAC, at Huntress.

Speaking ahead of his appearance at the CRN Pipeline conference in August, Appleton spoke to CRN Australia about how IT partners lack a scalable framework and have challenges articulating the value of cybersecurity to customers.

“The unit economics of security is a challenge for MSPs,” he said, after completing a roadshow with NinjaOne and HaloPSA that visited Auckland, Brisbane and Perth.

SMB IT partners continue to talk about difficulties selling cybersecurity. “I often hear, ‘I can't upsell on cybersecurity’ and ‘my customers don't see the value,’” Appleton said.

Appleton said that part of the problem is the failure to articulate and demonstrate the value of security.

He cited the CEO of an MSP who spoke at one of the Huntress-NinjaOne-HaloPSA roadshow events, who said “It’s not necessarily that the customer won’t see the value; it’s that as an MSP, you’re not articulating and demonstrating the value of your offerings well enough. So some [MSPs] get trapped in a race to the bottom on price.”

Another problem is “There is no framework or set of standards that are built for small to medium business,” according to Appleton. “MSPs rightly drive the Essential Eight with their customers; but once you reach maturity level two or three, it becomes un-scalable for those small to medium businesses. And then what?”

“There’s a gap in the SMB space to provide a set of standards that help SMBs understand security posture and drive continuous improvement. ISO 27001 is too big for most SMBs and the Essential Eight doesn’t really scale [for SMBs] and is the bare minimum set of controls.”

At CRN Pipeline in August, Appleton will join a panel discussion about the way forward, in a session titled "Strategic Shifts - Evolving Your Cybersecurity Business For Tomorrow's Market."

One of the trends, in his view, was partners outsourcing cyber services. “The other piece, which is interesting I think, is Canalys said at the beginning of this year that about half of MSPs by the end of 2024 will be operating in an ecosystem model,” Appleton said.

“What they mean is they're utilising other MSPs or vendor services like Huntress to deliver specialised services. Generally, MSPs do not have the security capability to deliver a 24/7 SOC at scale for example, despite the fact it is a must-have in today’s landscape.”  

“MSPs should partner with security experts to augment their capability and have confidence in the value they’re delivering to their customers.”

Reece Appleton will take part in the session "Strategic Shifts - Evolving Your Cybersecurity Business For Tomorrow's Market" at CRN Pipeline on August 14. See the Pipeline agenda and register your interest in attending.