The path to profitability for partners of Palo Alto Networks is being paved by the foundations of enhanced security specialisation and expertise, as customers kick cloud, digital and network transformation projects into gear across Australia and New Zealand (A/NZ).
Triggered by a post-pandemic wave of investment, end-user appetite for modernisation is heightening demand for technical supremacy within the local ecosystem as skilled-up providers offering advanced security services and solutions take centre stage.
“Adversity drives innovation,” observed Bryan Stibbard, director of Channels and Alliances across A/NZ at Palo Alto Networks. “We’re seeing partners take on new ideas and offerings as customers become bolder post-pandemic.”
The vendor’s quarterly Partner Advisory Council of partners and distributors accounts for approximately $500 million to $1 billion in annual cyber security spend locally, with Stibbard outlining a strong sense of channel optimism in relation to end-user innovation.
Such optimism is based on the view that customers are now transitioning away from conservatism in the pursuit of emerging technologies and transformation agendas.
“We’re seeing projects that were on the back-burner for multiple years now sitting front-and-centre of customer plans,” he added. “Perhaps 12 months ago, customers wouldn’t have adopted this stance but given 75 per cent of the workforce has been working remotely since early 2020, now is the time to be bold. The knock-on effect is a buoyant economy and a positive channel ecosystem as partners attempt to take customers on this transformation journey.”
According to EDGE Research commissioned by ARN and Reseller News - and delivered in partnership with Tech Research Asia - security ranks as the number one investment priority for customers on both sides of the Tasman in 2021, followed by customer experience, digital transformation and cloud migration projects.
Within this context, investment is linked to a business agenda centred around technology modernisation and keeping current IT systems running, in addition to enhancing security, governance, risk and compliance capabilities.
From an outsourcing standpoint, security and cloud migration rank as the standout skills in shortest supply, paving the way for specialised partners to capitalise on a dearth of in-house end-user talent.
“Achieving high levels of technical supremacy is a top priority for our partners locally,” Stibbard added. “The differentiator for most of our partners today is around technical expertise, the engineering capabilities they possess and their ability to deliver high-end managed services.
“We’re forecasting a significant amount of market acceleration during the next 2-3 years as customers push more workloads to the cloud and increase focus on optimising cloud environments and SOCs [security operations centres].”
According to EDGE Research, 49 per cent of trans-Tasman customers are focused on moving key workloads to the cloud during the months ahead, with 27 per cent of businesses migrating remaining workloads and 13 per cent prioritising modernising applications deemed as “not cloud ready”. Given only 11 per cent of organisations are “not focused on cloud”, the direction of travel is clear.
Specialisation at the core
In response to changing market dynamics, plans are underway to “double down” on ensuring the vendor’s ecosystem houses the “best trained engineers” across A/NZ.
Central to such efforts is an enhanced approach to partnering through prioritising specialisation, incentives and enablement as the core tenants of a revamped go-to-market channel strategy. Under the banner of NextWave 3.0, the refresh is designed to help partners differentiate services and build new security expertise in response to increased customer demand.
“This launch is our way of investing back into the partners that have already invested in us through a focus on attaining deep expertise,” said John Hare, vice president of Strategic Partnerships across Asia Pacific and Japan at Palo Alto Networks. “We’re seeing partners grasp those opportunities to build capabilities within our portfolio of next-generation technologies which continues to accelerate given the dynamics of the market today.”
This sharpened focus on driving differentiation within the channel is anchored around new specialisations in the form of Prisma SASE, Prisma Cloud and Cortex XDR/XSOAR certifications, backed by new incentives, deal boosts and rebates.
“One of the main drivers of NextWave 3.0 is to help partners build profitable businesses by leveraging either our entire portfolio, or specific segments appropriate to market focus,” Hare added. “During the past 2-3 years we’ve seen the emergence of an increasingly diverse ecosystem of partners, evolving from our traditional distribution and value-added reseller base.
“Fast forward to today and we have more system integration partners and cloud service providers as well as an increase in connectivity and technology specialists. Obviously, the program needed to evolve to accommodate that change.”
Delving deeper, expanded partner opportunities are expected to take shape in the form of strengthening existing deal referral incentives on all Palo Alto products, in a move designed to extend partner-delivered support across the vendor’s wider portfolio. In addition, NextWave partners can also resell Prisma Cloud via a two-tier go-to-market strategy.
“We’ve seen an evolution in the way customers are consuming security solutions which is placing new demands on partners,” Stibbard added. “The rise of remote working and the remote workforce continues to change as customers now have home devices as part of the corporate network.
“We have traditional partners, large system integrators and those in the born-in-the-cloud space running cloud migrations. Our partner ecosystem is different today to what it was even 12 months ago.”
For Stibbard, the revamped program now serves to provide partners with increased levels of flexibility from a portfolio standpoint, allowing opportunity to build out in-depth security expertise.
“We have a large portfolio of products available for partners to leverage but we’re also seeing providers increase specialisation levels,” he outlined. “For example, some partners are focusing on endpoint protection or SOC automation which can be achieved through the new program - the option to scale up and down depending on preference is available.
“The last thing we want to do as a vendor is push a partner which is already stretched, especially in these current times. Getting a strong return on investment is going to be paramount for all of our partners.”
From an end-to-end standpoint however, Stibbard said momentum is also building as large-scale system integrators and consulting partners assume lead roles in spearheading enterprise-grade transformation projects.
“They are working in network and digital transformation deployments and security is a large component of that,” he added. “Our partners are plugged into our three core pillars and see an interdependency across the portfolio we provide which is reflective of the current state of the market.”
In looking ahead, 81 per cent of Kiwi organisations - in addition to 73 per cent of Australian businesses - indicate further investment in managed security service providers (MSSPs) to enhance protection levels during the next five years. But as qualified by IDC, the pandemic has placed “extra pressure” on partners to be “flexible, empathetic and reliable”.
“Customers will closely assess the support received from their MSSPs and if they trust their current provider to provide this support again during future storms,” advised Emily Lynch, associate market analyst of IT Services at IDC. “The pandemic has caused a massive shake-up in external services needs, and customers must now evaluate whether their current services provider ticks the new boxes created by COVID-19.
“Although not all customers are facing cutbacks, for many organisations, gestures of additional support and goodwill will go a long way to bolstering trust through the partnership and ensuring repeat business when the time comes for contract renewal.”
More broadly speaking, managed security services spending is primed for long-term growth, backed by an expected compound annual growth rate (CAGR) of 12.3 per cent. This translates to a revenue forecast of A$5.5 billion in Australia and NZ$821 million in New Zealand by 2024, according to IDC findings.
“We’re seeing our partners expand services capabilities in search of that extra ’S’,” Stibbard said. “After baseline security services there is the next layer which requires telemetry expertise and pulling together multiple points of security information which isn’t necessarily easy to do.”