Margin maker

The potential for making a decent margin selling IT security solutions is far too compelling for the channel to ignore. This is a segment commanding an ever-increasing portion of the IT budget. From the end-user and home office right through to the largest enterprises, security is a hot topic. If you’re bored of shifting tin with miniscule margin, investing in the skills and training required to sell security solutions could be the answer.

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By  Stuart Wilson Published  November 3, 2004

The potential for making a decent margin selling IT security solutions is far too compelling for the channel to ignore. This is a segment commanding an ever-increasing portion of the IT budget. From the end-user and home office right through to the largest enterprises, security is a hot topic. If you’re bored of shifting tin with miniscule margin, investing in the skills and training required to sell security solutions could be the answer.

Security software has come a long way from bundling an anti-virus package with a desktop. Yes that market still exists but it has become highly commoditised. Today, the real action is in emerging sectors such as firewalls and VPN, as well as intrusion detection and prevention systems. And let’s not forget the security 3A segment encompassing authentication, authorisation and administration solutions (sometimes referred to as identity management).

The case for security software adds up for channel players looking for new avenues of revenue growth and improved profitability. The overall market size is growing fast. Figures from the numbercrunchers at IDC reckoned that the market for security software in the Gulf States (Saudi Arabia, Bahrain, UAE, Qatar, Kuwait and Oman) was worth a tasty US$52.6m in 2003. With an annual growth rate in excess of 20%, IDC reckons that the segment will be worth some US$145m in 2008.

Bear in mind these projections were made some time ago. Given the current IT investment climate and the speed with which new security threats are developed and new solutions offered, this figure may well need to increase substantially to accurately reflect the market appetite.

So, what have we got? A fast-growing market that cuts across all vertical markets and appeals to every single customer you can possibly think of. If they have an IT system, they are a potential customer. It is also an evolving market and that is good news for margins. With the IT security threat changing every day, the protection systems being put in place need to do likewise. This means vendors are engaged in a constant cycle of innovation to develop new products and upgraded packages that require a channel-to-market.

There is already a glut of vendors targeting the security software market. Established vendors such as Symantec, Trend Micro and McAfee are just the tip of the iceberg. New vendors are entering the market with innovative products all the time. Admittedly, the big boys acquire many of these start-ups before they get really established, but the whole cycle is testament to an industry sector in the ascendancy.

With so many vendors chasing the security software segment, channel partners are in demand. Every major vendor is on the lookout for partners that can open the doors to new customers. IT security encompasses software, hardware and services. Pretty much every solution being offered to customers can have an IT security component incorporated into it. That means resellers selling hardware into the SMB sector have the potential to upsell security and carve out a new business niche.

Some resellers have started to make the transition already, but major vendors are adamant that there is room for many more to realise the untapped potential that already exists within their business model to add security solutions. This opportunity involves much more than adding a few extra products to the portfolio. Moving into security software can radically redefine customers’ perception of their supplier. If you’re supplying printers and PCs the only real differentiator is price. Customers perceive little value-add and will happily chop and change their supplier if it means a cheaper deal.

Security software gives resellers the opportunity to turn themselves into trusted suppliers to their customers. Those that develop the potential to consult, explain how the solutions are evolving and provide genuine value-added services are laying the foundations for long-term business relationships.

Security software is not for everyone. But those that refuse pointblank to even consider this market segment may live to rue their shortsightedness in years to come.

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