The Thriving Cybersecurity Channel: Navigating Challenges and Opportunities

The cybersecurity landscape is undergoing a significant transformation, with the channel ecosystem—comprising value-added resellers (VARs), distributors, and managed security service providers (MSSPs)—thriving amid evolving threats and regulatory frameworks. According to Canalys, security managed services revenue is projected to grow by 15% annually by 2025, highlighting the increasing importance of cybersecurity in today’s digital world. However, as the market evolves, so too must the strategies employed by channel players to remain competitive and relevant.

The Current State of Cybersecurity Spending

In the second quarter of 2024, a staggering 91% of total cybersecurity spending was funneled through the channel, according to Canalys. This statistic underscores the critical role that channel partners play in the cybersecurity ecosystem. The allocation of these funds is heavily influenced by two primary factors: the behavior of threat actors and the IT infrastructure adopted by end-user organizations.

Threat actors are becoming increasingly sophisticated, leveraging advanced tools such as AI and infostealer malware to enhance their capabilities. A recent report from ReliaQuest revealed that the average breakout time post-exploitation has decreased to just 48 minutes, a stark reminder of the urgency with which organizations must respond to cyber threats. The report also highlighted the emergence of novel intrusion techniques, including vishing-based impersonation and ransomware assembly lines, which further complicate the security landscape.

As organizations continue their digital transformation journeys, the attack surface is expanding, particularly in distributed cloud and AI services. This growth presents new vulnerabilities, making it imperative for organizations to adopt robust cybersecurity measures.

Trends Shaping the Channel

The shift to cloud computing is one of the most significant trends impacting the cybersecurity channel. Jeff Pollard, a VP and principal analyst at Forrester, notes that marketplaces and platforms are disrupting traditional IT security channel businesses. The ease of deploying new technologies through prebuilt API integrations available in app stores poses a challenge for channel partners, who must find ways to demonstrate their value in this evolving landscape.

Economic pressures, including high borrowing costs and escalating cybersecurity threats, are also affecting channel players. Christina Decker, director of strategic channels at Trend Micro, emphasizes that these factors necessitate strategic adjustments to maintain competitiveness. Additionally, the introduction of new compliance mandates, such as the NIS2 directive, adds complexity, particularly for small and medium-sized businesses (SMBs) that rely on channel partners for guidance.

The SMB market is currently the fastest-growing segment for the cybersecurity channel. Joe Turner, global director of research at Context, points out that channel partners are ideally positioned to support SMBs, which often lack the resources for in-house cybersecurity teams.

Evolving Channel Strategies

In response to these trends, channel businesses are diversifying their service portfolios. Extended detection and response (XDR), Zero Trust frameworks, and compliance services are gaining traction. Context’s data indicates that XDR services sold through the channel grew by an impressive 64% annually in 2024. Many MSSPs are also venturing into the managed detection and response (MDR) space, driven by increasing demand for ransomware mitigation.

As traditional services like anti-virus and multi-factor authentication become saturated, channel players are exploring new growth areas, including secure access service edge (SASE), anti-data exfiltration (ADX), and SaaS monitoring. These emerging services not only enhance security but also provide new revenue streams for channel partners.

Opportunities in AI and Training

The rise of artificial intelligence presents significant opportunities for channel players. Matthew Ball, chief analyst at Canalys, highlights that cybersecurity is a key use case for early adopters of generative AI. Channel partners can leverage AI for threat detection, incident response, and enabling security operations center (SOC) analysts. Automating repetitive tasks and providing adaptive training through AI can enhance the capabilities of channel partners and improve service delivery.

Moreover, there is a growing emphasis on customer education and training. Turner notes that many managed services now include regular workshops and webinars to help end customers understand emerging threats and compliance regulations. This focus on education not only empowers customers but also strengthens the relationship between channel partners and their clients.

Rethinking Business Models

The shifting economic and technological landscape is prompting some channel players to reevaluate their business models. Pollard notes that there is a trend toward developing proprietary platforms rather than relying solely on partner technologies. This shift allows channel partners to provide unique value propositions directly to customers.

Additionally, mergers and acquisitions (M&A) activity is expected to rebound in 2025, particularly among managed service providers looking to expand their capabilities in the MDR and XDR spaces. This consolidation could lead to more comprehensive service offerings and improved customer experiences.

Finding a Trusted Partner

For Chief Information Security Officers (CISOs), the evolving channel landscape presents both challenges and opportunities. As the industry adapts to better serve end customers, it is crucial for CISOs to identify trusted partners. Certifications and industry-wide frameworks, such as the UK government-backed Cyber Essentials Plus, can serve as indicators of a partner’s credibility and commitment to security.

Ultimately, CISOs should seek partners that prioritize their needs over transactional incentives. Pollard advises organizations to engage with channel partners that can clearly articulate their technology preferences and provide transparent insights into their recommendations.

Conclusion

The cybersecurity channel is thriving, driven by increasing demand for security solutions and the need for organizations to navigate a complex threat landscape. As the market evolves, channel players must adapt their strategies to remain competitive and deliver value to their clients. By embracing new technologies, diversifying service offerings, and prioritizing customer education, the channel can continue to play a pivotal role in enhancing cybersecurity resilience for organizations across the globe.