A short story that doesn’t have to be yours Prologue You’re the captain of a massive container ship filled with servers, hard drives, and mounting...
If Only Kodak and Nokia Resellers Had Known A short story that doesn’t have to be yours
You’re the captain of a massive container ship filled with servers, hard drives, and mounting racks, making its way through stormy waters. The heavy cargo makes it hard for the ship to float and for you to navigate it safely to its destination. Suddenly, you notice a huge boulder ahead. You try to steer away, but the heavy cargo makes it difficult, and it seems like impact is inevitable. As you sound the alarm, you jump into action without wasting a second and start packing your single lifeboat with all the appliances you can get your hands on. Your team looks at you scared and puzzled, but you’re positive you can save everything; yourself, your team, and all the appliances ignoring the fact that they were the ones that led to the collision in the first place.
Dramatic? Yes. Ridiculous? Not really
You’re likely facing this dilemma while reading this blog post. Will you act differently?
A good 50-90% of your revenue comes from reselling appliance-based point solutions. You’re operating on slim margins, and it’s becoming more and more challenging to differentiate yourself and explain the value you bring to your customers. You find it hard to hire top engineers and sales professionals because they’re busy selling cloud solutions and future-proofing their careers.
You see the storm waves rising. You feel the steering wheel getting heavier by the minute.
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Let’s pause here and look at the facts
On November 16th, 2021, Riverbed Technology announced filing for Chapter 11 Bankruptcy. Check Point Software Technologies was recently pushed out of the Nasdaq 100 Index. These events happen while the network security business is skyrocketing, and the competitors are reaching an all-time high in market valuation and revenue growth. What do these companies have in common? First, they never really embraced the convergence of networking and network security. Secondly, their solutions are not cloud-delivered as a service but are still heavily dependent on edge appliances, physical or virtual. While most other pure SD-WAN and network acceleration companies were acquired (VeloCloud by VMware, CloudGenix by PAN, Viptela by Cisco) as a part of a SASE play, Riverbed stood by itself as an appliance-based point solution company. While most leading security vendors made aggressive moves towards SASE convergence or integration onto the cloud (PAN, Fortinet, VMware, Cisco), Check Point stayed away from networking and was late to launch cloud-delivered solutions.
These are all obvious indications, warning signs, if you will, of a fundamental shift in IT architectures. Ignoring these signs is equivalent to loading your lifeboat with appliances while riding 100 feet waves. You, as a reseller or a service provider, can’t save yesterday’s technology. Evolving is no longer the privilege of the brave and innovative but necessary for any business looking to remain relevant.
You can choose how your business story unfolds. Consider the following one.
A day in the life of a cloud-native SASE reseller
Resellers and service providers of cloud-native SASE solutions help their customers transform their networks into agile, flexible, and maintenance-free environments. They bring to the table a highly differentiated offering that enterprise customers going through digital transformation deeply appreciate.
These partners generate recurring revenues that future-proof their financials. They enjoy the rewards of buying a managed service just like you recommend to your customers. Their SASE Cloud provider takes care of the network, hires the right personnel, maintains, patches, and updates everything according to the industry’s best practices. The provider releases new features and capabilities that are available to their customers at the flip of a switch and is accountable for all the network and security components of its service. These SASE partners have ‘one throat to choke’ and benefit from unmatched SLA.
On their SASE deals, SASE partners make high margins and add their professional and managed services on top for even more attractive blended margins.
Their employees master modern technologies, taking pride in driving this revolution rather than trying to convince everyone, themselves included, that nothing is changing.
And their customers? They will never go back to appliance-based solutions. Thanks to their trusted partners, they now enjoy a scalable and resilient cloud-native network and a full security stack delivered as a cloud service. They are becoming SASE experts and thought leaders, and some of them even started their own blogs.
But most importantly, they weathered the storm. Their ships are safe, and so is everyone on them.
The Way Forward: How to Win in a Changing Business Environment
Cloud-delivered solutions are winning. Cloud datacenters replace the world’s on-premises data centers. Cloud application replaced most of our on-prem applications. The 2019 COVID outbreak accelerated cloud and SASE adoption, as enterprises moved to work-from-anywhere.
The SASE revolution is here, as defined by the world’s leading analysts, changing networking and network security for good. 2022-2025 is the transition period to mainstream adoption of SASE among enterprise customers 1
Our music is in the cloud. No more CDs. MP3 players are no longer needed. We have smartphones. Cloud and convergence are revolutionizing the way we use technology. Why would network and network security be any different? They are not. These shifts in the market don’t happen overnight. Business managers that recognize them, must adapt to ensure the relevancy and profitability of their companies.
Not all appliances will disappear. Some customers, in some cases, will still choose them. But, they represent the past. In the same way that CDs, Kodak films, and Nokia (not so smart) phones are still available, edge appliances will stick around. But do you want your business to be recognized by these legacy solutions? Do you want their success or failure to determine yours?
Be brave enough to write your own story.
1 Gartner, “Hype Cycle for Enterprise Networking ” Andrew Lerner. October 11, 2021
GARTNER is registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
Our recent survey Security or Performance: How do you Prioritize? has a lot to say about what enterprise IT leaders value vis-à-vis the tradeoffs between network...
Channel Partners Favor Scale and Deliverability Over Product Margins, Finds Cato Survey Our recent survey Security or Performance: How do you Prioritize? has a lot to say about what enterprise IT leaders value vis-à-vis the tradeoffs between network performance and security effectiveness. But as a channel guy, what I found particularly interesting were the insights the survey offered about the channel.
Along with the 2045 IT leaders, the survey canvassed nearly 1,000 channel partners across the globe about their top security partner considerations. Partners covered the spectrum including resellers, MSP, agents, and master agents across the Americas (33%), EMEA (26%), and APAC (41%). Only a handful of them worked with Cato, providing us deep insight into the overall channel industry.
What we found was surprising and should help inform the strategic direction of any IT service provider or reseller.
Delivering Appliances Has Become Risky Business
You might think that money talks, and so product margins and wealth of services would be the channel’s top considerations, but our survey tells a different story. Far more important than a product’s margins, is the complexity of bringing that product to market. Product margins came in 8th overall when we asked respondents about their priorities when evaluating security vendors. Scalability, ease of management, ease of integration, and the ability to deliver as service were all ranked higher, regardless if you’re speaking about agents and master agents or VARs, MSPs, SIs, or ISPs.
Another way to put that is that the overhead of delivering appliances often outweigh the margins in selling them. This just one indicator that the business argument for network appliances is being called into question.
Appliances have always been about facilitating access to the datacenter, but over 70% of respondents agree or strongly agree that the datacenter is no longer the center of data and that most applications and data reside elsewhere.
Furthermore, security appliances themselves are proving to be a source of security vulnerabilities, which creates brand and customer relationship problems for the partners delivering those products. As Cato’s director of security, Elad Menahem, explained back in October, security advisories published by Cisco Security revealed several significant vulnerabilities in Cisco IOS and IOS XE software. Nor is Cisco alone. Having to drop everything and patch appliances has become all too common, pointed out Peter Lee, security engineer at Cato last fall. No wonder that 80% of respondents agree or strongly agree that for mid-size enterprises, SASE offers better security as it’s easier to manage and allows full visibility into network traffic.
It should also come as no surprise then that over 60% of respondents agree or strongly agree that reselling security appliances has become a risky business. The question is, what’s the alternative?
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SASE Cloud Addresses Appliance Limitations
Again, looking at the priorities for the channel -- scalability, ease of management, ease of integration, the ability to deliver as service, and time to market – are all attributes of the cloud. It becomes much easier to profit from offering cloud services. Delivering security and networking capabilities as cloud services then is increasingly important to partners not only because of the impact it has on the customer’s business but because of the impact it has on their business.
At Cato, I’ve seen that firsthand. The Cato SASE Cloud is a single vendor, cloud-native SASE solution. Our onboarding time for partners is just 4-6 weeks. What’s more the service is always update, managed and protected by our operations and security teams. If you’ve delivered security appliances at all you’ll know how remarkable that is. Having come from a security appliance vendor, I can tell you that onboarding time typically takes many months and requires massive upfront investment.
But frankly, the short time to market and easy adoption of a cloud-native SASE platform, like Cato SASE Cloud, is unusual for SASE solutions today. That’s because many vendors rebrand legacy appliances as SASE portfolios. What’s needed, as Gartner points out, is a SASE platform. (Follow the link for detailed differentiation between SASE platforms and SASE portfolios.) It’s little wonder then that when we asked respondents how long should channel partners would require to build a full SASE offering, only 17% assessed that it should take less than two months. By contrast, nearly half (44%) estimated that it should take up to a year, and 39% estimated that it should take more than a year.
Still, with the easy delivery of SASE platforms, the security improvements SASE brings to the enterprise, and the ability to deliver and manage the complete range of enterprises security and networking services from a single solution, the vast majority of respondents (84%) believe that SASE will become the preferred choice among customers. Over 70% of respondents agree or strongly agree that customers are already looking into SASE to simplify their network and lower TCO (total cost of ownership).
It should be no surprise that most channel partners have adopted (59%) or are looking to offer their customers a SASE solution (31%) Only 10% of respondents have no plans to offer SASE anytime soon.
To learn more about Cato and its partner program, visit https://www.catonetworks.com/partners/
Today, we announced the expansion of our Global Partner Program with an eye on helping MSPs and channel partners everywhere benefit from the power of SASE....
How A Philosophy of Agility Led to Our New MSP-Centric Partner Program Today, we announced the expansion of our Global Partner Program with an eye on helping MSPs and channel partners everywhere benefit from the power of SASE.
From its inception, Cato focused on solving the problems caused by the complexity and rigidity of legacy IT infrastructure. The result was a new kind of infrastructure, one that brought the agility and simplicity of the cloud to network and security. Years later, this approach would be called SASE, but when it was introduced back in 2015, it was just called "groundbreaking."
We brought that same philosophy to our channel partner program. The Cato Networks Global Partner Program was built to eliminate the red tape and help the channel be profitable. We introduced Flex Orders, Flexible Billing, Assured Margins, and more all aimed at simplifying life for our partners and helping them be more competitive.
You see, more than the features that make Cato's program unique is the philosophy. Our motivation and ability to change things around to make our partners' future brighter and their day-to-day more effortless. Agility goes a long way when it comes to channel strategy and alignment. We've seen vendors develop complicated, cumbersome, and demanding partner programs, thinking that thousands of channel companies should change and adapt because they say so. We know that it's the other way around.
BRINGING THE POWER OF CATO TO MSPs EVERYWHERE
The updates we're making to the Cato Networks Global Partner Program today once again embody this philosophy. We're bringing better deal protection, enhanced discounts, assured margins on highly competitive deals, and we're delivering more agility, especially for partners that sell Cato as a managed service.
For the past two years, we thoroughly evaluated MSP and partner needs and challenges. We heard about channel conflict, risk hedging where they committed upfront to full deployment scope but could only bill monthly, and the challenges of maintaining profitability in competitive deals.
So we addressed partner risk and profitability with, you guessed it, greater agility. With 'Flex Orders,' we eased financing and lowered the risk on our partners. Our 'Assured Margins Program' (AMP) guarantees a minimum gross margin to our partners on every deal, even in highly competitive situations. We increased the deal-reg discount and created better differentiation with new tiers.
We also hired more channel managers to properly onboard these partners and work with them to build a solid mutual pipeline. We improved the partners' visibility into their SASE opportunities with the new partner portal, adding real-time and robust CRM integration and an improved pipeline management interface. The revamped partner portal also contains arguably the richest collection of SASE training materials in the world. In addition, partners can register deals and leverage co-branded content and out-of-the-box ready campaigns to generate demand and educate their customers.
SASE IS HERE: WILL YOU PROFIT OR BE LEFT BEHIND?
Disruptive technologies are changing the world we're living in and the IT industry in particular. Legacy technologies are fading out, making room for something more agile, more flexible, and way faster. The cloud has become the center of tomorrow's enterprise network. Profiting from this revolution is no longer an option for the channel; it's a must. The Cato SASE platform puts partners in the driver's seat, letting them lead the SASE revolution and futureproof their business.
Today, we announced a new kind of partner program, one that’s been designed from the ground up to meet the needs of today’s channel. It...
A Channel Program with Some Sass for Partners to Win in the SASE Era Today, we announced a new kind of partner program, one that’s been designed from the ground up to meet the needs of today’s channel. It is also the first partner program that enables MSPs and resellers to position Secure Access Service Edge (SASE, pronounced “sassy”) as a converged, future-proof, global, network and security cloud service.
While creating the program, I found myself wondering why IT resellers and vendors have even called each other partners. Partners are supposed to share core values, work towards the same goals, and split profits and losses. But for years, the IT industry has broadly abused and misused the term partner. In relationships between IT vendors and their channel “partners”, both sides of the deal often had different goals, different core values, and in some cases, even inherit conflicts. It comes as no surprise then, that loyalty and commitment are no longer required to form these “partnerships.”
At Cato, we wanted to fix the “IT partnership problem”. For starters, we wanted to get the vendor out of the business of the channel. Traditionally, vendors have involved themselves in each channel deal and in this way controlled “the partnership.” How? By using a high-price-high-discount business model. The list price was so high that partners can’t progress independently and must ask the vendor for excessive discounts in order to be competitive. It puts partners in a very awkward position, forcing them to disclose details about a project that might as well involve solutions from competing vendors.
Dependency is only one aspect. Forcing themselves into every deal means vendors have a significant impact on the partners’ profitability, often granting customers high discounts by reducing the partner's margin. As a result, resellers try to keep their “partners” away from the customers because they suspect that their own best interests might be compromised. I’m sure all vendors ask themselves; how can we build a more profitable, highly differentiated, and future-proof channel ecosystem? However, achieving these goals requires sacrifice that we rarely see and requires a real channel-first mentality across the organization. Hence most partner programs look the same and no one bothers to take a second look at them. Not even their own creators.
Cato’s New Partner Program – Independency, Protection, and Accelerated ROI
At Cato, we faced the challenge of creating a framework to enable channel-led growth, knowing all the above. Long before the announcement of our newly released partner program, we decided to do things differently.
First, we wanted to solve the partner dependency challenge. Our list price was designed to be competitive and win deals. We sell SASE, not discounts. It allows our partners to go deep, wide, and fast, independently. It also helps our partners with forecasting. They know exactly what gross margin to expect any deal, no matter how big or how small. On top of that, we commit to a positive ROI from the first deal. We gained this by basically eliminating all costs associated with onboarding a new vendor – building the demo lab, getting staff trained and certified, and investing in lead generation activities. These are all provided to authorized partners for free. Also in the name of independence and minimal investment, we launched Cato’s partner portal, where partners can independently get trained and certified, register deals and track their statuses, manage the pipeline and collaborate on opportunities, propose marketing and lead generation activities and get funding and other resources allocated to them to support their ongoing efforts -- all of which have involved the vendor in the past .
Second, knowing that trust between partners and vendors is not at its peak, we created the Rules of Engagement, which we communicate to partners during onboarding, monitor internally, and built processes and approval cycles to protect partners’ assets and investments. These rules address deal registration protection, incumbency on renewals, and other aspects that are crucial to building partner confidence. We also minimize potential channel conflicts by planning our needed coverage and calculate channel capacity, so we don’t overpopulate any territory or market segment. In that, we allow our partners' growth, differentiation, and profitability.
Third, we simplified everything, such as the value proposition, ideal prospects definition, and core use cases. Our partners know exactly when not to spend time pitching Cato, so it’s easier for them to focus their efforts and increase their ROI with Cato. Customers also appreciate simplicity. This simplified messaging allows our partners to enjoy an 80%-win rate post POC, and >90% renewal rate, with massive, upsell opportunities. All due to simplification and expectation alignment which our partners embrace.
To be honest, even the most compelling and well thought out partner program, is only secondary to a real market opportunity for one’s partners. Today, more than ever before, we know that the market opportunity for our partners is immense. Why?
The World’s First SASE Platform Gives Our Partners a Huge Head Start
SASE is probably the first successful attempt of a third-party, let alone the world’s leading IT analyst firm, to capture what Cato is all about. With this validation of Cato’s five-year-old vision, our partners know that they’re able to become market leaders themselves. Our partners are visionaries and foresee the inevitable change to the Wide Area Network, and how to secure it.
Partnering with Cato allows partners to expand their services offering both horizontally and vertically. By converging many disparate network and network-security capabilities including one cloud-native platform, Cato partners can deliver SD-WAN, SWG, CASB, SDP/ZTNA, and FWaaS with minimal difficulty. If they specialized in security, they can now deliver SD-WAN and global networking. Alternatively, if they specialized in networking, they can now go into security. If they wanted to shift from reselling appliance-based solutions and deliver managed services but couldn't afford to, now they can, out of the box (or, should we say, out of the cloud).
[caption id="attachment_9213" align="alignnone" width="939"] SASE converges the functions of network and security point solutions into a unified, global cloud-native service. It is an architectural transformation of enterprise networking and security that enables IT to provide a holistic, agile and adaptable service to the digital business.[/caption]
The Bottom Line: 500% growth YoY
New partner programs are introduced by countless companies looking to build a channel ecosystem and grow their business exponentially. Veteran resellers (MSPs, VARs, and SIs) can see right through them. They can also recognize a true, channel-oriented vendor when they come across one. Cato’s channel led revenue grew more than 500% YoY (2018/17). That’s the best indication for us that our partners believe us. We respect our partners and our partners respect a better bottom line.