Vendor Channel Strategy and the Need for a Vision E015

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Channel Strategy for Vendors E015
A Bit of Security for April 12, 2024
This is addressed to vendors. I recently looked at the information security industry from the perspective of the investment community and folks, we are in trouble. Of the twenty largest firms, many don’t even compete with each other, nor do they supply each other. What’s going wrong?
Information security is a complex problem. But at its core, the problem is about preserving the integrity, privacy, and availability of data. All kinds of data. Ther eis a core guiding philosophy for that task, in ISO 7498-2. You know ISO 7498 – it’s the OSI reference model. The -2 suffix shows where security primitives apply against that stack. The five primitive security functions are:
1. Identification
2. Authentication
3. Data integrity
4. Data confidentiality
5. Non-repudiation
I spoke before about the difference between identification and authentication. There was an incident a few years back when a bank in New York was called to account for not having strong multifactor authentication, and some PR flack said “We do have two-factor authentication! We require a userid and a password.” Biometrics are identification technologies, not authentication tools – you can’t update a biometric id.
Use these five primitives as the core of your security architecture. As a vendor, you must build a vision of how your solution uniquely solves information security challenges. If you don’t have a vision, your sales force will see themselves as dealing with a commodity. The deal matters more than the discount. Once your company falls into that red ocean, the only relevant financial metric is which one of the vendors will go bankrupt last.
Having a vision allows good salespeople to bring that message to their prospects.
I spoke with a friend about the challenges information security vendors face building market share and the lessons apply cross disciplines. If the company has a powerful vision and believes in its mission, sales can easily expand on that impulse and develop enthused prospects. But if the sales force is complacent, passive, and believes the marketplace is primarily commoditized, sales will convey that lethargy to its prospects. What to do?
A channel strategy can supplement an enthusiastic sales force – generating leads. But if the sales force doesn’t feel the need to land new licenses, the leads will lie dormant. A “land and expand” strategy may make sense if your company already has a dominant position in the market , and is playing defense. The only path to growth is to sell more stuff to existing customers. But if you do not have a majority of a particular segment, this cedes new licenses to competition.
Hire a Channel. Fine, as long as they don’t have to create the magic you have lost. When the visionaries have left or retired, and the financial wizards take over, the company is in a death spiral. A red ocean. The only metric to consider is how long until the last vendor goes bankrupt.
A mercenary will stand beside you until they get a better offer.
Note to file: If you are in an oligopoly, don’t start a price war!
Build your vision – and if you don’t have one, prepare for rounds of layoffs, discounts, and market contraction. Nobody ever saved themselves into prosperity.
References:
Competitive Strategy, Michael Porter – Five forces
Blue Ocean Strategy, Renée Mauborgne and W. Chan Kim – cut margins until everyone goes broke (red ocean) or create a new market that obsoletes the competition.