• Cybersecurity providers must differentiate and be relevant by assisting enterprise customers during the recession, with a business outcome led security approach that includes portfolio business cases.
• Commercial deals should include innovative pricing, offering better commercial initiatives and discounts between 10-20%.
The Global Telecom Sector in the Current Economy
A number of telecom operators have reported a decline in B2B revenue of up to 10% compared to the previous year. To add complexity, the majority of providers are simplifying their portfolios, digitalizing their operations and customer interfaces to reduce OpEx and improve customer experiences in a digital enterprise setting. Within this backdrop, recent announcements on the economy going further in the red will create turmoil in the telecom sector in the next two years, and result in companies failing to meet their projected forecasts.
The cybersecurity sector however is sailing high, as global organizations continue to struggle with increasing cyberattacks. Cybersecurity providers continue to be seen as saviors in helping businesses and governments with preventive cyber-attack measures, by implementing effective cybersecurity defenses within their networks and enterprise IT environments. Financially, this has resulted in significant enterprise spending on cybersecurity, with GlobalData predicting spend above $173 billion in 2023, and increasing above $230 billion by 2026. Breaking this down further, transformation of enterprise technologies and implementation of security frameworks continue to fuel growth. This entails tighter end to end security within the enterprise by embracing approaches like zero trust, an increase in hybrid working, and the convergence of network and cloud connectivity topologies.
But the proof is in the financial performance of these cybersecurity companies. As an example, Palo Alto, one of the leading cybersecurity companies, announced in November 2022 fiscal Q1 2023 results of $1.6 billion in revenues, a 25% year over year growth. Also, Cisco announced its Q1 2023 revenues at $971 million for its end to end security, and its CEO Chuck Robbins stated in an analyst call that security is now Cisco’s top investment area.
Short-to Mid-Term Strategic Sales Initiatives for Security Providers
GlobalData predicts that spending on security will remain high, while global enterprises re-strategize and cut costs on technology and manpower. But the view is that a reduction in security spend will be substituted in other enterprise software areas. However, there will be some impact on cybersecurity spend, and enterprises will be that much more conscious in the decisions they make around sourcing cybersecurity. Therefore, it’s imperative that security providers implement short- to mid-term sales initiatives now that enable them to differentiate and more importantly meet customer needs during economic turmoil, which will only get worse in the short term. Some of these initiatives include:
• Business Case Justification: Lead sales and marketing efforts with customer cost of ownership in mind. Develop a strong value proposition outlining the total cost of ownership benefits to the client, balanced with the business benefits achieved. Utilize sector specific benchmark data as much as possible in the sales process.
• Align Portfolio to Business Needs: Sales and marketing must sell with a business outcomes led approach, moving away from selling solely on the technical merits of the product, and instead focusing on the challenges of the customer around fortifying their enterprise environment. This includes the approach to enterprise risks outside security, consolidating suppliers and associated products, addressing security across supply chains, and security in the context of complex cloud environments.
• Portfolio: For managed security, repackage and segment the portfolio by customer size, offering a highly automated high touch cost effective alternative in the smaller customer segment (less than 400 employees). Outline a well thought out portfolio sales roadmap on complex bids requiring multiple products and consolidation – the value proposition must be business outcomes led with simplicity in mind.
• Commercial Incentives: Factor in favorable discounts on standard licensing/subscription fees (up to 10-20% in some cases) on new deals and with customers looking to make further investments. Proactively deliver value by factoring in cost transformation facilitation workshops in the procurement process to help with planning. Refresh successful customer commercial initiatives that might have been introduced during the COVID-19 pandemic, i.e., financing deals.