In recent years, the marketing industry for IT and cyber solutions has undergone a real strategic revolution. Marketers in the US and Europe are undergoing a conceptual and business transformation, shifting from product sellers to Managed Service Providers (MSPs). In Israel, the distribution market is largely accustomed to traditional methods of distributing IT and information security products to resellers, and from them to end customers, under specific brands of various manufacturers. However, we are witnessing more and more resellers adopting the global trend and becoming MSPs, out of an understanding that a change must occur.
Traditional resellers who have not yet adopted the change are currently facing a series of challenges in order to survive the market. These challenges include the multitude of players competing for the same market share, shrinking profit margins due to new global issues stemming from rising chip manufacturing costs, shipping, and customs duties. Additionally, the aggressive entry of Big Tech into the mid-market (SMB and SME) threatens to offer their services directly to end customers, bypassing resellers. This is further exacerbated by the surge in cyberattacks during COVID-19 and the resulting increased need for clients to receive
service, which is much more than just providing products.
Considering such a significant change in evolving threats, customer demands, and the prices resellers pay today for the solutions they market, why don't we yet see a substantial, widespread change in the work and marketing strategies of many of them?
Despite the challenges mentioned above, many marketers have not yet felt the financial impact. On the contrary, the shift to remote work has greatly increased the purchase of IT and cyber products, and many marketers have reaped substantial profits. These marketers may be lulled into thinking that traditional product marketing is still sufficient, but the truth is that this event is considered a one-time economic event sponsored by the Corona pandemic, and it is important to listen to trends and make the adaptations that the market dictates.
Recalculate route
The demand for change comes from both below and above. On the one hand, there are customers, organizations that were protected by security products and yet found themselves exposed to cyber terror and a wide range of threats, with real difficulty in bearing the operational burden of their many technologies and infrastructures. On the other hand, the big tech companies want to conquer the mid-market and provide solutions that until recently were only available to enterprise organizations.
As is known, demands create opportunities, and those who manage to identify them in time and act, benefit. Instead of selling "boxes" of this or that brand and trying to generate profits of a few percent per transaction, the new marketers become their own private brand. They build service packages, such as endpoint and server protection services, or maintenance service agreements, customized to the required needs of their clients, while taking full responsibility for the operation of the systems, within defined scopes and timelines. Their client is no longer interested in which brands they use; they are interested in receiving responses to threats, accountability, and reactions in case of an incident. In this way, the marketer becomes a private brand in themselves.
Resellers who are wise enough to operate under the MSP (Managed Service Provider) model, integrating a variety of products from different manufacturers along with related services, and providing maximum protection with minimum maintenance, will succeed in building genuine relationships with their clients. A client relationship that begins and ends with selling boxes does not create a true sense of loyalty. The moment a competitor offers the same solution at a lower price, it's likely the client will switch. Conversely, if a client receives a holistic solution, and the reseller helps them minimize risks and increase operational efficiency, then they become a partner. Their clients remain loyal, and they are no longer in survival mode.
Why do we need to make this change right now?
Mid-market organizations face complex business challenges, exacerbated during the COVID-19 pandemic. These include difficulty recruiting information security personnel, reduced capital budgets for investing in appropriate technology, and an increase in attacks. Every day, we see more phishing attempts, ransomware attacks, security breaches, insider threats, and more. As attackers and attack methods become more sophisticated, businesses must upgrade their security measures accordingly, paying a fortune to meet business needs, and even then, they are not necessarily protected. This is because new malware and ransomware are developed globally every single day, and antivirus software simply cannot update quickly enough. Firewalls also require regular maintenance every few days to provide good protection for the business. Additionally, vigilant oversight is needed. Hiring such personnel for an organization adds further costs, which not every organization can afford. There are not always support resources available to address all the gaps that arise.
This is where the MSP provider comes into play.:
A managed service provider will operate and maintain an organization's technology on a monthly basis, without initial investments in human capital and employee training. Managed service providers can reduce IT-related expenses, including network infrastructure, hardware, and maintenance costs. MSPs can provide a suite of services, based on the organization's needs, and create more predictable expenses with fewer budget overruns. Often, leveraging MSP services is significantly cheaper than staffing and maintaining an entire in-house IT department. Coupled with the global shortage of information security experts and the costs associated with training employees and keeping IT resources up-to-date with technologies and methodologies, MSPs provide a solution for organizations" human resources, according to their evolving needs. Additionally, MSPs provide their clients with detection and response services, security operations, ongoing monitoring and maintenance, allowing them to meet compliance protocols and ensure effective security tools are in place. In the event the organization experiences a malfunction or attack, they take full responsibility for its operation. This effectively allows their clients to focus on their business with greater peace of mind.
According to reports published by the American consulting firm, Mordor Intelligence, The managed services market in the U.S. is gaining momentum, with more and more organizations opting to adopt this business model. Last year, the U.S. MSP market was valued at $152.05 billion. By 2026, it is expected to reach $274.20 billion, recording an annual growth rate of 11.2% over the forecast period (2021–2026). Resellers in Israel who do not join this global trend and do not prepare for the change today risk losing market share and, in a few years, may even find themselves out of the game.
MSP Distribution in Israel
As mentioned, "bundling" with appropriate tools and correct services, which MSP resellers will provide to their clients directly and without relying on third-party services, is the trend that more and more resellers in Israel will be moving towards in the coming years. They will no longer represent the manufacturers' brands, but will sell themselves; they will be the brand, built from all the building blocks we listed above. Accordingly, they can significantly increase their profitability. In addition to mid-market organizations, enterprise organizations will also purchase complementary services from them and will be able to use their personnel as an extension of the internal teams that exist within their organizations, thereby actually increasing their organizational efficiency.
"Ofek Distribution aims to be a distribution company that encourages and promotes MSPs in Israel," says Rahav Rosenthal, CEO of Ofek Distribution. "The solutions we choose to promote are advanced solutions that allow resellers maximum response to their customers with minimum hassle and problems. Together with training, business guidance, and technological support, we help our resellers promote their business and build the strategy for their private brand with them. We know how to provide our partners with all IT and MSP solutions, end-to-end directly from us, such as: backups, data center services, information security services (EDR, XDR, antiviruses, server protection), communications and phone systems, management and monitoring products, and all this in an elastic distribution model of pay-as-you-grow, where you only pay for the resources used.".
"Among the prominent solutions, you can find the N-able product family, with an emphasis on the RMM (Remote Monitoring and Management) platform, which every reseller needs in order to successfully manage the complex environment of various solutions for many clients. One system that centralizes everything into a single, user-friendly, and efficient dashboard with high security capabilities. In addition, we distribute Sophos solutions, which include a wide range of security solutions for all IT layers.
He explains that the fact that Ofek was a reseller itself, and was born out of places of marketing products to customers, allows it today, as a distribution body, to identify the gaps that are opening up for resellers, between the traditional marketing world and the future marketing world. "The market is moving, CEOs of the reseller world need to consider these gaps and try to bridge them right now. For example, they must take into account the entry of Big Tech companies into Israel. When Microsoft sets up server farms here, what will prevent their customers from consuming directly from them and saving the coupon that has come to them until now? Already today, many of them are facing a sharp decline in profitability; they have no choice but to create new growth engines, beyond the existing ones. Managers who will succeed in turning this threat into an opportunity, and who will offer their customers a complete ecosystem, rather than selling individual products, will successfully navigate the transition.".
"Ofek knows how to provide precisely the business and marketing guidance needed, to forge a shared path with our marketers, bring strong technologies and products, build a strategy with them, accompany them in discussions with their clients, and give them the tools for growth," Rosenthal concludes.