Ask A Solution Provider: What’s The No. 1 Threat To Your Business?

CRN spoke with nine solution provider executives at XChange+ 2021 to get their thoughts on the biggest threat to their business right now. Here’s what they had to say.

Security And Workforce Issues Loom Large

The Channel Company’s XChange+ 2021 conference held in San Antonio this week brought together more than 200 solution provider executives to get exclusive industry insight, build new strategic relationships, learn about emerging technologies and participate in peer networking events. These executives are on the front lines and can therefore see the biggest threats looming on the horizon.

Cybersecurity was the most frequent storm cloud cited by XChange+ attendees in conversations with CRN editors, with solution providers calling out the proliferation of ransomware and supply chain attacks in recent months. Solution providers also brought up concerns around the increased stealthiness of attackers as well as a lack of user education and training around cybersecurity.
From a workforce perspective, solution providers expressed concern about the lack of skilled talent available for hire, the increasing cost of qualified consultants and greater competition in the recruiting arena. Outside cybersecurity and labor, XChange+ attendees saw the potential for an economic downturn and challenges around customer retention as threats to their business.

Here’s what XChange+ attendees said is the No. 1 threat to their business right now.

Lack Of Skilled, Affordable Talent

Tanaz Choudhury, President, TanChes Global Management

People is the No. 1 threat to my business because just finding and retaining good and correct talent that works with your business model and your culture is hard to find. And fortunately or unfortunately, a lot of people got free money, and that created a huge dent in our industry. So we either ended up getting candidates who thought they were worth way more than they were actually worth just because of the shortage, or—on the other hand—they were like, ‘We don’t want to work.’

You have people that are so overinflating their salaries, when you actually put them on the job, they don’t know what they’re doing. They’re asking for level three prices, but they are coming in at level one. And that’s a little bit of an issue. I’m not terribly sure how that’s going to even out in the market, but I know there will be a correction at some point. There has to.

How are you addressing this problem?

More contract work. Because that way it’s a win-win-win situation. I’m already paying employment taxes and everything else that’s raised, and on top of that to not have somebody that you can rely on is just very uncomfortable for us. We are 100 percent U.S.-based. I know that’s counterintuitive since I’m from India, but we have never in the last 23 years outsourced.

There have been times where I’ve reconsidered my decision and thought about it. ‘Oh, I could have five people for the price of one person here.’ Why am I not doing that? Because I believe a little bit more in the concept of what I am bringing to the table. It’s me giving back to the economy, to the country, to the community that has allowed me to do what I am doing.

Is the issue only pay, or is skill also part of it?

I’m not finding very skilled people, too. Because another thing that’s happened with the MSP industry is people think they know everything, and they really don’t. It’s because they’re doing a little part of everything, they come in thinking their professional skill sets include all of these traits, and they don’t. And you don’t know that. They interview well and you don’t know that until you put them on the job and they’re like, ‘Oh, I’m gonna need help with this and with that.’

Have you considered working with community college students?

That’s a good solution if your business model allows it. In our case we are touting certified professionals. So I can’t bring students and put them on the job if they’re going to be certified professionals. So, again if your business model allows it, sure. That flexibility is great because you’re invoking a younger generation of the workforce. There’s nothing wrong with that. And actually, that has been a part of our thought process, which we’re going to take to retreat later this year and see what the whole team feels about starting it next year. So next summer, we may think of bringing in some interns who are in their second year or third year of college.

Lack Of Cybersecurity Resilience

Phillip Walker, Customer Advocate Leader, Network Solutions Provider, No. 498 On The 2021 CRN Solution Provider 500

Cybersecurity has become the issue of 2021 and the greatest threat to the business and clients of Network Solutions Provider, Walker told CRN. It is imperative that clients build cybersecurity resilience with things like immutable backups to limit cyberattacks including ransomware attacks, Walker said.

“The news today highlights the threats,” he said. “There are real sharks in the water, and they’re more aggressive than in the past. And I think they will be even more aggressive going forward.”

A big part of the challenge comes because attackers don’t give MSPs enough time to fix customers’ security perimeters, Walker said.

“I’ve seen my customers’ perimeters tested in a way that shows stronger winds are coming,” he said. “This includes highly sophisticated email campaigns. In the past, you would see things like an upside-down Amazon logo that would give an attack away. Today it’s hard to spot an attack.”

Other avenues of attack are also strengthening, Walker said.

“East-west traffic on the network is a growing threat,” he said. “And people are increasingly mobile. Mobile devices are not as well-protected as desktop PCs.”

Cost Of Qualified Consultants

Richard McKinnon, founder, CEO of DVBE Technology Group, No. 478 On The 2021 CRN Solution Provider 500

I’d say that the No. 1 threat is not so much qualified people that work, but actually people that want to work. There’s a difference. We’ve seen the price of hourly consultants skyrocket an average of 30 [percent] to 40 percent per person. And a lot of times it’s just getting the clients to realize where the market is, and that’s the going rate and there’s nothing I or anybody else can do about it. It’s not us trying to increase the rate. It’s just where the real market is, and most people are getting those dollars.

Will the end of unemployment benefits help?

It’s interesting in California. There’s so much stimulus money being given away where there is no money. It’s changed the landscape of all business, because even the large companies that have won these contracts are held to SLAs by the states and the counties in the federal arena. And if there’s no increase from their side and from those local, state and federal entities, there’s no way of meeting the SLAs from a prime and a sub standpoint.

How have you gotten around this issue?

I’ve been able to diversify and work on multiple states. From the past I built relationships in all 50 states. And so I have relationships that I’ve actually—even during COVID—I reached out to whether it be in California or outside the California border. And I’ve been able to—knock on wood—win those opportunities. I’ve been able to draw business and provide engineers and stuff with those companies. That’s allowed me to continue to grow the professional services.

What would you do with more employees?

As we continue to grow, yes, I will be utilizing some of the money that we’ve won from our contracts to increase the internal staff, which then can help with procurement and contracts and making sure that we’re getting stuff done so that we meet all of our diversity quotas, too, for being a disabled veteran company. One of the saving graces for me has been that I’ve had some of the same people working with me for 20 years. And so they understand the model of what we’re trying to achieve, and being services-abled in all 50 states has opened up my doors, even during COVID, to where I’ve been able to add business in all markets and revenue streams.

It‘s truly a consultants’ market right now, and people—even without a lot of experience—are demanding astronomical rates. I mean, you’ll see guys with four to five years’ experience getting $100 an hour. And that’s just where the market is at. I’ve been fortunate in the fact that a lot of companies utilize me to use my consultants and white label them as their own. So even if I’m making money, some of the money these companies are making is a lot more across the board. But I’ve also been able to sell, for the first time, sell staffing as a managed service. Clients buying books of ours, then utilizing our consultants, whether it be part time, full time. That’s just increased, also with software and hardware sales and then being able to actually do the managed services on the back piece.

User Behavior

Daniel Ihonvbere, CEO, Tech Prognosis

The human factor is always the biggest threat for Tech Prognosis since the Round Rock, Texas-based MSP can’t really control what employees do on their devices, Ihonvbere said. Employees tend not to separate business and personal activity and often end up signing up for coupon services using their work email, which results in large amounts of junk email being sent to their corporate email account, he said.

The copious amounts of inbound spam messages makes users more likely to click on emailed links or attachments that end up being malicious, according to Ihonvbere. From fake invoices and unsolicited downloads to purported online flower orders, user error around email is an issue that requires constant attention from MSPs, Ihonvbere said.

Potential For Economic Downturn

Paul Anderson, President, CEO of Novacoast, No. 260 On The 2021 CRN Solution Provider 500

The biggest threat to my business today is a downturn in the economy that causes large enterprises to cancel projects or put them on hold. I have a big bench of engineers and developers, about 200, and if business dries up, it’s painful.

Is that COVID-19-related?

It’s only COVID-related as it affects the economy. Mask mandates, lockdowns—anything that has a negative impact on businesses operating as normal has an impact. Most of my clients are very large enterprises. So things that impact the national or global economy can delay projects. The rising inflation in the U.S. is certainly a concern for me. That impacts consumer spending, which in turn trickles into lots of industries.

The projects themselves aren’t specific to any one technology vertical, they are simply projects that are on the schedule to get done as time and money permits. When corporations have revenue shortfalls, then IT projects get stalled or canceled. That’s my biggest corporate concern.

Supply Chain Security

Terry Speigner, President, CEO, NGEN

The recent breaches of SolarWinds, Kaseya and Accenture have highlighted the risks associated with supply chain security, and Latham, Md.-based NGEN has invested considerable resources into ensuring that vendors it trusts are protected and safe, Speigner said. Companies at the top of the supply chain pyramid will be subject to a lot more scrutiny going forward, according to Speigner.

Solution providers should evaluate the security hygiene of their vendors they use, ensuring that best practices around everything from patching to multifactor authentication are followed, Speigner said. Given the increased scrutiny enterprise customers are subjecting suppliers to and how dependent solution providers are on OEM and ISV vendors, he said the channel runs the risk of being squeezed.

Competitiveness Of Recruiting

Michael Hadley, President, CEO of iCorps Technologies, No. 493 On The 2021 CRN Solution Provider 500

Recruiting. We have more work than people, especially in specialized industry and the higher-end technical people.

Why?

There’s a lot of companies fighting for the same people is one reason. The other reason is that full-time position versus consulting position. You kind of have to have an entrepreneur mindset to be a consultant. For that full-time position, you want people to not only be strong technically, but be very strong personally—that’s tough to find. We won’t hire just anyone. We never stop recruiting. Never. If we find a good person, we’ll hire them, even if we don’t have the work.

We’re actually in the process of adding a full-time recruiter. We have HR people that recruit, but we’re going to hire someone dedicated to it. … It’s even harder to find good people now [since the COVID-19 pandemic]—it’s made it worse. I think people are unsure about a lot of things, so they don’t want to be uncertain about their employment.

Anything To Do With Security

John Douglass, President, Pileus Technologies

The big threat to Pileus’ business in 2021 is anything to do with security, Douglass told CRN.

“Mainly, it’s the end user not understanding the need for security,” Douglass said. “So we’re using Breach Secure Now for training, signing up our customers so they get weekly and monthly training. The users get quizzed on what they learn, which lets our customers and our own people see how well they are doing.”

With the slowdown in the COVID-19 pandemic, Pileus has once again been able to target customers’ security issues with good old-fashioned face-to-face contact including webinars and a restarted lunch-and-learn program, Douglass said.

Customer Retention

Daron Plummer Jr., CEO, BizTek Connection

Customer retention because the threat landscape has really evolved. If we don’t evolve as a company to stay up to date on what’s what, then we’ll definitely lose to our competitors.