Chapter 1:
What to Know Before You Start
Chapter 1 is essentially “Cybersecurity & Compliance 101.” If you already understand these topics, consider this a quick refresher (or skip ahead to Chapter 2). You can always come back to this chapter to review!
What is Cybersecurity?
Since the internet’s inception, bad actors have found new and creative ways to scam people online, steal their data, and compromise their digital infrastructure. And as the internet has become more sophisticated, so have these cyber threats.
Fortunately, there’s a solution: cybersecurity! (surprise, surprise)
Cybersecurity is the practice of protecting systems, networks, and data from digital attacks. The goal is to use compliance tools to safeguard organizations against unauthorized access, data breaches, ransomware, and other cyber threats
Why Does Cybersecurity Matter to MSPs?
Data Protection:
MSPs like you are responsible for protecting not just your data but also your clients’ data. You often handle sensitive information (such as financial records, personal health data, intellectual property, etc.) that could lead to reputational damage, economic loss, and legal liabilities if exposed in a breach. That’s a lot of responsibility!
Business Continuity:
In the event of a data breach, MSPs leverage cybersecurity and compliance tools in tandem with backup solutions to maintain operational integrity and business continuity — for your business and all of your clients’ businesses. The goal is to reduce or eliminate downtime and data loss, which mitigates the risk of an attack.
Legal Requirements:
Many industries have regulatory and compliance requirements designed to protect sensitive data. MSPs must ensure clients comply with these regulations to safeguard critical data and avoid penalties and legal fees (that’s where compliance software comes in, but more on this later).
Reputation & Trust:
The MSP-client relationship is built on trust. A robust cybersecurity presence helps enhance the trust between you and your clients and contributes to a positive reputation in your industry. By staying current on emerging threats and proactively preventing breaches, you can strengthen your relationship with your clients (and earn mad props for every breach you prevent!).
What Does Cybersecurity Mean For Your Clients?
Risk Management
Many of your clients are likely not very tech-savvy — they rely on your expertise to help them identify risks and potential vulnerabilities within their infrastructure. Cybersecurity and compliance software is essential for managing these risks.
Financial Protection
Cybersecurity breaches can lead to expensive legal fees, regulatory fines, and business loss due to downtime and reputational damage. Not only is this a massive headache, but it can literally kill your business — or your clients’ businesses. By ensuring your clients have a robust cybersecurity solution, you can minimize the risk of financial loss.
Scalability
Every owner wants to grow their business, but very few consider the risks of growing too fast — especially if their infrastructure can’t keep up. Effective compliance and risk management software solutions allow your clients to onboard new technologies and expand their operations without exposing their business to increased risk, all so they can scale with confidence.
Peace of Mind
Security breaches are a massive pain point — something that surely keeps your clients up at night. Make sure your clients can enjoy the peace of mind that comes from knowing an expert protects their infrastructure. This sense of security allows your clients to operate their day-to-day business and do what they do best without worrying about cyberattacks.
What is Compliance?
Compliance refers to the rules and regulations that help protect sensitive data relevant to specific industries, regions, or business operations. Each sector and region has unique compliance requirements that all organizations must follow. Compliance includes legal and ethical regulations on personal data protection, privacy, and security.
Why Does Compliance Matter to MSPs?
Focused Cybersecurity
Official compliance regulations help MSPs focus and prioritize their cybersecurity efforts — that means no more guessing games! These regulations give you a framework to roll out cybersecurity solutions, ensuring there are no gaps in the process.
New Revenue Stream
Selling Compliance as a Service opens up a new revenue stream for MSPs. By helping your clients become compliant (and maintain compliance over the long term), you can safeguard them against threats and add a new source of recurring revenue to your books.
Cyber Threats Trending Downmarket
Bad actors are increasingly targeting smaller businesses over large enterprises. Small and medium-sized businesses often lack the resources, budget, and expertise to defend their businesses properly — many falsely assume they are not big enough to be a target. Unfortunately, 82% of cyberattacks target businesses with fewer than 1,000 employees. Compliance as a Service providers can avoid this trend by proactively selling compliance and risk management to SMBs, equipping them with the solutions necessary to safeguard against threats.
What Does Compliance Mean For Your Clients?
Increased Responsibility
This can’t be said enough — many of your clients are likely not tech-savvy or experts in compliance and cybersecurity. Adhering to compliance regulations adds another headache to their list of responsibilities, which is why they need your help.
Process Optimization
As your clients work towards becoming compliant, they must refine and optimize all internal processes and systems to ensure they comply with various compliance frameworks. Sometimes, this is a full-scale overhaul of how they do business. At the very least, an organization-wide systems audit and process breakdown are required to identify process gaps that could lead to vulnerabilities. Many of your clients wouldn’t even know where to start. That’s where you come in.
Need For Expertise
Compliance is simply too substantial to be an afterthought. Most clients don’t have the time, resources, and expertise to become compliant on their own, and hiring a qualified information security manager is a considerable expense they can’t (or don’t want to) pay for. By taking the burden of compliance off your clients and equipping them with compliance management software, you can fill a need in their infrastructure and cement your position as your clients’ go-to IT partner — all while saving them money compared to hiring an internal resource.
Current Landscape and Emerging Trends
Cyberattacks and MSPs
There is no shortage of data to highlight the risk cyberattacks pose to MSPs and their clients. According to data collected in the ScalePad Trends Report from early 2024, cybersecurity threats are the second-highest external concern for MSPs (behind inflation) — 55.9% of MSPs offer cybersecurity services, and 35.6% of MSPs say cyber threats are the top external concern for their business.
MSPs also reported that cybersecurity is their second most crucial offering behind cloud services, showcasing the shift towards cybersecurity as a must-have service. If you don’t already offer cybersecurity and IT risk management, take this as your wake-up call!
Data breaches are up 68% yearly, with 2,200 breaches occurring daily — it’s not a question of if a cyber attack will target your clients, but when. And the risk is only increasing. The annual cost of cybercrime is predicted to hit more than $23 trillion in 2027, up from $8.4 trillion in 2022. If cybercrime were a country, that GDP would make it the third largest economy in the world after the USA and China!
All this to say… the market is ripe with opportunities for MSPs who want to protect their clients by offering cybersecurity, risk management, and compliance services. And if you don’t make the move towards offering these services, you will fall behind other MSPs in the market.
MSP Cybersecurity Stats
55.9%
35.6%
~85%
Cyberattacks and SMBs
While small businesses rarely make the news when they are the victim of a cyberattack, that doesn’t mean it doesn’t happen. In fact, SMBs make up the majority of cyberattack victims. In 2021, 61% of all SMBs in the US were targeted by a cyberattack. More recently, over 90% of breaches impacted SMBs, demonstrating how vulnerable these businesses are to cyber threats.
And it’s not just an inconvenience or a minor risk of downtime and data loss — these breaches pose an existential threat to small businesses. A UK study showed that 60% of small businesses will close within six months of suffering a cyber attack, showcasing the long-term impact of poor cybersecurity and compliance measures.
Speaking of existential risk… 46% of ransomware attacks in 2023 led to losses of between $1 million and $10 million, which is enough to put the majority of SMBs out of business altogether. Could your clients comfortably absorb seven-figure losses, compounded by data loss, downtime, and a hit to their reputation? Probably not.
And since 82% of breaches target businesses with fewer than 1,000 employees, SMBs are especially vulnerable. All together, these stats paint a pretty clear picture — cyber breaches are a massive expense for SMBs and threaten their very existence.
Because of this ever-present threat, cyber insurance premiums have increased 30-40% — another significant expense for small businesses. But many insurance companies offer discounts for good security posture. By maintaining adequate cybersecurity measures, you can reduce your clients’ insurance premiums, which goes right to their bottom line.
SMB Cybersecurity Stats
Data Breaches
68%
2,200
82%
The average cost of a data breach globally is $4.88M in 2024 — a 10% increase over 2023
Ransomware
62%
$46,000
46%
Of ransomware attacks in 2023 led to losses of $1M-10M
Average ransomware payments spiked from $812K in 2022 to $1.5M in 2023
Impact on SMBs
61%
of all SMBs in the US were targeted by a cyberattack in 2021
90%
of breaches impact SMBs over large enterprises in 2024
60%
Cyber insurance premiums for SMBs have increased 30-40% year over year
The Role of MSPs in Compliance
MSPs are uniquely positioned to support businesses in achieving and maintaining compliance. Your clients see you as their go-to source for IT-related issues (you likely already manage the bulk of their technology infrastructure). The increased focus on compliance allows MSPs like you to add a compliance offering to your list of services and better support your clients on something they need.
How exactly do you start selling compliance services to your clients?
Check out Chapter 2 to learn how to identify your clients’ compliance needs.
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