The flexible contract – integrating usage-based practices into the channel

Dean Porter, UK country manager at F-Secure on how its time for service providers to embrace usage-based security.

Posted 16 December 2021 by Christine Horton

We’ve all felt the frustrations of signing up for a subscription and realising six months down the line that we’ve barely used it – but tough luck because we’re bound to a 12-month contract. Equally, as consumers, we’re also given the option of only signing up to services as and when we want them thanks to the popular pay-as-you-go service. Both ends of the spectrum can offer great value, but can also incur regrettable costs.

Long-term contracts are commonplace in the world of business, especially in cyber security. But while organisations may have appreciated these agreements in previous years, the sudden change of pace in digital transformation has caused many to reconsider their priorities. Changes to network infrastructure and processes mean a company may only need a service for a couple of months, but the only offer made is a 24-month contract. If the service in question is fundamental to the company’s evolution, these binding agreements can throw a spanner in the works: either you pay unnecessary costs for the minimal service you need, delay the project, or ditch it altogether.  

Usage-based contracts offer a valuable alternative and have started to take hold in many industries. But the cybersecurity sector is yet to jump on board. For the IT channel, who too are often bound to these long-term agreements, this presents a major opportunity to help drive change in the industry.

A breakdown of usage-based contracts

In essence, usage-based practices are services where businesses are only charged for what they use within an agreed timeframe, rather than having to pay regardless of their activities. A few years ago, when companies found their comfortable level of business operations, they would usually be happy to sign up to a long-term agreement to maintain their services. Now however, everything has changed. The pandemic triggered an overhaul of working practices, demanding cost cutting solutions and greater agility. Flexibility became the new watchword, and it remains high up on business priorities almost two years later.

There are some services that have already integrated usage-based contracts into business offerings, such as web hosting and cloud storage. Cybersecurity is one of the most fast-paced industries in modern business, and so it could greatly benefit from the flexibility offered by usage-based approaches.

How can the channel help?

Showing customers that you care about assisting them in their business is the key to a successful channel partnership. And let’s face it, only charging a customer for the services they use is a brilliant way of demonstrating your genuine commitment. Surely, it’s better to take a minor hit to your short-term income to guarantee a long-term relationship, which will ultimately be far more profitable?

Cybersecyrity providers can strengthen their portfolios with usage-based contracts, especially if they’re able to deliver services that can easily be scaled up or down depending on the customer’s current needs. Locking a company into an agreement that might not suit them in the long term will only damage the partnership.

The flexibility of usage-based services is particularly important for organisations with smaller budgets, such as the public sector. These businesses often don’t have the same available funds as private companies, so only having to pay for what they use in a month – rather than a fixed contract – will greatly aid their long-term success.

A fundamental part of the usage-based approach is a central management portal for all services. Not only is this beneficial for visibility in general, but it also helps channel partners manage their portfolios. One of the important considerations for the channel is to ensure they’re not delivering conflicting services to their customers, and so they must take the necessary time to construct a collection of products that will benefit the customer, and work well together in a stack. When being operated from a single portal, these services can be closely monitored and adjusted as necessary, thanks to the flexibility of the usage-based approach.   

Pay-as-you-go security

The cybersecurity sector has a unique requirement, in that companies must be prepared to do a complete 180-degree turn should the landscape demand it. The development of a new cyber threat can trigger rapid growth or an overhaul of priorities, and so new solutions may have to be brought on board to respond.

The flexibility offered by this innovative approach is invaluable for cyber companies. Not only would costs be reduced in times of quiet, but businesses could immediately scale up services should the need arise. By integrating usage-based contracts into their portfolio, the channel can actively support the cyber industry in its fight against attackers and by removing the complexities of paperwork and contracts, channel partners will strengthen their relationship with their customer base. The best partnerships are founded on mutual understanding, not just a mere financial transaction.

However, this trend has not yet caught on in the cybersecurity industry. The channel is in a strong position to kickstart the shift towards flexible contracts and, in doing so, paving way for a future based on stronger partnerships and greater long-term successes.