Improving Profitability for MSSPs Targeting SMBs

In recent years the adoption of cloud services, including
security services, has risen significantly. Gartner predicts
that spending on public cloud products will reach over $207
billion by 20161 and Frost & Sullivan in its 2012 report on the
Global Managed Security Services reported a market size
of nearly $7 Billion with a growth rate of over 18% for the
forecast period2. Enterprise customers have driven much of
the recent growth, but as the market is maturing, the SMB
(Small and Medium Business) sector is now beginning to
adopt in larger numbers. Research firm AMI anticipates that
SMB spending on security services will rise over 10% per
year through 20163. The challenge with the SMB adoption
rate is that the typical small and medium business expects
lower price points, and in turn is pushing for less expensive
services with many of the features that Enterprise-sized
customers would expect. Standard deployments, including
virtualized solutions, can still be expensive and deter the
SMB from buying cloud security services. This same
expectation can also make it difficult for providers to deliver
services at a profitable price point.
Fortinet helps solve these challenges by leveraging
Service Provider platforms and a Multi-Tenant VDOM
(Virtual Domain) configuration to meet both the SMB and
Enterprise service levels and price points. VDOMs enable
a single FortiGate unit to split its resources and function as
multiple independent units with customized policies and
controls. Traditionally, Enterprise customers require highly
customizable solutions utilizing a dedicated VDOM per
customer to support those requirements. Enterprises are
also willing to pay the market price for these services.
By contrast, the SMB sector generally cannot afford to
pay what an Enterprise can yet requires similar services.

In order to address these challenges many providers have
discovered that while SMB customers need the same
kinds of services, they often require less customization than
enterprise customers.
This white paper discusses a configuration option that
allows the service provider to address enterprise and SMB
managed services requirements, at a reasonable margin,
on a single Fortinet chassis. This can be done by using
a combination of dedicated and multi-tenant VDOMs to
provide both service requirements. Dedicated VDOMs for
enterprise customers needing a high level of customization
and multi-tenant VDOMs for SMB customers delivered in
pre-packaged control bundles. While this approach will not
address every SMB environment, it does give providers
another model to choose from that can lower costs of
deployment and therefore lower service pricing while
keeping margins intact.
The Growing Need for SMB Focused Managed Security Services

Managed security services have matured significantly over
the past decade. Traditional managed security services have
largely been limited to managed firewall and VPN. Over the
last 5 years, the demand for other security services has
increased significantly. Today, managed security services
include a wide range of services including firewall, Layer 7
Application Control, IDS/IPS, content filtering, anti-virus,
and many others. The interest and growth in these services
has been strongly correlated with the sharp escalation in
regulatory requirements felt across industry verticals and
dramatic increase in security breach notifications in the media.

Many MSSPs have focused on the enterprise as the primary
customer for security services. Given that enterprises had
the most complex environments and the financial resources
to afford MSSPs, this focus made sense. In recent years,
MSSPs have begun targeting mid-sized enterprises, but
many have avoided the SMB market entirely. However,
the SMB segment has been facing increasing security
challenges and in many cases have the same challenges as
large and medium enterprises.
The most recent Verizon Data Breach Investigation report
illustrates the need for security for the smallest organizations.
As Table 1 illustrates, out of 855 reported breaches – 612,
or just over 71%, occurred to companies that had between
1 and 100 employees. These companies do not have the
infrastructure in place to prevent attacks and yet are being
targeted more frequently. There is plenty of opportunity for
providers to offer security to the SMB segment.

The Traditional Approach to Using Fortinet equipment in Managed Security Service Provider Environments

As the complexity of the service increases, the amount of
administration time increases, thus increasing the overall
cost of goods sold.
It is common for Service Providers to size hosted service
bundles using an amount of bandwidth enforced with tiered
service levels. The example below is just one illustration of
how a service provider might define their services. There are
many variations depending on the number of services that
the provider chooses to offer.
In a traditional approach, a provider would assign one
Fortinet Virtual Domain (VDOM) to every customer, giving
the customer its own environment that could be controlled
and managed by both the provider and the customer. The
full breadth of UTM services could be allocated based
on each customer’s environment. While this is an ideal
scenario for enterprise customers who have the need for
shared administration and dedicated ports, the price of this
solution is fixed to a large extent by preventing economies of
scale from being achieved. There is another model that still
provides dedicated security, but allows providers to share
the cost of VDOMs amongst multiple customers. This allows
for service providers to lower their prices while offering
similar services and service levels to their customers.

Advantages of Using a SingleVDOM for Multiple Customers
Small and Medium businesses are often amenable to a
more standardized security offering and may have less
stringent co-administration and compliance requirements
than enterprise customers. As mentioned earlier, one of the
key challenges for providers seeking to address the SMB
market has been providing security services at a price point
that is palatable to the SMB. Table 2 shows average industry
pricing for some of the most common managed security
services as determined by Frost & Sullivan. 4 These annual
prices are far too high for most SMBs.
Fortinet gives providers another option. Provisioning
multiple customers into a single VDOM. Because every
Fortinet appliance has the ability to perform advanced
routing functions, Fortinet enables service providers the
ability to route and segment customer traffic using Virtual
LANs (VLANs) and Virtual Routing & Forwarding (VRF). By
segmenting customer traffic via VLANs using existing VDOM
technology, providers can leverage Fortinet equipment to
provide secure segmentation of customers into standardized
support bundles, taking advantage of economies of scale to
lower costs.
Multi-tenant VDOM Considerations
While the multi-tenant VDOM model opens up the possibility
of moving more customers onto a single appliance with
lower licensing costs, there are still considerations that the
provider has to keep in mind. The following considerations
have to be evaluated by the provider based on individual
customers and the size of their managed service operation.

Implementation Sizing
Fortinet estimates user count, per multi-tenant VDOM,
to be around 500, where the customer’s throughput is 1
to 2 Mbps with an average of 10 users per customer. On
chassis-based systems like the 5140, this deployment could

use a separate blade within the chassis, supporting 5,000
users running about 50K concurrent sessions (assumes
an average of 10 sessions per user and 100% utilization).
Smaller systems can be specified based on growth
expectations and service complexity relative to hardware
resource consumption.
These numbers are greatly simplified and should only serve
as a guideline that will vary depending on the service options
deployed. A single blade dedicated to a multi-tenant VDOM
with other individual VDOM customers running on separate
5001C blades is optimal to insure shared VDOM customers
don’t impact performance on the same blade. Fortinet
recommends that the provider purchase dedicated blades
for this low end service in order to make provisioning easier,
as well as manage capacity.
Session Tables
While traffic is securely separated by VLANs, Multi-Tenant
VDOMs share firewall session tables, this can be an inhibitor
for maintaining compliance in highly sensitive security
environments. Many SMB customers are not going to
be concerned with sharing session tables if their traffic is
securely separated via VLAN. VLANs are used extensively in
the LAN and by the service provider for traffic segmentation
and security.
Customer Self-Service
In order for customers to be able to co-administer the
firewall in a shared VDOM, the service provider would have
to integrate a customer service portal using the Fortinet
Software Development Kit (SDK) with FortiManager. This
is due to FortiManager’s self service administration being
allocated per VDOM. Alternatively, no co-administration
would be allowed and service provider must handle all
change requests. Customers wanting this level of service will
often be willing to pay for an upgrade to an individual VDOM.

Rule Implementation
Operationally the MSSP will need procedures to ensure rules
are grouped together, or identified with a naming convention
specific to each customer to assist in the change request
and troubleshooting process.
Overlapping Addresses
Assuming most use private address space, everyone must
have unique addresses or use public IPs within a shared
VDOM. This will also drive the limited number of customers
on a VDOM. When a customer has overlapping space and
no public IPs, they would need to be in a separate VDOM
or card. This is also a limitation for IPSec VPNs due to
overlapping private addresses.
Documentation of IP addresses
For reasons discussed regarding overlapping addresses, IP
address specification and documentation is something that
will need to be very closely tracked and reviewed before new
customers are provisioned to ensure duplicate IPs are not
configured into a single VDOM.
Resource Allocation
Per VDOM resource allocation can be modified to limit or
guarantee a certain amount of sessions. This will keep this
VDOM from consuming resources used by higher paying
customers. Using VLANs to separate customers will be
required each customer to have a unique VLAN ID for logical
traffic separation.

FortiManager Considerations
Strict naming conventions for security objects will have to
be enforced so management of multiple customers can
be tracked and troubleshooting simplified. FortiManager
provides a tagging feature that can be used to uniquely tag
each customer’s policies. The Fortinet SDK allows providers
to develop customizable customer facing web portals,
allowing a customer’s IT staff to make changes to a number
of configurations such as whitelists and web filtering rules.
FortiAnalyzer Considerations
Analyzer or SIEM reporting – running reports by VDOM
will not allow separate customer reporting, will need to run
reports by VLAN ID, or IP address. This will require extra
work from the provider to configure.
A Comparison of Single and Multi-tenant VDOM Pricing

The determining factors in choosing the proper Fortinet
equipment to provide security services is the overall
price and margins that an MSSP can generate from their
business. This section will illustrate the significant cost
savings that can be achieved through the use of a multitenant
model. These cost savings can then be used by
the provider to meet SMB customer price points while
maintaining profitability. A mix of dedicated and multitenant
VDOMs can provide a solid ROI for service providers
and allow them to meet the needs of SMB and enterprise
customers on a single appliance.

The SMB segment is proving to be an easy target for
attackers due to the smaller budgets and fewer resources
these businesses can deploy to stop cyber threats.
Unfortunately, margin-focused Cloud MSSPs have
avoided this market due to the high price sensitivity of
SMB companies. Cost considerations have always been
a limitation for SMB companies weighing their IT security
options, regulatory requirements now affect many of these
small companies, requiring them to look for partners to
provide broad security at lower price points.
This configuration option allows the service provider
to address enterprise and SMB managed services
requirements, at a reasonable margin, on a single Fortinet
chassis. Dedicated VDOMs can be used to address
enterprise customer’s needs for customization and higher
security. Multi-tenant VDOMs can be used for SMB
customers and through simplified pre-packaged control
bundles; cost of goods sold can be reduced.
Fortinet allows MSSPs to deliver cutting edge security
technologies to SMBs, while preserving their margin