Zscaler Targets Increased Reliance on Partners in Push for $5B ARR | CRN

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Kyle Alspach

The cybersecurity vendor is seeking to achieve comprehensive networking between its sales and partner organizations and is doubling down on the channel through a series of investments, executives said at its Zenith Live conference this week.

The head of the Zscaler channel Karl Soderlund

Zscaler is implementing several changes aimed at enabling the cybersecurity vendor to rely more on channel partners as it seeks to accelerate its growth and reach $5 billion in annual recurring revenue, executives said this week.

In interviews with CRN, and during a partner summit on Thursday at the company’s Zenith Live conference in Las Vegas, Zscaler executives outlined a number of new investments along with an overhaul of its sales process, all of which aim to bring much more than one channel: focused strategy to drive its next phase of growth.

The company also touted the tremendous opportunities available to partners in helping customers transition from traditional network security technologies, such as firewalls and VPNs, to Zscaler tools that can help enable a zero trust security posture.

[Related: Zscaler CEO Jay Chaudhry’s 5 Boldest Statements At Zenith Live 2023]

“Until now, our partners have been very important, but it’s been almost a complementary relationship,” said Karl Soderlund, senior vice president for worldwide partners and alliances at Zscaler, in an interview with CRN. “Moving forward, there will be a complete connection between our sales force and partner community to the point where we are retraining our entire global sales organization on how to engage [the channel] and how to be a better partner for our partner community.”

Zscaler also plans to take “dozens” of new hires to its channel team over the next year, including sales, technical, marketing and customer success support roles, Soderlund said.

Jay Chaudhry, founder and CEO of Zscaler, told CRN that the company is “definitely” planning to rely more on partners in the future.

Working with partners “is critical for us to accelerate the growth of our business to the next $5 billion stage [in ARR] that we’re trying to achieve,” Chaudhry said in the interview.

Zscaler revealed that it’s now generating more than $1.5 billion in annual recurring revenue, though it hasn’t publicly shared a target date for reaching $5 billion in ARR. The company’s growth has been fueled in recent years by growing customer demand for security technologies that can protect remote and distributed workforces, such as Zero Trust Network Access (ZTNA), which aims to offer more secure than VPNs for connections to corporate applications and data .

“More Engagement”

Solution providers who spoke to CRN this week at Zenith Live said they’ve already started to see increased attention from Zscaler.

“I’ve seen a huge shift in really greater engagement at the partner level over the last couple of years,” said Kurt Wagner, director of cybersecurity services at BlackLake Security, Texas-based in Austin, TX. 282 on CRN’s Solution Provider 500 for 2023.

Wagner said he recently spoke with Soderlund and other members of Zscaler’s channel team, and it’s clear that “the channel seems to take priority.”

Peter Ballas, Director of Sales for New York and New Jersey at GuidePoint Security, # Ranked 52 on CRN’s Solution Provider 500 for 2023, he also said he’s seen Zscaler become “much more collaborative.”

“I’ve seen a noticeable change in how they’ve approached us,” Ballas said. “I’ve been at GuidePoint for five years and I think the relationship with Zscaler has never been stronger.”

Eduardo Ibanez, co-founder and CEO of San Ramon, California-based cybersecurity consultancy Dazzpers, applauded Zscaler’s pledges during the Partner Summit on Thursday, including a pledge that channel partners will be invited at the beginning of the supplier’s sales in August.

“The fact that we’re welcome to join that sales pitch, and really be aligned and educated on new features, that’s really cool,” said Ibanez.

Often, vendor sales kickoffs are limited to internal team members, but some of the information that’s later passed on to partners is lost in translation, he said.

“It’s best if you can get it straight from the source,” Ibanez said. “The fact that they think that way, I really like.”

During Thursday’s partner summit, Soderlund said the changes Zscaler is making to ensure its sales and partner teams are aligned should be apparent very soon.

“In the short term, you won’t be able to tell the difference between who works in the sales organization and who works in the partner organization, because we’re all going to work in a similar way,” he said.

“Constant Improvements”

Soderlund, who joined Zscaler from rival supplier Palo Alto Networks in March, told CRN that the biggest changes during his first few months at the company included setting out plans to increase his investment in partners, including through hiring for the channel team.

Zscaler is also increasing its operating budget, he said, “to do more events with partners, to generate more demand with them [and] to increase the number of employees financed by partners.

In terms of the partner program in general, “there won’t be a big reveal” in terms of an updated new program being introduced in the near future, Soderlund said.

“What we are trying to do is constantly make improvements [so that] every 90 days is better than the previous 90 days,” he said.

While Zscaler has 40 percent of Fortune 500 companies in its customer base, the vendor plans to expand its strategy by increasingly targeting small businesses, executives said.

In part, Zscaler plans to do this “by increasing our investment in distribution,” Soderlund said, noting that the company plans to announce a global distribution leader “within weeks.”

Currently, the percentage of Zscaler’s overall business that goes through distribution is less than 10 percent, he said.

“If I compare it to other companies in the industry, it should be above 50 percent. This is the opportunity we have,” Soderlund said.

For Zscaler, in terms of reaching small businesses, “the biggest obstacle is awareness,” he said. “Awareness comes through the partner community.”

Ultimately, “you will see more of us” in the future, Soderlund told partners at the event on Thursday. “We have no travel restrictions. We will be in your offices.

Zscaler’s message to partners is simple, it said: “We want to engage with you.”

    Learn more about Kyle Alspach

Kyle Alspach

Kyle Alspach is Senior Editor at CRN specializing in cybersecurity. His coverage includes news, analysis, and insights into the cybersecurity industry, with a focus on fast-growing segments such as cloud security, application security, and identity security. He can be reached at kalspach@thechannelcompany.com.

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