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compliance for managed service providers

The Evolving Importance of Compliance for Managed Service Providers

ConnectSecure  |   Aug 23, 2023

In the past few years, compliance has emerged as an issue no managed service provider (MSP) can afford to ignore. From helping clients fulfill the stringent criteria to acquire cyber insurance to navigating increasingly complex data privacy protection laws, you have likely felt the impact and potentially discovered the business opportunity it presents. In this quick read, we’ll take a look at how much the landscape has changed and why it matters to your MSP.

The Early Days: Simpler Needs, Fewer Regulations

In the early years of IT outsourcing, the role of MSPs was predominantly transactional, usually involving hardware maintenance, software installations, and basic network management. The focus was more on operational efficiency than governance or compliance. The primary objective was to ensure that systems were up and running, not necessarily secure or compliant with any particular standards.

Emergence of Digital Threats: A Wake-Up Call

With the turn of the century, the technological landscape began to evolve rapidly, and so did the nature and complexity of cybersecurity threats. From simple viruses and worms to advanced phishing attacks and ransomware, the risk profile changed dramatically. 

Two notorious ransomware attacks, GPCode and Archievus, became synonymous with the start of the internet era. Although revolutionary at the time, they were, as TechTargets points out, rudimentary by today’s standards,  focusing on quantity over quality. (The attackers requested as little as $20 for a decryption key). Data breaches also began to make headlines, like the Yahoo breach in 2013, which, with 3 billion records compromised, remains the biggest incident of its kind to date. 

New Regulations Add Pressure

Alongside escalating threats came in the early 2000s the enforcement of the Privacy Rule for HIPAA-covered entities as well as the enactment of the Sarbanes-Oxley Act (SOX) for financial record keeping and the Payment Card Industry Data Security Standard (PCI DSS). 

This shift propelled MSPs into a new role—one that not only required technical expertise but also a deep understanding of security protocols and risk management. While these were concerns earlier too, they were now imperative, making compliance a critical issue. Still, even less than 10 years ago, compliance was still a relatively new concept for many MSPs.

Regulatory Awakening: Introduction of Global Standards

Then, the 2018 establishment of the General Data Protection Regulation (GDPR) had far-reaching implications for organizations worldwide, including MSPs. As GDPR applies to any organization that processes the personal data of EU residents, regardless of where the organization is located, MSPs had to quickly implement new data security measures and adjust policies and procedures. 

Compliance became not just an industry best practice but a legal requirement. MSPs servicing clients in healthcare, finance, and other regulated sectors found themselves navigating a labyrinth of new compliance challenges.

Data Breaches and Public Scrutiny: Compliance as a Differentiator

High-profile data breaches began making headlines, significantly affecting consumer trust. For MSPs, compliance became a selling point, a way to differentiate themselves in a crowded marketplace. Businesses started to see the value in partnering with MSPs who could not only manage their IT infrastructure efficiently but also do it in a way that complied with legal and industry standards. (Reading tip: MOVEit, Last Pass, and Other Breaches Prove Need for Proactive Security)

The Modern Era: Compliance as a Culture

Today, compliance is not merely a checklist but a cultural imperative. MSPs have shifted from viewing compliance as a necessary evil to embracing it as an essential component of their service offering. Many even employ full-time compliance officers, conduct regular audits, and invest in specialized compliance management tools.

Beyond Borders: Global Compliance Needs

MSPs often serve clients whose operations span multiple countries, each with its unique regulatory landscape. The need for global compliance strategies has never been greater. This is pushing MSPs to develop expertise in international laws and regulations, turning compliance into a complex but essential part of global business operations.

Future Outlook: Automation and Continuous Compliance

As we move into the future, compliance needs will continue to evolve. New technologies now give MSPs the ability to automate many compliance tasks, such as monitoring and reporting. The notion of "continuous compliance"—where compliance monitoring happens in real-time—is becoming a new standard.

Summing Up

From being a backburner issue in the early days to its current status as a core business function, the importance of compliance has increased manifold. This evolution is not just a testament to the growing complexities and risks associated with the digital age, but also indicative of a broader shift in how we view the role of MSPs—from mere service providers to strategic partners in navigating an increasingly complicated regulatory landscape.

How to Make Compliance Easy

Sign up for a 14-day free trial of ConnectSecure today and see how easy it is to scan your IT infrastructure for common cybersecurity compliance standards like PCI DSS, HIPAA, GDPR IV, NIST 800-53, NIST 800-171, CIS, CIS 8.0, ISO 27002, Cyber Essentials, and Essential Eight.

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Read more: 

Biden’s Cybersecurity Strategy: Will MSPs Have to Take Responsibility?

Q&A: Attorney Eric Tilds on What MSPs Should Know About Cyber Insurance

5 Ways Vulnerability Testing Can Drive Profits for MSPs