The Conflict of Interest Hiding in Your Security Budget

Introduction

Most business owners wouldn’t hesitate to ask a financial advisor how they’re compensated. It’s a normal question, because everyone understands that advice and commission sitting in the same place is worth knowing about. The advisor may be excellent and the recommendation may be the right one, but the question is still reasonable.

Almost nobody asks the same about cybersecurity.

Security products are usually purchased through a reseller, an integrator, or a managed provider who also serves as the advisor. That firm assesses the environment, identifies gaps, and recommends products. It then sells those products, and it earns a margin on what the client buys. The recommendation and the revenue come from the same organization, and in most cases the client has no visibility into how much of the price is for the product and how much is marked up.

This is the standard model. It isn’t hidden or unusual. But it is worth examining, particularly during budget season, when the year’s purchases get decided.

What the Model Quietly Encourages

The value-added reseller arrangement developed for sensible reasons. Vendors need channel partners, businesses need help navigating a crowded product landscape, and someone has to do the work of matching a company to the right tools. None of that is objectionable.

The difficulty is structural rather than ethical. When a firm’s revenue depends on product sales, several things become true regardless of anyone’s intentions. Recommending fewer products is financially worse than recommending more. Telling a client that an existing tool is sufficient generates no revenue at all, while replacing it does.

None of this means resellers give bad advice. Many are genuinely excellent, and plenty routinely tell clients not to buy things. The point is narrower: the client cannot easily distinguish good advice from well-delivered sales, because both look identical from the outside. .

That uncertainty has a real cost. It is one reason security stacks grow faster than security capability, and one reason businesses end up with overlapping tools nobody fully uses.

Three Questions Worth Asking

None of the following are confrontational, and any firm operating transparently should be able to answer them:

How are you paid on what I buy? Not whether the firm earns margin, since most do, but how much and on what. A clear answer is a good sign. A vague one is informative in itself.

Does your recommendation change depending on what I purchase? This is the heart of it. If the advisor’s compensation is identical whether you buy three products or none, the advice is easier to take at face value. If it isn’t, the advice may still be correct, but it may deserve more consideration.

Can I see what this product actually costs? In most arrangements the answer is no, as the markup & original price is bundled into a single figure. Bundled pricing is common and often reasonable, since resellers negotiate rates they aren’t always free to disclose. What matters is whether the conversation is an easy one to have.

A firm that welcomes these questions is demonstrating something meaningful. A firm that deflects them has answered anyway.

Why This Matters More Now

Two things have made the incentive question more consequential than it was a few years ago.

The first is the sheer size of the product landscape. There are now hundreds of credible security products across dozens of categories, many overlapping substantially. Choosing among them is genuinely difficult, which means businesses depend more heavily on advice at exactly the moment when the advice is hardest to verify.

The second is budget pressure. Security spending has grown steadily while most other technology budgets have been scrutinized, and that combination invites exactly the wrong kind of purchasing. Buying more becomes the visible signal that security is being taken seriously, whether or not the purchases connect to any coherent plan.

A Structure That Removes the Question

There is another way to arrange this, and it is worth understanding as a model rather than as a product pitch.

If a firm earns nothing on what the client buys, the incentive problem disappears entirely.
Advice becomes advice. The advisor has no reason to recommend more products, no reason to favor one vendor over another, and no reason to replace a tool that’s already working.

This is how we built our Secutor Insider Direct program. Members are paired with an expert Fractional CISO or CISO Advisor who carries no commission, and customers procure their security products at Secutor’s own cost. The entire business model runs on a fixed membership fee, which means the recommendation and the revenue are structurally separate. There is no version of the arrangement where advising a member to buy more improves Secutor’s outcome.

The practical effect shows up at onboarding. New members receive a NIST Cybersecurity Framework assessment alongside a full mapping of their existing security products, down to vendor, license count, price, and renewal date. That mapping lets us determine what a business already has before anyone discusses what it might need, which is the reverse of how most security procurement begins.

Final Perspective

The question is not whether your current provider is trustworthy. Most are. The question is whether you can tell, and whether the structure of the relationship makes that easy or difficult to determine.

Businesses examine incentives carefully in nearly every other area of spending. Security deserves the same scrutiny, particularly as the budgets grow and the product landscape becomes harder to navigate alone.

If you would like to understand what your security spending looks like without a margin attached to the advice, we’d be happy to walk you through it.

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Jason Fruge

Consulting Chief Information Security Officer (CISO)

Jason Fruge is an accomplished Consulting Chief Information Security Officer at Secutor Cybersecurity, bringing over 25 years of deep expertise in information security. His storied career includes leading and managing robust security programs for Fortune 500 companies across retail, banking, and fintech sectors. His current role involves providing strategic guidance and advisory services to clients, focusing on security governance, risk management, and compliance.

Apart from his consulting responsibilities, Jason is an active member of the global cybersecurity community. He is a Villager at Team8, a prestigious collective of senior cybersecurity executives and thought leaders. Additionally, he serves as an Advisor at NightDragon, an innovative growth and venture capital firm specializing in cybersecurity and enterprise technologies.

Jason’s tenure as a CISO is marked by a proven track record in developing and implementing comprehensive security policies and procedures. He adeptly leverages security frameworks and industry best practices to mitigate risks, safeguarding sensitive data and assets. His expertise encompasses incident response and root cause analysis, where he has notably managed cyber incidents to prevent breaches and minimize business disruption and customer impact.

A key aspect of Jason’s role has been the creation and facilitation of executive and board-level cyber risk committees, ensuring organizational alignment and awareness. His responsibilities have extended to maintaining compliance programs for standards such as PCI and SOX, as well as leading privacy and business continuity programs. Holding prestigious certifications like CISSP, QSA, and QTE, Jason is also a recognized thought leader, contributing articles on cybersecurity to InformationWeek.

Jason’s passion lies in driving innovation and fostering collaboration in the cybersecurity field. He is currently seeking an executive CISO role in a leading retail, finance, or fintech organization, where he can continue to make significant contributions to the cybersecurity landscape.

Jennifer Bayuk

Cybersecurity Risk Management Expert

Jennifer Bayuk is a highly esteemed cybersecurity risk management thought leader and subject matter expert at Secutor Cybersecurity. Her extensive experience encompasses managing and measuring large-scale cybersecurity programs, system security architecture, and a wide array of cybersecurity tools and techniques. Jennifer’s expertise is further deepened with her proficiency in cybersecurity forensics, the audit of information systems and networks, and technology control processes.

Jennifer’s skill set is comprehensive, including specialization in cybersecurity risk and performance indicators, technology risk awareness education, risk management training curriculum, and system security research. Her academic achievements are noteworthy, holding Masters degrees in Philosophy and Computer Science, and a Ph.D. in Systems Engineering. This strong academic background provides a solid foundation for her practical and strategic approach to cybersecurity challenges.

Certified in Information Systems Audit, Information Systems Security, Information Security Management, and IT Governance, Jennifer is a well-rounded professional in the field. Her credentials are further enhanced by her license as a New Jersey Private Investigator, adding a unique dimension to her cybersecurity expertise.

At Secutor, Jennifer plays a pivotal role in steering cybersecurity initiatives, aligning them with organizational risk appetites and strategic objectives. Her ability to educate and train in the realm of technology risk has been instrumental in raising awareness and enhancing the cybersecurity posture of our clients. Her dedication to research and continual learning makes her an invaluable resource in navigating the ever-evolving cybersecurity landscape.

Jennifer Bayuk’s blend of academic prowess, practical experience, and certifications make her an indispensable part of our team, as she continues to drive forward-thinking cybersecurity solutions and risk management strategies.

Steve Blanding

CISO Consultant

CISSP, CISA, CGEIT, CRISC

Steve is an IT management consultant living in Dallas, TX. Steve has over 35 years of experience in executive IT leadership, IT governance, risk and compliance (GRC), systems auditing, quality assurance, information security, and business resumption planning for large corporations in the Big-4 professional services, financial services, manufacturing, retail electronics, and defense contract industries. He has extensive experience with industry best practices for adopting and implementing new technologies, IT service management frameworks, and GRC solutions that have dramatically improved customer satisfaction while reducing cost.

Industry Experience

  • State Government: 5 years
  • Retail: 5 years
  • Defense Contract: 5 years
  • Manufacturing: 2 years
  • Health Care: 2 years
  • Local Government: 2 years
  • Public Accounting (Big 4): 7 years
  • Insurance: 3 years
  • Financial Services: 5 years

Key Career Accomplishments

  • Conducted a full-scale ISO27000 audit 4 times over the past 6 years.  Also, conducted a “light” ISO27000 review of a small Dallas-based company in 2007.
  • Developed and authored a comprehensive IT security policy manual, incident response plans, training programs, security contingency plans and configuration management plans for FedRAMP regulatory compliance.
  • Conducted multiple DR and operational backup and recovery IT risk assessments of critical business systems on mainframe, LAN, and distributed system networks located across North America.
  • Conducted data centers audits for Tyco Corporation (Brussels, 2005 and Denver, 2006), Farmers Insurance (Los Angeles, 2006), Zurich Financial Services (Chicago, Kansas City, and Grand Rapids, 2006), and Convergys Corporation (Dallas, 2010, 2011, and 2012).
  • Led a project to remediate segregation of duties and streamline user access system security and HIPAA compliance administration across 5 regions in North America, resulting in cost savings of $700,000 per year (Kaiser Permanente).
  • Implemented Sarbanes-Oxley Section 302 and 404 IT general and application controls, reducing security administration costs and improving operational performance by 50% or $500,000 annually (Tyco Corporation).
  • Led the global SAP business-IT alignment, process re-design implementation initiative for financial accounting, materials management, production planning, quality management, sales and distribution, warehouse management, and plant maintenance, which resulted in creating $2,000,000 in cost savings.
  • Engaged by Arthur Andersen in Houston to transform the local IT organization and then direct 3 organizational mergers/consolidations, which resulted in a 25% reduction in operating costs, or $3,250,000, while improving customer satisfaction by 30%, and improving employee morale, technology availability and the quality of IT infrastructure and service delivery.
  • Assigned by Arthur Andersen global leadership to lead global project teams responsible for data center and customer support call center consolidation, which resulted in annual operational cost savings of 45% or $4,000,000.
  • Implemented ITIL service management practices for problem management, incident management, help desk, project management, and operations management.
  • Conducted SOX 404 audits at Duke Energy (6 months), Red Hat (3 months), Tyco (9 months), Zeon Chemicals (4 months), and Convergys (2 months). Experience includes control design/documentation and effectiveness testing.

Publications:

Author, various articles in EDPACS and Auerbach’s IT Audit Portfolio Series, 1981 – 2001

Author, various articles in the Handbook of Information Security Management, 1993 – 1995

Editor, Auerbach’s Enterprise Operations Management, 2002

Editor, Auerbach’s IT Audit Portfolio Series, 2000 – 2002

Consulting Editor, Auerbach’s EOM Portfolio Series, 1998 -2001

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