The increased integration of technology into production processes and equipment have forged new efficiencies and operational capabilities in today's manufacturing landscape. Yet, this digital fusion has a downside: increased vulnerability to cyber threats.
According to a recent IBM security report, manufacturing is a prime target for hackers, accounting for 23% of all cyberattacks worldwide. Moreover, the financial toll is incredibly steep for manufacturers, with manufacturing experiencing the highest average ransomware payment across all sectors, costing $2,036,189 per ransom payment.
Many manufacturers, wary of the external threat landscape, have turned to third-party IT providers for cybersecurity solutions. While this may seem like a “fool-proof” option on the surface, anytime you work with a third party — even an IT provider or software provider — there can be additional risk factors. According to WEF’s Global Cybersecurity Outlook 2022, indirect cyberattacks — those gaining access via third-party providers — have jumped from 44% to 61% in recent years.
Knowing this, if you have, or plan on outsourcing your IT functions, you need to be careful about who you trust with such a critical aspect of your business operations. A poor choice in IT providers may not only fail to mitigate external risks but can actually escalate them.
What is a Third-Party IT Provider?
A third-party IT provider, commonly called an IT services provider or managed service provider (MSP), is an external company that offers specialized IT services. These services range from data and software management to network administration and maintenance to cybersecurity to cloud solutions, each tailored to meet a manufacturer’s specific needs. Common services include everything from proactive IT management to data safeguarding to threat analysis.
So, if they’re supposed to function as the first line of defense, why do so many third-party providers increase your organizational cybersecurity risks? Here are a few reasons:
- Access to multiple organizations – One successful hack on a third-party IT provider could unlock a treasure trove of sensitive data from multiple clients, making them a valuable target.
- Shared infrastructure – A weak point in one client's cyber defense can expose others to those same vulnerabilities.
- Integration with client networks – The deeper the integration, the wider the door you're opening for potential cyber intruders.
- Insider threats – A compromised employee within your IT provider can leak sensitive data and access.
Remember that not all IT providers are the same. Each third party must be thoroughly evaluated on its capabilities, expertise, and costs.
Pros and Cons of Hiring a Cyber/IT Provider
Hiring an IT provider can be a strategic move to optimize your technology infrastructure and streamline your digital operations. These professional services offer a range of benefits from expert technical support to cost-effective solutions tailored to your specific needs. However, like any business decision, there are also potential drawbacks to consider.
Here are some pros and cons to consider when choosing an IT provider:
- Expertise – IT service providers offer up-to-date specialized knowledge in technology and security that may not exist within your organization.
- Cost-efficiency – Outsourcing IT functions is often more cost-effective than hiring a full-time in-house team, taking into account salaries, benefits, and training.
- Scalability – Third-party IT providers can adapt their services to meet your changing business needs as you grow.
- 24/7 support – Unlike smaller in-house teams, many IT service providers offer continuous support around the clock.
- Business focus – Outsourcing allows your business to concentrate on core competencies while experts handle the technical aspects.
- Lack of control – Outsourcing can lead to diminished control over technology and data, as you're entrusting these to an external entity.
- Lower prioritization – With obligations to multiple clients, the provider may not have the bandwidth to prioritize your business, resulting in slower response times or impersonal service.
- Security risks – Providing sensitive data to an external company inherently poses risks, even if the provider adheres to security protocols.
- Communication challenges – Differences in time zones or language with the provider could complicate communication.
- Dependency – Long-term relationships with a provider can lead to dependency, making it hard to change services or revert to in-house solutions.
- Lock-in – Specialized systems the provider uses could create barriers when switching to a different service.
With so much to consider, how do you decide on the right IT provider?
How to Choose the Right IT Provider
Start by clearly understanding your own needs. Are you seeking general IT support, or do you have specialized cybersecurity requirements?
For example, if you're a DoD (Department of Defense) SMM, compliance with NIST SP 800-171r2 is a crucial requirement. Knowing your needs will narrow your choices and set a benchmark for evaluating potential providers.
Next, focus on the experience and expertise of the providers. It's not just about how long they've been in the business but also about their familiarity with your specific industry. Check if they have case studies, references, or past work experiences with companies of a similar size and scope. This will give you insight into how well they can manage your threat environment.
Then, consider the range of services the provider offers. The ideal provider should function as a one-stop IT shop, from network management and data backup to cybersecurity and cloud services. A provider with a comprehensive set of services will be more equipped to handle the multifaceted IT needs of your business.
When it comes to security, check for the following:
- Encryption standards – What level of data encryption do they provide?
- Intrusion detection systems – How do they monitor for potential threats?
- Regular audits – Do they perform security audits, and if so, how often?
- Compliance standards – Are they compliant with industry-specific regulations?
- Incident response plan – What is their protocol for data breaches or other security incidents?
- Firewalls and anti-malware – What types of firewalls and anti-malware solutions are in place?
- Data backup – How often do they back up data, and what is the restoration process?
- Physical security – What measures are in place to protect the physical infrastructure?
- Service level agreements (SLAs) – What are the levels of security they provide in terms of availability, response times, resolution times, etc.?
You must proceed with caution whenever you allow any party within your virtual security perimeter. Screen them carefully before you entrust your cyber defenses to them. Improper due diligence when selecting an IT provider could expose your business to unnecessary risks, both operational and security-related.
Red Flags to Look Out For When Choosing an IT Provider
When choosing a provider, be wary of candidates who lack transparent communication about costs and strategies, offer no tailored solutions, or fail to provide credible references. These are early warning signs that could signal deeper issues on the horizon.
Similarly, when you reach the point of screening for experience, look for red flags like no disaster recovery plan, a lack of regular training or certification, and no proactive maintenance or strategy.
Best Practices for Hiring IT Providers
First, you must define clear contracts and service level agreements (SLAs) with your prospective IT provider. These documents should meticulously outline the expectations and responsibilities of both parties.
Additionally, don't just follow a set-and-forget mindset. Instead, conduct regular audits and reviews to ensure the provider consistently meets the agreed-upon standards.
Finally, ensure your IT service provider understands your company's information security policies. This alignment is crucial for maintaining the integrity and confidentiality of your data.
Have an Exit Strategy
Establishing an exit strategy is an essential yet often overlooked element of protecting your business. Your SLA should include comprehensive clauses on how to amicably part ways if the relationship goes south.
For instance, it should detail what you’re responsible for if you decide to terminate the contract, how you will get access to your data, and if any fees are due to end the contract.
Considering these elements helps ensure a clean separation between the two parties and that you won't be left flat-footed and scrambling to safeguard critical aspects of your business.
Trust the Right Partners
In the high-stakes world of cybersecurity, vetting your service provider is a critical first step. Approach the selection process with a healthy dose of skepticism — let them earn your trust by proving their capability and expertise in the field.
Need help with navigating the complex world of cybersecurity?
If you want to strengthen your digital infrastructure, CMTC is ready to assist. We specialize in helping small and medium-sized manufacturers identify vulnerabilities and secure their digital domains.
About the Author
Gregg Profozich is a manufacturing, operations and technology executive who believes that manufacturing is the key creator of wealth in the economy and that a strong manufacturing sector is critical to our nation’s prosperity and security now, and for future generations. Across his 20-year plus career in manufacturing, operations and technology consulting, Mr. Profozich helped manufacturing companies from the Fortune 500 to the small, independents significantly improve their productivity and competitiveness.