Posted on Feb 18, 2021
Every company excels at something. Whether you manufacture cars, build software, or sell a service, your organization specializes in what it does best. However, just like it takes a village to raise a child, it takes a group of systems, applications, and networks to run a successful business. By understanding what a third-party service provider is and the potential risks they pose, you can build a more secure ecosystem and remain a successful business.
A third-party service provider is generally defined as an external person or company who provides a service or technology as part of a contract. In the IT space, a third-party service provider typically provides a technology used to store, process, and/or transmit data that enhances an organization’s operational efficiency.
Since any “as-a-Service” technology solution is a third-party service provider, nearly every organization uses at least one, if not more.
Software-as-a-service is the most commonly recognized third-party service provider because people use them at work and home. A SaaS provider offers an application delivered through the internet and often uses a subscription pricing model. One way to think about SaaS services is that they are like rental furniture; you only get the pieces you need for the length of time you want them.
Some typical SaaS service providers include:
Platform-as-a-Service is a little trickier. A PaaS provider offers a cloud-based location where organizations can build their own software without worrying about maintenance like operating systems, software updates, storage, or infrastructure. They also use a subscription pricing model. To follow the rental analogy, you can consider PaaS services as similar to renting a furnished house; they give you everything you need to do what you need to do so that you don’t have to think about it.
Some typical PaaS providers include:
Distinguishing between Infrastructure-as-a-Service and Platform-as-a-Service can be a little more complicated because many of the services overlap. An IaaS provider sells computing infrastructure such as servers, storage, networking firewalls/security, and data center services using a subscription-based model. Finally, to bring the analogy to completion, IaaS services offer you a rental house without the furniture.
Some typical IaaS providers include:
Since most companies focus on their primary product, building their version of an existing technology becomes a financial and operational burden. The choice to purchase public cloud services rather than build a private cloud offers a good example.
When an organization chooses to build a private cloud, it needs to consider the following costs:
Many companies find it difficult to estimate these costs. Additionally, even if they estimate correctly, building a private cloud comes with operational costs that can be difficult to quantify.
Meanwhile, third-party cloud service providers, such as Azure, AWS, and Google Cloud Platform (GCP), calculate these costs for you and provide the technology. While it might be challenging to optimize costs or hidden costs may exist, the service providers do most of the hard work and then charge a subscription fee. For example, you can increase and decrease your compute power whenever you need it, as long as you pay the associated fee. You don’t have to worry about running out of computer power during a busy season because you underestimated it.
Third-party service providers allow companies to focus on their primary business operations while giving them a way to remain competitive by reducing operational costs.
While organizations can reduce costs and increase productivity with these technologies, they also need to recognize the cybersecurity risks that come with their use. According to the IBM Cost of a Data Breach Report 2020, breaches caused by a compromised third-party vendor cost $207,411 more than the average. Since third-parties by definition are not part of your organization, you cannot control them the way you can manage your internally developed technologies.
With increasing reliance on a cloud-based vendor ecosystem, malicious actors look for the supply chain security weaknesses so that they can gain unauthorized access to more than one organization. Since service providers’ customers tend to rely on point-in-time security reports, they do not take changes to the IT stack and security control maintenance into account.
As companies continue to integrate with more third-party service providers, they need to consider how they manage the potential impact these contractual relationships can have on their security posture. With SecurityScorecard’s security ratings platform, companies can monitor their third-party service providers’ security posture across ten categories of risk factors. Out platform continuously monitors your IT ecosystem, giving you an outside-in look at security controls’ effectiveness.
Additionally, organizations can leverage the controls and best practices that SecurityScorecard provides to establish contract language and create a shared security language. Using our easy-to-understand A-F ratings, companies can work with their vendors to establish baseline scores as part of their business relationships.
Vendor management is the process an organization utilizes to assess and manage a third- or fourth-party vendor. Learn how SecurityScorecard can help.
Performing cybersecurity risk assessments is a key part of any organization’s information security management program. Read our guide.
Templates and vendor evaluations are needed to level that playing field, in a time efficient and fair way, so that the best vendors are chosen.
Co-founder and CEO, Alex Yampolskiy, speaks about the importance of measuring and acting on key indicators of cybersecurity risk.
You’ve invested in cybersecurity, but are you tracking your efforts? Check out our list of 20 cybersecurity KPIs you should track. Read more.
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