Enterprises are Forcing Their Security Standards on SMB Vendors

Industries are becoming more interconnected and the demand for robust security measures is skyrocketing as larger organizations force their smaller partners to adopt stringent security practices as a contractual requirement. For many small and medium-sized businesses (SMBs), the pressure to comply with enterprise-level security standards is a make-or-break factor in securing profitable contracts and maintaining partnerships. 

The challenge lies in the imbalance. SMBs, operating with a fraction of the revenue of their larger counterparts, are often required to meet the same standards, despite their vastly different budgets and resources. This misalignment forces smaller companies to stretch their operations, adopt expensive tools, and divert resources that would otherwise be used to grow their core business. This blog explores why enterprises impose these standards, the impact on SMBs, and what they can do to navigate these challenges. 

WHY ENTERPRISES ENFORCE THEIR SECURITY STANDARDS ON VENDORS 

Enterprises adopt a "one-size-fits-all" approach to compliance, requiring all vendors—big or small—to meet the same standards. Here’s why:

• Consistency Across Operations: Enterprises have multiple vendors, often spread across different geographies and industries. A standard security approach ensures consistent application of cybersecurity policies and mitigates potential confusion or misinterpretation of what’s required. This also makes it easier to audit and manage compliance across a global supply chain.
• Protecting Their Supply Chain: For enterprises, even one weak link in their supply chain can create vulnerabilities, leading to potential breaches. According to a Ponemon Institute study, 56% of organizations reported having a data breach caused by a third-party vendor and 60% of SMBs that experience a cyberattack go out of business within six months (National Cyber Security Alliance). Enterprises prioritize strict standards to protect themselves and push these requirements downstream to SMBs.

THE IMPACT ON SMBS

For SMBs, these security requirements present challenges that affect their finances, operations, and growth potential.

• Exploring the Financial Gap: Whereas enterprises can easily absorb the cost of advanced security measures, SMBs must stretch their limited budgets to comply. According to Astra, 43% of cyberattacks focus on small businesses because they are less prepared and thus easier targets. SMBs are exposed to the same security risks as their larger counterparts which can jeopardize the entire supply chain, potentially causing disruptions for their enterprise partners.
• The Hidden Costs of Compliance: SMBs must make significant investments in tools, audits, and cybersecurity upgrades to meet enterprise demands. The hidden costs of hiring compliance consultants, implementing new technologies, and conducting regular security audits often exceed what smaller companies initially anticipate. Worse, these are not “once-and-done” investments … they require ongoing investments as requirements and technologies evolve. 
• Compliance Is Non-Negotiable: For SMBs hoping to secure contracts with larger enterprises, compliance isn’t a negotiable aspect—it’s mandatory. This leaves smaller vendors with limited bargaining power to secure a new client, and failing to meet these ever-expanding security requirements may lead to loss of contracts and hard-earned business relationships.

COMMON SECURITY REQUIREMENTS ENTERPRISES IMPOSE

Many enterprises require their vendors to comply with well-established security frameworks that have been designed to safeguard data and systems like:

• CMMC (Cybersecurity Maturity Model Certification)
• NIST (National Institute of Standards and Technology)
• SOC 2 (Service Organization Control 2)

How These Translate to SMBs: While large companies have dedicated teams to ensure compliance with these frameworks, SMBs often need to invest in third-party audits, security software, and specialized staff or consultants to meet these standards. For example:

• CMMC requires attaining specific maturity levels, which may require significant process improvements for SMBs aiming to secure government contracts.
• NIST guidelines require regular risk assessments, continuous monitoring, and establishing incident response plans.
• SOC 2 compliance requires SMBs to demonstrate their ability to protect sensitive data and maintain high levels of security, availability, and confidentiality.

BALANCING COMPLIANCE AND COSTS 

SMBs can strategically approach compliance without overextending themselves by prioritizing critical areas and seeking external support. 

• Implement Incrementally: Gradually adopt security standards instead of an all-at-once approach. Focus on the most critical areas of compliance that align with customer priorities. A phased implementation allows for better budget management and resource allocation, enabling SMBs to spread out costs and reduce the strain.
• Leverage Existing Resources: Often current staff and existing technologies can meet security requirements. Training employees and optimizing existing tools reduces the need for additional investments, helping SMBs maximize what they already have in place.
• Leverage Fractional Expertise: A virtual Chief Information Security Officer (vCISO) provides expert guidance on compliance and cybersecurity strategies. Unlike a full-time CISO, a vCISO offers scalable services on a flexible, as-needed basis, at a fraction of the cost.