The Forbidden Question: Are You <i>Still</i> Using A QSA?

GuestView Columnist David Taylor is the Founder of the PCI Knowledge Base, Research Director of the PCI Alliance and a former E-Commerce and Security analyst with Gartner.

The other day at a security conference on retail and PCI security issues, I was in a group of retailers and saw one retailer ask the other a deliciously revealing question: "Are you still using a QSA?" The entire question is nice, but it's the emphasis on the word "still" that makes it art. That's the killer word, as it was designed to make this other retailer feel small about still using a qualfiied security assessor.

About a week earlier, at a different conference hundreds of miles away, I witnessed a similar exchange, with a group of about eight retailers and only one said he was using a QSA. And that guy was clearly on the defensive, half-blaming his management for forcing him to still use one.

Merchants with “mature” data security strategies and a technically skilled Internal Audit team don’t need to use Qualified Security Assessors (QSAs) to evaluate and sign off on their PCI compliance efforts. This sort of PCI one-upmanship is a perfect way to launch our analysis of the evolving relationship between merchants, service providers and PCI assessors.

  • QSA as Auditor or Business Partner
    From the beginning, the QSA relationship with merchants has been complex. Although some QSA companies pitched themselves as auditors, others pitched partnership. But regardless of the pitch by the QSA company, the vast majority of merchants have been hiring QSAs to do their PCI assessments because they were forced to by the card brands and strongly encouraged to do so by their merchant bank or processor.

    As a result, once the use of QSAs for Level 1 (the largest) merchants stopped being mandatory, we are finding more and more large merchants no longer use QSAs, or use them strictly in an advisory capacity, then do their assessment themselves. This has resulted in some erosion of the QSA business, with the attending layoffs among the less well-established assessment companies.

    I would argue that part of this was a result of the poor definition of the QSA role in the first place, such that QSAs have been allowed to do a gap analysis to identify security gaps, then sell merchants the technology or services to fill the gaps, then sign off on the result as being compliant. Our research database is rife with complaints by merchants about QSAs who engage in such practices. It’s no wonder that larger merchants are running away from certain QSAs as fast as they can.

  • Closing the Internal Audit Skills Gap
    When I began specializing in PCI consulting in 2005, it was very rare to find an Internal Audit department that had sufficient IT talent to do a PCI self-assessment. Even when organizations have dedicated IT auditors, very few had any training on the complexity of doing PCI assessments or how to develop and/or evaluate the necessary documentation. Now, that situation has changed. Our research shows that nearly three fourths of the larger merchants we interview have “geeked up” their internal audit groups and are conducting (or preparing to conduct) their own PCI assessments.

    In fact, I have found that the internal auditors I speak with have been the ones who are most critical of the QSA companies’ “partnership” approach and some have actively pitched their departments to take over the PCI assessment role, in order to bring greater objectivity as well as company-specific knowledge to the PCI assessment process. The implication is that a PCI assessment by the Internal Audit department may be tougher than using a QSA, but it’s less likely to result in a mandate to purchase security products and services that do not match the risk management profile of the merchant.

  • From Checklists to Risk Management
    Speaking of risk management, the “high end” QSA companies (in terms of technical skills, industry expertise and global reach) will wind up taking on a more strategic role beginning next year, because I expect the outdated PCI assessment grading system will incorporate more “risk awareness,” as part of the PCI 2.0 version coming in the fall of 2010. (You might want to check out some of the comments from that grading system column.)

    This will force merchants to improve their management and quantification of IT security risks. Some of the leading QSAs are quite expert when it comes to risk management and have been among the most vocal in criticizing the PCI grading system (at least in our anonymous interviews) for its lack of incorporation of risk.

    Essentially, I’m suggesting a “forking” of the QSA industry, with some of the best companies adding more risk management, security strategy consulting, and “Beyond PCI” technology focus to their practices. For example: Assessing the effectiveness of tokenization, or end-to-end encryption, or secure cloud computing will require skills far beyond the checklist mentality, and really help differentiate the “cream” of the QSA companies.

  • Service Providers and Software Vendors – Increasing QSA Focus
    But what about the QSA business overall? Is it doomed by the trend toward merchant self-assessment? Hardly. The lion’s share of the QSA business has been focused on getting service providers to be PCI compliant. The use of QSAs for larger service providers is still required.

    Indeed, the QSA business will continue to grow as PA-DSS and PCI PED “white lists” of vendors, products and versions continues to grow. As these white lists become more complete representations of payment-related application market sectors, merchants will increasingly insist that their service providers and software vendors be “on the list,” even when the specific product or service isn’t a direct part of the payment flow.

    This can already be seen in the diversity of the companies and products included in the PA-DSS white list. We haven’t reached the point where not being on the list can spell financial disaster for enterprise application vendors, but I’ve talked to several vendors who have lost business due to merchants insisting that their products be on the PA-DSS white list.

    For those so inclined, there are ways to “get around” this, by using the customization provisions in the PA-DSS standard to argue that a packaged application is a really a “bespoke” application as it is used by a particular merchant. But the point of all this is that there are plenty of opportunities for QSAs, even as demand in the merchant community erodes.

  • The Bottom Line
    QSAs provide some merchants (especially senior management) with a level of comfort about their data security, and some Internal Audit departments simply don’t want to own the task of PCI assessment, but I do expect the issues described here to drive the trend toward self-assessment. If you’d like to discuss this, please visit the PCI Knowledge Base and comment in our discussion forums, which are monitored by dozens of the best QSAs in the business – all of which have been referred to us by their merchant customers. Also, if you want to have a personal discussion about this, just send me an E-mail at [email protected].