Does all the emphasis on verticalization overshadow more profitable opportunities for MSPs?

Kris Blackmon, Head of Channel Communities

February 21, 2018

4 Min Read
Business model

They say the channel is changing faster than ever before, and BlueRock Technologies can testify to that firsthand.

The Detroit-based MSP is having a gut-check moment about its business model, service offerings and vertical specializations. Now it’s going through what Nathan Hable, NOC manager at BlueRock, calls a period of redesign. One of the first things the managed service provider had to come to terms with was that, with all due respect to the experts, you can’t always take their advice as gospel.

“A few years ago we were on that bandwagon about needing to pick your vertical,” says Hable. So the company began developing a specialization within the hospitality industry, servicing luxury hotels countrywide. “But the Detroit area isn’t a big vacation destination.”


Nathan Hable

Nathan Hable

Customer service is BlueRock’s top priority, and Hable says the MSP had trouble providing the quality of service it wanted to give its clients when the decision-makers and points of contact were spread across the country. BlueRock decided to focus closer to home, targeting companies with headquarters in Southeast Michigan in order to allow account managers, salespeople and virtual CIOs to have direct, regular contact with customers. That decision has shifted the company’s thinking around its entire business model.

There’s a heavy manufacturing presence in the Detroit area, and so the clients BlueRock is taking on these days happen to fall within that vertical. But Hable says that’s more a result of focusing on size and geography. When you’re hunting for companies within Southeast Michigan with 25 to 300 seats, odds are you’re going to hit on a lot of SMB manufacturing companies. Intentional or not, though, the switch from hospitality to manufacturing hasn’t been all that hard to navigate from a tech perspective.

“What clients need isn’t really that different,” says Hable. “Ransomware is indiscriminate of what vertical it tackles. They still have the same needs: security, backup, compliance. There are lots of similarities that transcend verticals.”

Where the nuance comes in is the software products each vertical uses, and BlueRock has no intention of getting into the business of supporting line of business (LOB) applications. Its specialty is IT infrastructure, and acquiring true expertise further up the stack is a trap it wants to avoid. It’s still scarred from its hospitality days dealing with Oracle’s property management system, Opera — an application so complicated that Oracle has a separate division dedicated to Opera support and maintenance. BlueRock has no desire to compete with Oracle, or to divert resources away from its core competencies to service any other vertical application.

Instead, BlueRock is reconfiguring its existing offerings to accommodate the type of client it’s running into these days. Hable says that a lot of SMBs that signed up with MSPs several years ago when the trend really began to take off are having buyer’s remorse.

“They need more than just a help desk,” he says. “Their infrastructure is falling apart, their workstations are 10 years old and we just inherit that.”

With its existing offerings, BlueRock is caught between unacceptable choices. It can’t adequately support infrastructure that’s out of date, but it also can’t force the massive capex cost for an infrastructure overhaul down the throats of brand-new clients. BlueRock needs to find a way to sign a client to a five-year contract, lock them into a monthly cost and refresh all of their infrastructure to an environment its staff is trained to support within just a few months.

The MSP is about eight months into its process of redefining its business model and sales pipeline. The offerings it’s developing for clients today center more on hardware as a service, where it can give clients a fixed or per-user price that would include an entire IT infrastructure with a five-year contract built in. Every client, no matter the vertical, has different infrastructures in different states of repair, but they all have similar needs for the managed services that are BlueRock’s bread and butter like security, email and cloud services.

“If we can get our foot in the door and standardize equipment as quick as possible, it brings our cost of support down, and the client will be happier because they’ll get better service. It’s win all around.”


Read more about:


About the Author(s)

Kris Blackmon

Head of Channel Communities, Zift Solutions

Kris Blackmon is head of channel communities at Zift Solutions. She previously worked as chief channel officer at JS Group, and as senior content director at Informa Tech and project director of the MSP 501er Community. Blackmon is chair of CompTIA's Channel Development Advisory Council and operates KB Consulting. You may follow her on LinkedIn and @zift on X.

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like