June 27, 2019
Managed service providers and IT professionals generally fall into two categories : generalists and specialists. There are certainly pros and cons to both, but with businesses evolving more rapidly than ever before and new specialized fields cropping up all over the place, the distinction has become an important one.
So, how should providers position themselves?
Should we expect the demand for those with specialized, specific skills to take over, or is there still room for generalists who can offer value across a wide range of areas? Is the “specialist” label an MSP death sentence, an idea that’s been batted around over the last several years?
One Neck IT Solutions’ Jim Pena
de la Pena says specializing increases the business value for targeted markets but shrinks the total addressable market. Additionally, vertical-specific solutions require a depth of expertise that might be expensive to acquire and maintain.
By contrast, being an IT generalist allows for a greater target market for solutions, but at the cost of the increased business value. It also avoids the potential costs to acquire and maintain vertical expertise.
So, which one is best?
“One trend I have come across as a means to find middle ground is to build horizontal solutions (IT generalist) that have specific vertical messaging and positioning,” says de la Pena. “It is an attempt to take solutions that apply across multiple verticals and drive the vertical specific business value without the associated cost of creating and maintaining vertical specific solutions and expertise.”
Jeff Budge, vice president, advisory consulting at OneNeck, also weighs in, offering this response from a strategy perspective.
“The way I think about this is less about which one has advantages over the other, but rather which is the right fit for your culture as a provider based on your presence and value in the market,” shares Budge. “Being an IT generalist allows you to find solutions to problems that can be relatively consistent across a diversity of customers. It also allows you to align very strongly with technology concepts, technology platforms and technology vendors.”
Scantron’s Kim Larsen
Budge goes on to say that specializing in a specific vertical allows you as a provider to go very deep with a smaller set of customers that aligns with the vertical in which you specialize.
“I believe it comes back to culture and how your company chooses to approach the market — a consistent value add that is widely applicable, or deep engagement and a more specific value-add with a vertically aligned set of customers.”
Kim Larsen, vice president of managed IT services at Scantron Corporation, errs on the side of promoting value across a broad range of verticals, but says there are certainly pros and cons to this approach.
We gain a higher-level view of broader trends in the industry and in practical IT solutions.
We attract technology alliances who have similar horizontal strategies.
Diversifying our client base offers greater stability and reduces our risk.
We’re more agile when new markets arise that need services and support.
Even with an ostensibly horizontal strategy, many verticals emerge as sweet spots that you can leverage.
Wide geographic coverage using W-2 employees is more cost-effective.
Highly specialized industries tend to stick to service providers who also specialize in their field — it’s difficult to break into those opportunities.
It’s not feasible for a generalist to cross-train all resources on platforms and devices that are niche-specific, or just not used in their territories.
Vertical-specific vendors have the advantage when negotiating with a generalist service provider (we overcome this by forming partnerships).
Generalists will need to pull in vertical-specific SPs or consultants for large projects, but specialized SPs often become allies or friendly competition.
Since both specialists and generalists exist and each swim lane is vital to business success in different circumstances, there’s no simple answer to this. It’s true that the majority of MSPs today focus their business efforts on a specific vertical (or verticals). Whatever the case, it’s essential that you pick one that makes sense for your business.
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