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Vertical IT Market Opportunities & How to Capitalize on ThemVertical IT Market Opportunities & How to Capitalize on Them

Many MSPs in recent years have enjoyed tremendous success as a result of taking a vertical market strategy. There are significant and compelling advantages IT service providers can enjoy by taking this approach.

December 4, 2012

4 Min Read
Vertical IT Market Opportunities & How to Capitalize on Them

By Nimsoft Guest Blog 1


Many MSPs in recent years have enjoyed tremendous success as a result of taking a vertical market strategy. There are significant and compelling advantages IT service providers can enjoy by taking this approach. For example, when they lead with a vertical market-focused offering, MSPs have found they often end up speaking to contacts higher in the organization’s ranks, they have an easier time establishing credibility and trust, and they find themselves in markets that have less competition and pricing pressure. Further, delivering vertically-focused IT offerings can be a great way to build standardized, repeatable processes and to leverage and build on customer success.

For many MSP executives, this sounds pretty alluring, and for good reason. However, anytime you’re talking about changing business models, marketing tactics and more, the decision isn’t one to be taken lightly. If you don’t currently have a vertical market strategy, and are considering making a move, the following are a few factors to consider:

  • Existing customer base. While it may seem obvious, taking stock of the current list of customers is a critical first step. Your existing portfolio of customers may already have a high concentration of companies from a particular vertical industry, even if that wasn’t a conscious effort or focus. That should definitely factor into planning.  Even one prominent customer from a specific industry can be a huge asset as you’re trying to establish a foothold in a market segment and expand on it.

  • Industry prospects. A key criteria to consider is the overall health of the market, and the industry’s expected trajectory of growth or contraction. For example, with the financial incentives the HITECH act provides for investment in systems that support electronic health records, the prospects in healthcare have been bright for MSPs. In other industries, recent years have been tough, and, while disruption can create opportunities for MSPs, it can also pose risks.

  • Culture. It is important to take an honest look at the existing culture within your business and determine whether there’s a match with a potential target industry. Obviously, if you have a pre-sales engineer wearing flip flops and the client’s wearing wing tips, that would be a warning sign. While attire can be a simple thing to change, the underlying culture isn’t, so be sure that there’s a cultural fit with the organizations you’d be looking to work with.

  • Openness to outsourcing. By their very nature, organizations in some industries are more likely to outsource their IT than others. It’s critical to take a hard look at past outsourcing tendencies of organizations in a particular vertical, and make sure that there’s ultimately an opportunity to win outsourcing business.  That said, in some cases a history of reluctance to outsource could represent an opportunity. For example, a service provider may see that their targets in financial services have been reluctant to outsource a specific service to cloud providers in the past. They could carve out a successful niche by delivering a service that addresses compliance requirements.

Once you’ve decided on a vertical to target, take an honest look at existing skill sets and identify gaps in knowledge and make sure you address them — before going out to market. You can’t force or fake industry expertise. To be successful, both in sales and service delivery, your organization has to have a solid understanding of the specific technology environments of the industry, the language they speak, and their business realities.

If you’re contemplating a move to a vertically focused business model [and you should!], be sure to check out our upcoming MSPmentor webcast, “Vertical Market Excellence: Your Path to Success.”  This webcast will feature Ciaran Dwyer, CEO, 3t Systems and Greg Donovan, VP, Service Providers, CA Nimsoft. Both have successfully guided their firms into a new IT vertical market practices. These executives will draw on their experience to provide an overview of the most promising markets to target, including healthcare, some of the obstacles you can expect to encounter, and strategies for delivering optimal value to customers within a specific vertical market.

ken vanderweel

Ken Vanderweel is marketing director, service providers, Nimsoft. Monthly guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship. Read all of Nimsoft’s guest blogs here.

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