Vertical markets are becoming more and more lucrative for IT service providers and MSPs. They give service providers the chance to develop themselves as experts in a specific market, and those who do well will find themselves thriving. Vertical markets are constantly growing, and so is the need for IT service providers who can improve business processes in the specific verticals.
Avnet, a Phoenix-based IT distributor, offers vertical market training to its partners in healthcare, government, smartgrid energy and utilities technologies, financial services with a focus on banking, and retail.
“The reason we chose those industries is because each one is growing faster than the overall IT market spend today,” says Michael Houghton, VP of vertical market solutions at Avnet. “[The markets] are all large in size and have complex dynamics, which create opportunities for our VARs to become a differentiated trusted advisor with those end users.”
According to Mike Humke, senior director of vertical markets at Santa Ana, Calif.-based distributor Ingram Micro, the demand for services in vertical markets comes directly from the end-users, who need that trusted advisor. “Our customers are changing how they do business,” he says. “They’re looking to purchase from someone who understands their business better than they do.”
But there are many caveats when trying to break into a vertical market. Each vertical market has extremely specific requirements in terms of IT, especially compliance. Service providers who are going to enter the healthcare vertical, for example, had better be well-versed in HIPAA regulations.
IT service providers should examine their own business practices and figure out where their own strengths lie, and what clients they’ve worked with in the past. If a service provider has experience within a vertical already, then they’re already that much better equipped to handle a customer within that vertical.
“Pick your expertise and be very good at it,” says Humke. “The more you know about the market, the more successful you’re going to be.”
It would also be beneficial to the service provider to choose a vertical that’s growing. If a vertical is suffering, those customers are likely unable to pay for services. It’s important to choose a vertical where the IT service provider can thrive and easily train themselves on the market.
This ChannelPro Playbook examines the selection of vertical markets as an IT service provider, and how to best market an IT services business within verticals.