Pick a market—at least one market—and prosper. That’s been a mantra carried by many solution providers over the years and continues to be relevant as they transition their business to managed services model. That’s not to say an MSP has to stick strictly to a single-practice business model; but finding one specialty to start with is a common best practice. There are a number of ways to determine the right vertical market for your business, but the most important step is realizing the benefits of doing it.
To use a real world example – Autotask is a perfect example of this philosophy. When I was editor of Business Solutions magazine I remember Bob Godgart, the founder and former CEO, telling me about the early days of the company. He originally launched the software platform to solve the problems of the general services industry, helping them to automate their service tickets and manage their account information. Business grew slowly as the company went to a number of trade shows and developed an even larger number of marketing messages to meet the needs of every group they were targeting. After a couple of years, Godgart and his team realized the shotgun approach was not a viable plan if they wanted to grow the company significantly.
If Autotask continued to target and support multiple markets, platform development and marketing efforts could become quite difficult and expensive. For example, service ticketing and client software needs can differ significantly between an appliance repair company and a VAR business; while each attend their own industry conferences and read completely different media (journals, blogs, newsletters). After reviewing their strongest market opportunities (including a look at their current client base) they determined the best option was to develop the Autotask platform specifically for IT service provider businesses. That decision, as Godgart often says, was key to the company’s eventual success.
Spreading any organization’s development and marketing energy between several different markets and objectives, without the employees and financial resources to do it, is both unwise and unsustainable.
Don’t become a proverbial, “jack of all trades, master of none.” While most organizations can manage clients from multiple markets when they open for business, over the long haul those same customers can be a detriment to your growth (as Godgart discovered).
With just a couple clients in each industry, each support request can be a learning experience and customization becomes the norm. When the majority of an MSP’s customers are in a particular market and share similar systems and workflow, it allows the provider to standardize many of their own procedures as well. For example, a provider who focuses on healthcare may create a solution template to offer doctors’ offices, which can be tailored to fit the specific needs of each office. Rather than reinvent entire systems, they develop a standard implementation that makes it easier for their technical team to install and support. In effect, company employees become specialists in those systems, able to diagnose issues faster. Repeatable processes typically reduce the amount of labor required for an MSP, which can reduce costs significantly over time.
Master One Vertical at a Time
When you start out focusing on one or two key industries, your team will likely be lean and specialists in the systems related to that particular industry. That’s not a bad thing, but can be a challenge when looking to begin a new practice. Consider an MSP specializing in the healthcare market. How can they add the technology expertise required to attract and support legal clients without hiring a full-time technician with those specific skills? Making a major investment in your sales and service team prior to landing new business is a risky venture, but less costly options are available.
One alternative is to continue focusing on what you do best and outsource the routine support activities (such as first line support and help desk). If any of your employees performing those low-level services are capable of taking on greater responsibilities (with the proper training), redeploy them to an existing or new vertical focus. For example, an MSP can train a tech to be a specialist in legal software support and outsource the daily helpdesk services. That helps increase not only their revenue, but their value to customers and overall profitability.
The other alternative is to engage with an outsource specialist to service the clients in your new vertical, at least for help desk services. Consider the situation where you have a number of banks and credit unions in your immediate area, but don’t have anyone on your team proficient in transaction and related systems. You could find a third-party support organization to supply that talent—at least until the business is lucrative enough to hire or train your own specialized employee. By leveraging third-party business partnerships, it allows you to build the practice at your own pace, and bring on new employees only when you can justify the extra cost.
The opportunities are limitless when you leverage an outsource partner, whether you’re creating a new IT practice to support healthcare, legal, financial, government or any other clients. So, of your looking to improve your value to a key market, consider how a help desk partner or subcontractors can help you achieve your goals.
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