Vertical Specialization: The Key to MSP Success

It would certainly appear that an increasing number managed IT service providers are selecting a vertical specialization in an effort to become more profitable and scalable. And really, why wouldn’t you? That doesn’t sound like a bad gig!

The numbers demonstrate that when an MSP picks key vertical markets to infiltrate, they end up having enormous success. But why do so many companies elect not to do this, and become the experts in certain practices?

Why vertical specialization is important.

While at one time, simply offering a help desk, network admin, or backup was unique and innovative, this is just not the case today. Adding to this, the cost barrier to compete as an MSP has never been lower. And services such as service desk and NOC are easily outsourced. This influx of competitors and lower barrier to entry has certainly led to a bottleneck. A 2018 survey of the top 501 MSPs by Channel Futures reports that “only 22% of the companies that earned a spot on the MSP 501 this year offer no sort of vertical-market focus.”

It would appear that the best performing and higher growth MSPs have developed a vertical specialization.

Think about it… most business owners are seeking an IT provider they perceive understands their business the best. This is where vertical specialization will help to separate your MSP from the others.

Put yourself in the business owner’s position; all things considered equal from an IT support standpoint who would I trust my IT to more?  Chances are the MSP that exhibits the most business knowledge and understanding about their workflow will win the business.  Even better, this MSP will most likely be able to charge a premium for the same services.

We talked to some of our partners who specialize…

WCI Technology Solutions has historically focused on financial advisors as a primary niche. This particular niche also fits very well with one of WCI’s core focuses: “Protecting What You Value Most,” and The 20 has helped WCI confidently provide this to that niche. I believe WCI has been successful with financial advisors because we have always been very aware that we needed to keep our clients, and their information, safe… Combining The 20’s help desk, security tools (like Deep Instinct), mindset, and working with their strategic partners like The Compliancy Group, WCI is extending our focus to become known as “The Compliancy Experts.” This will enable us to successfully enter additional niches like medical and manufacturing.

Bill Wright, Owner, WCI Technology Solutions

Stratocent Technologies has a strong partnership with professional services firms – tax and accounting, legal, engineering firms in particular. Each of these have deadlines, mission critical data, regulation, compliance concerns, and a business model that relies heavily on their computers and networks. Our focus on mission-critical environments and workflows has worked very well to prevent downtime, increase confidence and productivity for our clients, often saving them money or increasing profitability in the process.

Jim Bachaud, CEO, Stratocent Technologies

In our 10th year, BLOKWORX went channel-only when the majority of our new business was peer team and other MSPs looking for assistance. We have a strong presence in financial and other compliance-based industries.

Rob Boles, President, BLOKWORX

…[TechNoir Solutions provides] IT support to nationwide co-working spaces (commercial real estate). Not only do we get their network up and running, but we can deliver ongoing support to the small businesses that comprise those spaces… Our mission is to be the technology advocate for startups and rapidly growing businesses that are experiencing technology growing pains.

TJ Mitchell, Director of Sales and Marketing, TechNoir Solutions

How does an MSP determine a vertical specialization?

Look across your client base and study each of your clients. See what you got. And know that verticals aren’t just about particular industries — it’s a melting pot of many factors. Here are items to review when selecting verticals:

  • Industry verticals: What particular industries are technology-dependent or see technology as a strategic asset?
  • Technology verticals: Do you have knowledge of a particular technology that is in demand? Do you specialize on a particular security offering? Maybe it is document management or some other technology that many MSPs seem to not bother with.
  • Geography: Are there particular geographies that are more lucrative than others? Are their parts of your city or state that are not serviced well by all the other managed service companies?

What do you have to lose?


Looking to fast track the growth of your MSP? Click here to learn more about The 20.