ChannelTrends: Five Fast Growing SMB Markets for Savvy Solution Providers

Of all the solution providers I have had the pleasure of speaking with over many years in the IT channel; relatively few have ever claimed to specialize in one specific vertical market. Even those considered retail VARs often build additional practices focused on hospitality or other complementary industries. After all, diversification is a great hedge for any business, allowing them to shift resources when economic conditions or other challenges affect one particular market harder than other bu ...

Of all the solution providers I have had the pleasure of speaking with over many years in the IT channel; relatively few have ever claimed to specialize in one specific vertical market. Even those considered retail VARs often build additional practices focused on hospitality or other complementary industries. After all, diversification is a great hedge for any business, allowing them to shift resources when economic conditions or other challenges affect one particular market harder than other business sectors. 

Other providers prefer the labels generalist, SMB IT professional or some other non-specific terminology to describe their organization. Of course, there’s nothing wrong with any of those descriptions. The key opportunities for solution provider are all derived from the perceived value they offer their customers. Perhaps that’s why many providers avoid marketing themselves as vertical-market specialists. Some have expressed they take great care not to pigeonhole themselves into particular specialties, concerned they might alienate prospective clients with different business or IT needs. Others service smaller geographic regions and believe a jack-of-all-trades approach is the best way to maximize their sales or profitability.

Of course, broadening a solution provider’s vertical-market competencies should not prevent the organization from appealing to the masses. It’s all in how the company presents itself through its general marketing and sales activities, including its website and promotional programs. With a proper plan and effective execution, a vertical practice can be an extremely lucrative addition to any solution provider’s business. Specializations work well in areas with a critical mass of specific businesses or organizations. With a larger target audience, it’s easier for solution providers to justify any of the investments needed to build these new practices, and a satisfied local client typically makes an excellent referral resource to help secure additional revenue.     

With managed and cloud services, their geographic reach can be much greater. A successful vertical-market specialist may have many clients within 100 miles, and more within 1,000 miles. With a little strategic partnering, solution providers can expand their reach and service capabilities exponentially, offering them a great return on their investment.      

While the vertical market opportunities are plentiful for IT companies, a few are particularly beneficial to SMB-focused VARs and MSPs, including:  

Manufacturing

This industry might seem a little challenging for an emerging solution provider due to the size and complexity of many of the big name players. Of course, that perception makes for a great opportunity for those who understand a majority of these businesses could be considered SMBs with IT needs similar to those of their other customers. Expected to top $67 billion in annual U.S. revenue this year according the 2013 CompTIA IT Industry Outlook report, companies in this market are readily adopting automation and other business improvement technologies to improve their competitive situation.

Finance and Insurance

While the market-sales opportunities may be larger ($104.8 billion) in this vertical, the best targets for solution providers are often the smaller regional and local institutions. The larger firms and franchises typically have their own IT teams or contract with enterprise-oriented providers, but that still leaves a significant number of prospective clients.   

Retail

With much smaller than average profit margins, these businesses rely heavily on automation and process improvement to keep their costs low and their revenues high. The $33.3 billion market is a perfect opportunity for providers skilled in the implementation and support of websites, payment processing solutions and other retail-related systems, as well as back office cloud-based programs.

Healthcare

While some of the buzz may be gone, this industry still presents a $48.5 billion opportunity for properly prepared tech companies. Emergency medical record (EMR) systems might be a limited opportunity for most solution providers, but the care, attention and capabilities a local VAR can offer physician practices and other medical facilities is invaluable. 

Real Estate

This $8.4 billion segment is especially appealing to local and regional VARs and MSPs, even with the large national and regional franchises controlling a significant part of the market. Each of these offices rely heavily on IT to promote listings, schedule appointments and help navigate a myriad of laws and regulations to sell their portfolio of homes.

Brian Sherman is founder of Tech Success Communications, specializing in editorial content and consulting for the IT channel. His previous roles include chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at Bsherman@techsuccesscommunications.com.

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