Specialization and differentiation are critical to competitive advantage. You can specialize in certain technologies, such as security or remote desktops. However, you can also develop expertise in vertical markets where you combine your in-depth technical knowledge with rich industry understanding. Here you sell both types of expertise, and can offer premium services at a greater margin.

One MSP, Jan Chapman, the co-founder and managing director of Melbourne, Australia-based MSP Blueshift, wrote in Channel Futures that if he were to start a new MSP, it would be vertical.

His advice? “Be a niche specialist – There are so many MSPs that the competition is crazy. You've got to be a specialist in a particular area, as in a vertical market,” Chapman argued.

Then prepare to serve that market. “Understand that niche: what their requirements are, speak their language, not just the IT side of it, but everything they do, their whole business, what's important to them, what problems they have from the business point of view, rather than technical. Because everyone does all the technical stuff,” he continued. “The actual specialist area is the only way to differentiate yourself from the competition.”

Channele2e tracks the top vertical MSPs, and through its research, has vertical insight. For one, it finds that those with deep vertical expertise have impressive annual recurring revenue (ARR). Here are two trends based on the web sites 2017 research:

• “The most successful vertical market MSPs are zeroing in on financial services and healthcare, although consolidation in the healthcare IT services sector is accelerating.
• MSP micro-verticals have emerged. Examples include IT services for veterinary hospitals (healthcare); hedge funds (financial services), and clubs and resorts (hospitality).”

Finding the right vertical is key. One issue is which verticals offer the most potential. Are you in an area surrounded by colleges, hospitals or manufacturers? Second, what expertise does your shop already have, and where does the passion lie?

Finally, if you already have clients in specific verticals, such as law firms, you could deepen your expertise and go after more legal accounts.

Below are three vertical markets worth considering.

The banking and financial service industry is a hot vertical, and here compliance expertise is a valuable MSP commodity.

The MSP Telemarketing website is gung-ho for finance. “Consider that regulations, cybercriminal activity, and human error abound in banking. Cybercriminals try to steal cash and government regulations try to maintain their tenuous control (which is often illusory). MSPs that can help banks large and small navigate this minefield of technological implications can make themselves very valuable. Identify a need for banking security–like fighting cybercriminal intrusion and its consequences, and then demonstrate how your MSP can reduce the risk of such an occurrence,” the site explained. “Additionally, as assets become increasingly digitized, it becomes incumbent on tech companies working with banks to help them design disaster recovery and business continuity solutions. All banks must have them. If you can provide this core need, you can get a piece of the pie from this vertical market.”

Healthcare is a great vertical. It is a growing field, and you can focus on sub-markets such as home health care, private practices, hospitals, and nursing and residential care facilities. One huge leverage point is compliance. Most small and medium-size healthcare outfits have little clue as to the technology needed for compliance. With an RMM and IT automation, MSPs can secure health care operations and help them achieve and prove compliance.

Both K-12 (primary) and Higher Education are great verticals. Here MSPs can take over the grunt work that bogs down underfunded educational IT staffs. And MSPs can apply IT automation and RMM solutions to handle key IT functions, such as security, help desk, patching and software updates.

“While it can take time to secure a government contract from some educational agencies, there are plenty of opportunities. Technology that is required for smartboards is increasingly prevalent in the classroom. Tablets, laptops, and desktops play a part in most educational operations today even at the elementary school level. As technology expands, its impact will predicate increasingly in-depth educational solutions for young people. It makes sense to get involved in this market as securely as you can,” the MSP Telemarketing site argued.

Learn how the Pulseway RMM supports education here.