Delivering cloud offerings that address the needs of companies in a specific industry can be a winning strategy for many service providers. The compliance approaches cited above may inherently have a vertical focus, such as HIPAA and the health care industry, but there are a range of other options for addressing the needs of specific industries.
One approach could be delivering industry-specific applications and capabilities to customers. As mentioned earlier, infrastructure is increasingly becoming commoditized. Most organizations will need to gain differentiation in a vertical through applications, industry-specific integrations, and so on. In the health care industry, this could include electronic medical record solutions, patient management applications, or healthcare billing solutions. These are very important areas for the healthcare market, but many organizations may not want to source them internally. If a service provider can deliver these capabilities in a turnkey cloud solution, they can have a unique selling proposition, and ultimately enjoy rich margins.
Service providers could also deliver specific capabilities, such as reporting solutions that are tailored to helping healthcare institutions comply with HIPAA.
For other organizations, it may make sense to gain entry to verticals through partner offerings. For example, if an organization has hosting expertise that’s more horizontal in nature, they can work with an independent software vendor (ISV) that has developed an application with a specific industry focus, and ultimately market a SaaS-based version of the application.
A vendor could aggregate multiple offerings with a vertical focus. This could include a packaged mix of applications and services, like an enterprise resource planning (ERP) application, database, and storage package tailored to a specific vertical segment.
This move to vertical specialization can be a logical extension if you have a business that’s traditionally served organizations in a specific vertical. For example, if an MSP has a proven track record managing application administration in a vertical, they can build on this experience to host these applications in a private cloud.
For other organizations, the move to a vertical focus may represent a new approach to doing business. To effectively sell into a vertical and differentiate your offerings, your organization needs to speak the language of that industry, and have a detailed understanding of customer environments—everything from the acronyms to the infrastructures and applications. It takes time, resources, and energy to learn this language, which is why it’s important to start with a narrow focus.
In assessing new vertical market opportunities, you should scope the addressable market, looking at the industries represented within the geographic reach of your sales and support organizations. For example, if your addressable region has one of the highest numbers of doctors per capita, that could be a good place to start a MSP practice targeting the healthcare market.
Note that some verticals lend themselves to being more open to cloud offerings than those in other industries. For example, organizations in the manufacturing industry tend to be very open to the cloud, since they have been focusing on efficiency, automation, and optimization for a long time. Executives in this segment tend to look at cloud offerings as a logical next step for their IT delivery.
In addition to the actual offerings provided, the services and service levels delivered can be a source of differentiation, both before and after the sale. Here are a few ways service providers can deliver differentiated services:
Post-sales Support
In the retail industry, brands have been built based on customer satisfaction. In the cloud, it is important to recognize that service expectations and differentiators will vary according to the cloud model. On the one hand, some IaaS models are built on no phone or email support. Users submit a credit card, get provisioned, and are pointed to Web pages for support. However, most customers will look for more support in the cloud, and this is where service can be a differentiator. Instead of looking at building up the support infrastructure as a cost, view it as an opportunity to add value and gain differentiation.
Service Packaging
Another opportunity may be realized through service packaging. Particularly as small and medium businesses grow more reliant on the cloud, leaders will get increasingly frustrated with dealing with one vendor for email, another for backup and recovery, and so on. They’ll want one “throat to choke” when it comes to tracking service levels. Longer term, they’ll also see opportunities through having disparate services delivered and supported in a more integrated fashion. Just as in the vertical segment, this type of service packaging can set the stage for winning differentiation.
Managed Cloud Services
For many clients, initial encounters with cloud models can vary substantially. For example, while the cloud offloads hosting, it doesn’t offload ultimate responsibility for customer service and service levels. In IaaS, for example, after computing instances are provisioned, customers are on their own in terms of applications, patching, backups, monitoring, and so on. Many early cloud deployments fit this model.
Because managed services require human involvement, they are typically too complex to deliver profitably in an elastic cloud environment. This has hindered cloud adoption, since customers need managed services to make the cloud work for them. By addressing this need, service providers can deliver significant value and differentiation. In fact, leading cloud providers like OpSource (now a part of Dimension Data), Rackspace and SoftLayer are now offering managed cloud services. The bottom line is that service providers can help customers achieve their service delivery goals by delivering managed services on top of the flexible, scalable cloud platforms.
IT Management as- a-Service is a key capability for organizations looking to deliver managed services in the cloud. Through its cloud delivery and its capabilities for remotely and uniformly tracking services across disparate deployments, IT Management-as-a-Service makes it practical to deliver managed services on top of cloud platforms. Providers can initially have customers start with basic levels of service and availability, and then offer them options such as dashboards, reporting and alarming that increase value and margins. By combining automated, efficient service delivery with service provider expertise, your organization can make it easy for customers to deploy and consume these value-added services, so the upsell is painless and compelling.
There’s a lot that goes into making a move to the cloud a success, the strategies outlined above should provide some useful advice for those charting their options. While this next step in your business’ evolution will require some changes, making the effort and investments can provide big dividends.
This is the second in a three-part series of blog posts from Nimsoft’s Ken Vanderweel, for CRN. [Original Article]
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