Can managed services providers (MSPs) cash in on the banking vertical? Before you answer consider this: N-able Technologies has joined the Independent Community Bankers of America, an association that represents nearly 5,000 community banks across the United States. N-able thinks the financial services vertical is a prime opportunity for MSPs. But is N-able correct?
The answer is a qualified yes. Roughly 40 percent of MSPs currently support banks and financial services firms, according to the fourth-annual MSPmentor 100 survey results (which will be unveiled February 16). Among the apparent industry leaders: HEIT, an MSP that has joined multiple banking associations in the past year. Also, Caltech has been serving a range of financial services customers across Texas.
Not by coincidence, Caltech leverages N-able software for remote monitoring and management within the financial services vertical. Eager to repeat that success with more MSPs, N-able states:
“ICBA membership will further N-able’s ability to generate qualified leads through its Midmarket Partner Program and build greater brand visibility for its N-central technology within the financial services industry.”
N-able executives plan to attend the ICBA National Convention and Techworld Conference (March 20-24, San Diego).
Meanwhile, there’s a separate trend unfolding here: MSP-centric software providers are trying to find blue ocean opportunities outside of the traditional SMB market. Last week, ConnectWise attended VMware Partner Exchange in Orlando. The event attracted more than 3,300 VARs and IT service providers. Meanwhile, Autotask Senior VP Jay McBain is busy educating MSPs about how to succeed in the health care vertical.
Still, the blue ocean opportunities aren’t simple. Succeeding in the financial services and health care verticals requires a range of corporate compliance expertise. Plus, community bank failures could trip up some MSPs.
Overall, I think quite a few MSPs will fail to make vertical market transitions. But I suspect successful vertical market MSPs earn higher margins than their horizontal MSP counterparts. Just a hunch…
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Posted In: North America | Partner Program | Vertical Markets
Tags: Autotask | CAlTech | Community Bankers of America | ConnectWise | HEIT | ICBA | ICBA National Convention and Techworld Conference | Jay McBain | N-able Technologies | VMware Partner Exchange
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Joe P –
We have been working with community banks since the 1980 when we started and they have been good to us. My father built the business on community banks and in 2002 banks were probably 80% of our revenue, fortunately over the past 10 years we branched out into other industries. We have seen a huge DIP in spending on IT from these banks over the past two years but that’s expected, however several that had in house staff signed up with us to help cut costs and improve response times. We are seeing the tide turn a bit and spending within our financial sector has started to pick up.
The one thing I caution MSPs about this industry is the “audit and regulation” aspect has sky rocketed which creates a lot of additional paperwork, documentation requests, and audit type meetings. However positioned correctly and with a tight offering scope these are easily overcome. MSPs tend to be more audit and process compliant than in house IT folks just because of the nature of their business.
- Eric Dosal
COO, Compuquip Technologies
JP, a number of the MSPs that I work with have a significant community bank practice. It is knowing these core facts that help me deliver my Managed Services marketing services effectively. When I am working with clients I am coaching then to do exactly what you mentioned with ConnectWise reaching new blue oceans. MSPs also need to spend less time at IT conferences and more time in the verticals they service. HIMSS is around the corner, I have my healthcare clients going there. Just as an example.
Wayne Gretzky once said, skate to where the puck is going to be, not where it is right now. Same thing here. Kudos to the companies mentioned in your article. If you need more examples I can share some with you.
Stuart Crawford
ULISTIC Inc.
Eric, Stuart: On the one hand I think it’s smart for MSPs (and software providers) to spend more time attending vertical-market events and conferences.
But I gotta concede… I’m a little wary of MSPs pushing into vertical markets. Quite a few MSPs gave EMR (electronic medical records) a try and failed badly because they didn’t understand doctors offices and health care. Seems to me MSPs need to get into one vertical market account and really master that customer engagement before developing a complete vertical market business practice.
-jp
JP. I totally agree. I invested many years understanding the Oil Patch before I claimed to have an energy services practice when I had my MSP. I lost many deals to the guys who knew the industry. Boy, was I happy when I became the guy developed relationships with the ISVs, Dynamics Partners and other service organizations that served the same market.
You need to invest in learning who is who in the zoo. Understand how everyone using IT in the industry…it takes time, it takes learning from mistakes and being able to see the light at the end of the tunnel and be patient to get there.
Attending industry events and committing oneself to understanding the vertical market is a start.
It does take time, effort and investment in the right people. ISVs and Dynamics Partner have this figured out I believe…we can all learn lots of coffee with one of these people.
Stuart Crawford
Managed Services Marketing
Great discussion and very insightful! I may be biased, but community banks embrace managed services. It is one tough nut to crack. It took us a few years before gaining mass, including being examined by the FDIC and 4 other audits every year. Most of the institutions are looking for a full outsourced solution, cloud, and/or co-managed solutions and not so much in terms of monitoring tools. Although, I believe that N-Able is a great tool for the MSP’s. I can see the $5B+ banks and CU’s potentially buying the tools and doing the management themselves, but it is rare to see independent banks and mainly those under $5B focus their attention on non-core functions to the institution. It will be interesting to see how the MSP tools providers do in the market.
The IT leaders at banks are elevating to more strategic initiatives related to revenue generation, channels, and efficiencies. It is just easier for them to outsource IT Ops functions. Joe & Stuart made great points about the vertical push for MSP’s. If an MSP doesn’t understand the industry, then I recommend staying horizontal or creating the generic “we are vertical with 4 verticals.” One of the biggest reasons for success in verticals is related to building a team that is from the industry. We decided to make those investments early on with many HEITans from banking, including a co-author of the GLBA, former regulator, and banking application experts. Just over 50% of our cases are related to banking applications and not the standard MSP cases, which required this focus.
We have had our fair share of lessons learned, and I’m more than willing to share. Being vertical has helped us tremendously, but like Eric Dosal said about the dip in spending, we have to take the good with the bad. At the end of the day, it has been very good for HEIT and our clients.
Dan Holt
HEIT
Great article and debate…
From the research I have studied, Stuart hit the nail right on the head with:
“I invested many years understanding the Oil Patch before I claimed to have an energy services practice”
I have seen MSPs add a new practice to their website overnight and in some cases the content has been copied and pasted from another site!
Vertical expansion starts with a deep understanding of a small number of clients, and then exporting best practices and processes to another, then another, etc. Joining and adding value to industry specific associations and communities is the real measure whether you have a “practice” or not.
Jay McBain
Autotask