Thursday, February 6, 2014

Managed Services Providers Agree: Build a Vertical Market DaaS Focus

A few weeks ago I had the privilege of speaking with a number of our Citrix Service Providers at Citrix Summit in Orlando.

There is no doubt in my mind that the Managed Services industry is shifting… away from commodity services (dedicated servers, websites, Exchange mailboxes) and toward more holistic, higher-value hosting and outsourcing services.

The evidence I cite is both from a Service Provider panel I facilitated, as well as from assessing the winners of the recent Citrix CSP Awards.

Heard at the Panel

My first set of data points came from a panel I ran covering the importance of choosing a vertical industry focus. On it I had the honor to sit with Frank Butler, CEO of Proxios, John Alston, CEO of ClubDrive Systems, Byron Patrick of Simplified Innovations, and Ted Eisley of Microsoft.

Whether the founder's intent was to focus on a vertical from the start, or whether they organically developed their vertical foci, the panel agreed that choosing one or more vertical markets was good for business.  It made marketing and prospecting easier. It allowed for a more replicatable set of offers. It enabled them to re-use line-of-business applications more frequently. And it enabled them to charge healthy premiums on their services because they were delivering such specific value.  Indeed, my Differentiate or Die theory was alive and well!

Some data points I took away from our discussion:
  • Living your business helps business come to you: One benefit of tenacious focus on a market is that "the business comes to you" Byron Patrick is so focused on the CPA market that he attends all of the professional networking and development meetings in his geography. Both he and his company are know quantities in the industry. He's the de-factor "go-to-guy" And that makes business developing (dare we call it marketing) all that much easier.

  • A low price is not (necessarily) the goal: All panelists agreed that competing on price was not their goal. Doing so is a race to the bottom. Rather, they competed on service and overall value. And surprisingly, when asked about prices for the DaaS offerings, many said they can easily charge in excess of $100/seat/month, sometimes more than twice that -- assuming that the value they provided (i.e. line-of-business applications, bundled services, etc.) was commensurate.
  • Knowing the market means knowing customer assessments:  Another great question from the audience had to do with how much customer assessment was needed to "size-up" an opportunity and arrive at price for migration and on-going DaaS service. And a nearly unanimous response from the panel was that, once you've done a few similar vertical engagements, understanding the gotchas and pit-falls gets a lot easier.
  • Speaking the vernacular simplifies marketing: Each CEO focused on a different market. But each knew that market and could speak the language of the buyer, as well as the language of the user. They knew the compliance and regulatory factors. They knew the top vertical apps. They knew how to speak to the issues and concerns of the customer in each market. Now that's not something you can fake. It only comes with focus and experience.
Seen at the Awards

The other set of data points I reference is from the Citrix Service Provider Awards ceremony.

The winning Service provider for Marketing Excellence, MindShift, won on the basis of their comprehensive approach to accurately messaging their services to the specific business goals of their audience.  But all entrants and semi-finalists outlined focus. Focus on specific markets, use types, applications, and sometimes even technology.  

As I'd heard in the panel, the Awards finalists all started with an intentional DaaS service definition, that evolved over time to meet the needs of one or more specific markets.

And by doing so, the successful Service Providers have consistently seen double-digit seat growth annually.

Got a question? Comment? I'd love to hear your input.