This past January marked the 2nd year that Citrix Summit devoted an entire track to Citrix Service Providers – and the 2nd year I hosted a panel explaining why Managed Service Providers of hosted workspaces tend to succeed the more they differentiate and focus.

Service providers may debate that taking a vertical approach seems counterintuitive – given that many business owners shudder to think they would consciously turn-away business if it did not fit a narrow model.  But our panel’s point was simple: with narrower focus often comes higher margins, more effective sales/marketing, and more repetitive business.

My Session’s Thesis Focused on the Following Benefits

  • Vertical positioning helps service providers differentiate services – industry Expertise keeps service providers ahead of commoditization pressure
  • Verticalized services can provide higher margins – deep industry knowledge will command a premium charge
  • Vertical specialization simplifies demand generation – enabling greater focus with improved response rates
  • Vertical focus lead to discussions with C-level executives – To better align providers with their clients’ business strategy

Successful Service Providers Share Vertical Advice

This year’s Citrix Summit panel featured four hosted services business leaders who spoke candidly about their vertical experiences:

These individuals were successful Citrix Service Provider partners who I knew of…  but for the most part, I’d never probed about their company strategy, or asked what they did that made them successful.  So it was a truly candid and out-in-the-open conversation.

The Panel Shared Vertical Advice on a Variety of Topics:

  • Did you verticalize on “Day-1”? How/when did you arrive at this vertical?
  • How has vertical focus helped marketing, margins, etc.
  • What are your top hosted apps?
  • How do you go-to-market: how do you sell, what are your messages, what are your avenues?
  • Do you compete on price? What do you charge for your service(s)?
  • Outside of technology, what did you do to excel in your chosen verticals?
  • What’s your competitive advantage?
  • War-stories about failures? Lessons-learned?

What We Heard

The panel discussion was far-ranging. But the results are applicable to any service provider looking to excel in hosting apps, desktops, or entire workspaces:

  1. To specialize, you need to acquire vertical subject matter expertise – in the form of staff: Just about all hosted workspace panelists agreed success in a specific market required specific market expertise. And this couldn’t be acquired simply by market research. They key was to build a staff – particularly of marketing and salespeople – who understood the specific nature, jargon, regulatory issues, etc. of a specific market. Building this competency was critical not just to credibility, but also to internalizing the needs of the market being served.
  2. No, we don’t worry about Amazon: The service provider panel briefly discussed how Amazon is targeting the platform play with commodity IaaS and “bare” desktops. No one on the panel expected that AWS in any way would try to pursue creating “business ready” desktops or hosted workspaces.  Creating always available, specialized vertical hosted workspaces will seem to remain the domain of partners like Citrix Service Providers who add specific value, customer knowledge, and service
  3. After a handful of customers, you pretty much know which apps are important: When hosting desktops and workspaces, one big question on people’s minds is always “which are the most important applications for each vertical?”  The consensus was, after your first 3-4 customers, things pretty much become repeatable, the top applications reveal themselves, and you know what to expect when you walk into your next engagement.
  4. 1, 2 or 3. Never 10. When specializing, how many verticals is the right number?  The sense the panelists gave was that it’s easy to excel in 1 or 2, maybe even 3. But much more than that and you lose focus, it’s harder to market yourself, and you start being perceived as a generalist.
  5. Knowing a vertical means knowing where the customers are. In other words, if you’re focusing on a specific industry, you’d better know the relevant industry associations, technology special-interest groups, trade shows, magazines and web sites.
  6. Failure takes the form of “sure, we can do that” – The sage advice given by one of the panelists… don’t fall into the trap of doing bespoke/custom work for every client. Pretty soon projects will tend to loose profitability and reproduceability. The most profitable hosted workspace businesses center around a core set of services, and incorporate only minor customizations – usually having to do with integrating specific applications and workflows.

If you’re a service provider and have found these ideas work – or have related suggestions, I’d sure like to hear more from you in the comments section!

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