Vertical Leap: How Specialization Focus Equals Big Win for Channel

Vertical Leap: How Specialization Focus Equals Big Win for Channel

First in a series of Vertical Leaps

It’s easy to think of business printing as a generalist pursuit. After all, every business does it and the mechanisms don’t seem to differ much across various industries — at least on the surface.

But the devil, as they say, is in the details. And as is often the case in the channel, so is the opportunity.

Over the course of the next few months, we’ll explore nuances of print services and document management from a vertical perspective. Our “Vertical Leap” series will show partners where optimum opportunities exist in a number of popular industry segments including health care, finance, legal, education and government.

To begin, let’s look at the solution provider marketplace as a whole. To appreciate the benefits of the vertical approach and the force-multiplying power of targeted print services, it helps to see how the broader B2B technology industry functions with regard to specialization.

Vertical Focus Makes Partners Profitable

As Alexander Graham Bell once quipped, “The sun’s rays do not burn until brought to a focus.”

We have much evidence that shows the power of specialization for solution providers. Focusing on a fertile vertical space gives partners a decided edge in revenues and growth, according to data compiled by The 2112 Group (the parent company of and distributor Ingram Micro Inc. in support of the annual IM SMB 500 list of most successful SMB-focused resellers.

Among the solution providers featured, partners servicing the top 11 vertical markets enjoy three-year average growth of 210 percent, well above the overall list average of 189 percent for partners already among the highest performing in the channel. Of those reporting annual revenues to Dun and Bradstreet, 98 percent show growth in three-year revenues versus 88 percent for the list at large.

3yr Growth Rate by VerticalLeading the pack of vertical specialists this year are those serving transportation, communications and utilities with 305 percent growth over three years. That segment is followed by business services at 250 percent; public sector at 223 percent; health care at 215 percent, retail-focused partners at 201 percent; engineering, accounting and research at 199 percent; wholesale at 195 percent; finance at 189 percent; education at 182 percent; construction at 178 percent; and manufacturing at 182 percent.

Verticals Have Strong, Specific Printing Needs

In a world where businesses spend up to 3 percent of their annual revenues on printing and imaging, 90 percent of companies do not track their spending (see infographic) in this area at all, so it’s easy to see print services as a broad solution befitting most any organization regardless of size or scope.

But a deeper look at the needs and usage patterns for print and related document management capabilities within vertical organizations makes the benefits of managed print services even more clear. According to research by All Associates, teasing out the top 10 vertical industries shows an average of 6.1 percent of revenues going to enterprise print costs – double the average for businesses at large.

Within those numbers are vertical markets with greater printing capacity – and a greater need for a disciplined approach to auditing and management of their office printing efforts. The legal industry, for instance, spends nearly 14 percent of its annual revenues on printing and imaging, second only to advertising, which comes in at 14.8 percent.

Higher education organizations spend 10 percent of their annual revenues on printing, well above both the broader business average and the typical average spending by verticals. Health care is not far behind, coming in at 9 percent. Telecommunications and finance hover just above the average at around 6.25 percent, the research shows.

In the public sector, the story is the same: Cash-strapped organizations are spending above market averages on printing and imaging, led by public K-12 schools at around 6.3 percent.

These figures make it clear specific verticals have varying needs for printing capability and an almost universal need to rein in costs and complexity associated with document management and imaging. That help must be delivered by a trusted advisor who understands not only the modern business printing landscape, but is in tune with the arcana of the specialized world these businesses exist in.

Which brings us to…

Focused Print Practices Mean Greater Engagement

Vertical focuses may mean better performance for solution providers and managed services purveyors, and vertical industries may have unique and growing print management needs, but the magic only happens when these two factors are brought together in a vertically focused managed print services practice.

Partners with strong vertical acumen understand their clients’ systems and processes, as well as their regulatory compliance and risk management burdens. Every touch on the client, from security services to backup and disaster recovery, builds deeper insight and greater customer entanglement, the key elements to the long and successful recurring revenue relationships that are the foundation of success in managed services.

More than almost any other IT service, managed print services leverage the gamut of understanding vertically focused partners have of their customers’ businesses. As a result, few services practices hold the promise of greater engagement and better opportunities for sales to existing clients than a robust business printing and imaging practice as part of a managed services provider’s bill of fare.

Whether it’s in health care, education, government, transportation or something else entirely, going to market with a vertically savvy print services offering opens a world of opportunities for the specialized channel partner.

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