The financial vertical, though tough to break into, offers managed services providers relatively secure footing.
That was the message of a presentation by Harry Srolovitz, a veteran of the financial sector, at the ASCII Group's Success Summit held this week in East Brunswick, N.J. As the owner of Praxis Data Systems, an MSP headquartered in Gibbsboro, N.J., Srolovitz has worked with banks and insurance companies for about 27 years.
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MSPs interested in the financial vertical first must understand customers' unique IT needs, he said. "When you look at the financial industry, there are a lot of things that can stand out that are a lot different than some of the other industries." For example, financial firms generally rely heavily on technology and, typically in smaller firms, have a "very thin layer of expertise."
Srolovitz also emphasized pressures around regulatory compliance as one of the market's defining characteristics. "[Customers] get audited every 10 minutes for different aspects of the business, whether it's the risk-management side, the loan side, the technology and security." As with the healthcare vertical, "the penalties are very steep," he noted. "The penalties with banks can be serious [enough] to shut a bank down or [force] a takeover." On top of having limited resources to handle regulatory compliance, firms must cope with regulations that change frequently, making compliance "a moving target."
With compliance being so important, these firms have "no choice but to invest in technology and security to keep their institutions protected, reliable, operational [and] recoverable [to] avoid fines and reputational disaster," creating an opportunity for MSPs to step in and take the lead, according to Srolovitz.
The vertical, while challenging, has its share of distinctive benefits, he said. One of those benefits is MSPs will often work with a bank's board of directors, which "at the end of the day ... are really charged with governance" and "carry the burden of liability." He noted Praxis Data often gives presentations directly to the board. Making connections with a bank's board members is a "great segue" into a customer acquisition, he said.
Another benefit is customer agreements, once made, are often "very profitable, very sticky and very long ... because, now, you're building this big trust factor." However, he added, MSPs must understand that they take on their customers' liability concerns and should price their services accordingly.
To get started in the financial vertical, he advised MSPs to learn about four regulatory agencies and frameworks: the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Federal Financial Institutions Examination Council and Gramm-Leach-Bliley Act. He suggested reading the FFIEC's IT handbook for an overview of compliance requirements, as well.
He also encouraged MSPs to learn about the big providers in the market -- namely, Fiserv, Fidelity Information Systems, Jack Henry and D+H -- not only to understand the providers' roles in financial firms' systems, but because they are competitors. "What we're ... finding now is these organizations are starting to offer their customers managed services, down to the very granular [level] of what we do, even servicing PCs." But while they pose competition, these large providers can't develop the same types of relationships with customers that MSPs usually have.
Furthermore, the financial vertical isn't overly saturated with MSP competition. "There are not a lot of MSPs out there that do a lot of business with banks, because there is so much involved with it. It's a lot of work. It's a lot of time. It's a lot of expense upfront. But that's also a good barrier for others coming into that market," he said.
News roundup for the week of Aug. 14
Here's a look at the highlights:
- Datapipe Inc., a managed services and managed cloud services provider, has acquired Adapt, a managed cloud services provider and integrator based in the United Kingdom. Datapipe said the purchase -- the financial details of which were not disclosed -- will expand the company's scale and services capabilities in Europe. Adapt is an Advanced Amazon Web Services Consulting Partner. Datapipe, based in Jersey City, N.J., manages multiple cloud platforms, including AWS, Microsoft Azure and Stratosphere, Datapipe's hosted private cloud. The Adapt deal follows another cloud-oriented transaction: In 2015, Datapipe acquired DualSpark, an AWS assessment, automation and migration firm.
- Agiloft Inc. rolled out an expanded partner program that offers 35%-plus margins on software-as-a-service (SaaS) contracts and on-premises sales of help desk, contract management and custom workflow applications. Colin Earl, Agiloft's CEO, said the margin starts at 35% and can increase up to 45% based on the past 12 months' sales. The revenue from SaaS contracts continues for the channel partner as long as the customer and reseller remain with Agiloft, Earl said. "Naturally, the partner also gets all the money from the consulting services, and these are typically the same size as the initial sale," he said. He noted that sales generated through partners have grown 300% over the past year, while the number of partners in the program has more than doubled.
- Networking vendor Juniper Networks Inc. will redesign the Elite-level tier within its Partner Advantage Program, adding five partner categories, according to a blog post by Matt Hurley, Juniper's corporate vice president of global channels. Juniper designed the categories to support different channel business models and their respective needs under the following designations: Next Gen, Rising Star, Cloud Service Partner, Federal Partner and Volume Partner. Hurley also stated that Juniper will launch a points-based rewards program as part of its deal registration system. The program aims to speed up the management and tracking of deals, and it will likely debut Sept. 1.
- Cybersecurity vendor Imperva rebooted its PartnerSphere Channel Program. Enhancements include higher margins on deal registration, a bolstered enablement program and marketing programs using Imperva best practices.
- NTT Communications Corp., a part of NTT Group that focuses on information and communications technology products, reported it met its goal for onboarding 15 master agents this past March. Since April, NTT Communications has done business with more than 100 new subagents, according to the company.
- VeloCloud Networks Inc. released a new certification for partners providing Cloud-Delivered SD-WAN-based products and services. Additionally, the company said it has registered more than 100 channel partners, which has expanded its global reach in Europe and Asia.
- DataCore, which provides software-defined storage and data infrastructure software, said Avisolve has become a DataCore Premier Partner in the Americas. Avisolve, based in Gilbert, Ariz., is a value-added reseller with project experience that ranges from building data centers to engineering customized software, according to DataCore.
- Arrow Electronics Inc. will incorporate StrataCloud's SDI Install into Arrow's FlexPod offering for resellers. StrataCloud, a provider of software-defined infrastructure, earlier this year unveiled a SDI Install, targeting VARs and system integrators. The product aims to reduce the installation time for Cisco and NetApp's FlexPod product line.
- Under a new agreement, distributor Interwork Technologies Inc. will provide iboss Inc.'s cloud-based network security and data protection platform to its North American partners.
- Masergy Communications Inc. has expanded its Global Office service to include Mexico and Italy. The company's Global Office offerings include Global Unified Communications as a Service and SIP Trunking.
- Relayware, a partner relationship management software provider, has appointed Gordon Rapkin as CEO. Rapkin succeeds Bob Mann, who will continue to chair Relayware's board of directors. In the CEO position, Rapkin will drive expansion into vertical markets and cultivate the company's international customer base.
The Market Share is a news roundup published on SearchITChannel every Friday.
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