What are the top three IT vertical markets in 2012?

Channel partners say health care IT services still rank above other IT vertical markets, but real estate and energy practices show promise.

Health care remains one of the most active and lucrative IT vertical markets for solution providers, even though the urgency spurred by federal regulations and funding programs has eased. Channel partners looking for other IT vertical market specializations have found success in the utility and real estate sectors. These vertical markets have gained momentum with the increased demand for energy efficient operation that can be realized using IT systems.

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In many cases, what started off as electronic health records (EHR) projects have blossomed into deeper relationships with customers, according to solution providers. BCC Research predicted that health care technology would grow from about $7.4 billion in 2011 to $17.5 billion in 2016, which is a compound annual growth rate (CAGR) of about 18.7%.

"For better or worse, health care organizations just don't shrink in terms of revenue," said Robby Hill, president and CEO of HillSouth, an MSP and IT infrastructure provider in Florence, S.C. "Our opportunities started with the stimulus package, we saw huge opportunities."

Health care is by far the company's fastest growing practice, Hill said. HillSouth centered the development of its managed services offerings around health care customers' needs, which was instrumental in driving HillSouth's revenue growth of 330% during that timeframe, Hill added.

HillSouth deliberately chose not to represent EHR software developers based on the challenges it observed within some of its accounts. Instead, HillSouth hired a services professional with EHR experience who could help guide client recommendations and then ensure their networking, server and client systems hardware investments would support the software.

"We partner with the client and become the client's advocate in making the decisions and keeping the systems running," Hill said.

Baroan Technologies, an MSP in Elmwood Park, N.J., stepped up its investment in the health care IT vertical market with the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act, said Guy Baroan, founder and president.

Like HillSouth, Baroan Technologies is focused primarily on smaller clinics and doctors that need to get their infrastructure up to snuff -- not just to serve their patients but to comply with new policies that affiliated hospitals are adopting, Baroan said. The company has also allied itself with EHR software developers Aprima Medical Software and NextGen Healthcare.

Baroan Technologies' influence in health care usually spreads deeper than health records installations into servers, networking deployments and managed services, Baroan said.

Energy and real estate are up and coming IT vertical markets

According to solution providers, two other IT vertical markets worth attention -- regardless of geography -- are commercial real estate and utilities. Both industries are undergoing massive transitions related to the drive for improved energy efficiency, requiring IT systems upgrades.

Silicon East Inc., a solution provider in Manalapan, N.J., has seen a resurgence in investments by real estate developers, traditionally one of the company's strongest vertical segments, said President Marc Harrison.

Much of that activity has come in the form of IP surveillance systems being installed in commercial rental properties and in technologies that help submeter electricity consumption in individual apartments or offices, he said. 

"All of these systems are now controlled by PCs," Harrison said.

Part of the potential for real estate technology is tied to the so-called "smart cities" movement, which is inspiring property managers to add wireless broadband, security solutions and energy management platforms to their real estate infrastructure.

Pike Research predicts that between 2011 and 2020 there could be $108 billion invested in smart cities infrastructure, which has the attention of high-tech giants like Cisco Systems and IBM, and by extension, their channel partners.

Utility companies also are rethinking IT infrastructure investments, in large part due to developments surrounding the smart grid, Hill said. A February 2012 report from Forrester Research, "The IT-Driven Energy Revolution," reports that IT executives for utility companies see the following four concerns as their top priorities:

  • Meeting regulatory and environmental compliance (54%);
  • Implementing or upgrading smart meters (41%);
  • Implementing or expanding use of mobile technologies for field service workforce (38%) and;
  • Upgrading distribution systems for smart grid (38%).

That mindset has translated into a HillSouth practice focused on developing middleware to help electric power coops share historical energy consumption information with their customers, Hill said. HillSouth's application extracts data from databases for use in consumer energy dashboards, he said.

"Electric co-ops need desperately to market their services to customers in a way that helps customers make energy efficiency decisions," Hill said.

To address this opportunity more effectively, HillSouth recently invested in becoming an Oracle partner and hired software developers with database expertise. This investment cost more than the training and development needed to focus on health care, but Hill said his company expects it to pay off across its managed services practice. 

About the expert
Heather Clancy is an award-winning business journalist in the New York City area with more than 20 years’ experience. Her articles have appeared in Entrepreneur, Fortune Small Business, the International Herald Tribune and The New York Times. Clancy was previously editor at Computer Reseller News, a B2B trade publication covering news and trends about the high-tech channel.

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