Taking SaaS and Managed Services Vertical

Posted on January 29th, by thinkstrategies in managed security services, managed services, MSPs, MSSPs, Netsuite, Perimeter eSecurity, SaaS, Salesforce.com, vertical markets. Comments Off on Taking SaaS and Managed Services Vertical

With the Software-as-a-Service (SaaS) movement becoming generally accepted among organizations of all sizes, a growing number of SaaS vendors are seeking to differentiate themselves by creating on-demand solutions specifically designed to address the unique requirements of particular industries or vertical markets.

THINKstrategies’ SaaS Showplace includes nearly 600 company listings by industry. Many of these companies are simply targeting specific industries rather than offering industry-specific solutions. However, a growing number are designing their on-demand solutions to cater to the specific needs of targeted industries.

The shift in attention is timely according to THINKstrategies’ latest SaaS survey in conjunction with Cutter Consortium. In the second installment of our three-part series on the findings of this survey we will discuss how a substantial proportion of the survey respondents are either currently using industry-specific SaaS solutions or considering them.

Leading SaaS vendors, such as Salesforce.com and NetSuite, have recognized the growing opportunities for industry-specific SaaS solutions. NetSuite launched its SuiteFlex ecosystem to respond to this opportunity, and Salesforce.com recently followed suit by expanding its AppExchange to encourage vertical market solutions.

Another indication of the growing focus on industry-specific SaaS solutions is the entry of venture capital (VC) funding for industry-specific SaaS vendors. A recent example is Procore, a SaaS vendor focused on the construction industry, which announced that it had completed its Series B financing led by Great Pacific Capital.

This same phenomena is also emerging in the managed services sector. In contrast to the SaaS trend, overall market acceptance of managed services has been slower for a variety of reasons, so managed service providers (MSPs) are attempting to stimulate greater demand by making their services more appealing to specific market segments.

A pioneer in industry-specfic marketing of managed service solutions is Perimeter eSecurity, previously known as Perimeter Internetworking. Perimeter began as a full-service network service provider, but found particular acceptance of its security-oriented services among community banks. It decided to focus nearly all of its sales and marketing resources on the community banking sector, and today is the dominant player in that market.

Through a series of acquisitions–most recently Message Secure, a managed security services provider (MSSP) focused on financial institutions and other businesses in the U.S.–and alliances with Internet Service Providers (ISPs), Perimeter has expanded into other segments of the market.

I think the verticalization of the SaaS and managed services markets will be one of the major trends in 2007.

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