Going Vertical

InCentric Solutions has built a business around being in the right place at the right time. Based in Morrisville, N.C., just outside of Raleigh, the VAR is surrounded by businesses in the life-sciences market--pharmaceutical firms, laboratories and research companies.

"We had one, two, three life-sciences customers, and before we knew it, we had a vertical," says Troy Webb, chief marketing officer at InCentric. "If you look at our top 10 accounts, six of them are life-sciences companies. That vertical makes up about 50 percent of our business in revenue."

For life-sci companies, Web portals, business-process modeling and collaboration are solution hotspots, according to Webb.

Among InCentric's customers, many of which reside in the vicinity of Research Triangle Park, N.C., about 70 percent are midmarket players. "A few are mammoths--like GlaxoSmithKline--but most are companies with 200, 300, 400 employees," Webb says.

Keeping busy in the life-sciences arena is a fairly easy task for InCentric. The VAR's headquarters are just 5 miles or so from IBM's demo center, where potential and existing customers can see solutions in action. Webb says he leverages seminars, too, bringing clients to top-notch local venues with "excellent keynote speakers and great menus." Case in point: InCentric recently landed a handful of new accounts at a Brazilian steakhouse, where GlaxoSmithKline's vice chairman Robert Ingram addressed attendees.

But InCentric isn't the only VAR leveraging its location to tap midmarket verticals. Keith Boyer, founder and COO of Hampton, Va.-based Data Management Group (DMG), says the firm started off in 1995 as a horizontal player but now earns its bread and butter from four vertical markets: government, nonprofits, manufacturing and transportation.

"Because we're so close to Washington, D.C., we have a lot of exposure to government agencies. And many nonprofit organizations have decision-making offices in that area as well," Boyer says. "Then, from working with the Department of Transportation, we were able to 'broadcast' ourselves to transportation companies."

DMG, in fact, has gone strictly vertical in the past several years. Those four markets account for about 75 percent of its revenue; the rest comes from health-care and financial services firms.

Most of the solution provider's customers are small and midsize companies--those with $50 million to $750 million in annual revenue, Boyer says. For government and health-care clients, DMG's solutions focus on performance management and compliance with legislative regulations. Manufacturers need inventory and supply-chain management; nonprofits use business-intelligence systems to measure the success of marketing and fundraising campaigns.

"There comes a point when you stop going after different types of accounts and start expanding the ones you've got," Boyer says. "That's where domain expertise comes in. Our success in vertical markets lies in 'building once, selling many.'"

Rhett Daniel of Daniel IT, an Athens, Ala.-based e-commerce VAR, has discovered the same thing. His company has been a cross-industry player from its inception, but now Daniel says he's beginning to focus on "domain depth."

"Through our work with the State of Oregon, we've been looking at e-government products and initiatives, and there's really not a lot out there. This is a huge opportunity for us," Daniel says. "In the next five years, government is going to be an important part of the business."