The Wavelength: Vertical Markets

Every vertical market has specialized requirements, presents unique challenges, and offers unique rewards. Do some offer better opportunities than others? What are some of the tips and tricks, and are there certain “must-know” facts about each? Our panel this month tackles the topic.

Which vertical markets do you feel offer the most attractive opportunities?

Erica Calise: Non-profit organizations and churches are an untapped vertical market resource. There is a great deal of opportunity in this market. Churches and places of worship continue to provide their parishioners printed material on a weekly basis, and many of these materials are in full color.  

Jim Mooney: Based on the volume of information and speed with which it needs to be managed and mobilized, we have built out dedicated businesses and subject matter expertise within healthcare, retail, manufacturing, banking, and insurance. Enterprise vertical solutions in those industries allow customers to turn what would otherwise be too much information and create a return on investment from it.  

Brent Wesler: Financial services and healthcare are the two verticals I see significant growth in for the near future and even a decade from now. A key piece of this is due to the compliance, transactional volume, complexity of integration, and the nature and variability of those industries. These are also both industries that will never disappear, despite changing markets and economic conditions. As a workflow consultant, you always look for processes that have volume. The more volume, the more overhead. The more overhead, the more opportunity to look to technology and automation to fix the issue. Specifically within healthcare, as the population ages, there will be an increased demand for healthcare and additional pressure placed on those organizations to perform with fewer resources and a lower operating cost. 

Have you gained entry to a vertical market unexpectedly? How?

Wesler: Beverage distribution (beer/wine/spirits) was a vertical market that quickly became a successful niche for us. What started in 2016 as a one-off opportunity for accounts payable automation for a beer distributor in Maine turned into a multiyear project with more than 10 use cases across the entire organization. Outside of accounts payable automation, which primarily uses AI and machine learning for unstructured invoices, they now utilize robotic process automation (RPA) to automate numerous manual data entry processes. For example, a few industry-specific processes such as pricing and promotion updates, unsaleables, and billbacks require numerous hours of manual data entry that now use RPA to handle those tasks.  

We then identified commonalities within use cases, technologies, and among the organizational leadership. Since our beginnings, we have always been a strong player in the distribution and manufacturing verticals. We understood the vertical, but we then found a specific opportunity with beer/wine/spirits distributors. This was particularly due to the compliance standards required within the industry. We discovered that although these were commonly legacy, family-owned businesses, there would often be a progressive buyer who actively sought out improvements to their processes and solutions. 

As mentioned when discussing healthcare, the beer, wine, and spirits industry has a component that drives value more than any other vertical industry — and that’s compliance. Compliance drives investment due to risk. The risk of being fined or out of compliance drives the organization to look at workflow automation solutions that help them meet compliance standards. In the case of beverage distributors, there are compliance concepts around brands, what brand you can sell, geographically where it can be sold, and just the nature of alcoholic beverages being regulated within the US. That opens up the door for integrators to offer valuable solutions that meet these standards. 

What are some of the more complicated vertical markets that you are active in and why?

Calise: Institutions of higher education are one of the more complicated vertical markets in the industry. Universities tend to have requirements that can make it difficult for suppliers. For example, these requirements include 1) the mandate for one CPC campus-wide with zero minimum commitment, 2) on-site print shops, 3) one unified solution for multiple campuses. Engaging with this vertical requires that the supplier takes into account the additional staff and cost considerations involved.

Mark Hart: Education and healthcare are two verticals that still require complex processes for both paper and digital transformation. The legal requirements to provide learning materials, patient records, student forms, and medical records in multiple languages continue to drive printing. Although these verticals have embraced digital transformation, there are still so many families with no access to home internet services so once again a paper-based process is still required.  

What are some of the biggest challenges in the healthcare vertical?

Calise: Getting your foot in the door – larger systems are not willing to move to an alternate vendor once they are embedded with an incumbent. Hospitals are hesitant to switch suppliers. In addition, once a supplier has engaged, there are challenges with compatibility with hospital software systems (EMR integration). Also, training end users can be problematic. Hospital employees want to have a solution that has a uniform UI so that they can easily move throughout the institution and use any device.

Hart: Security, security, security! Healthcare is driven by so many local and federal laws that it is one the most difficult verticals to play in, BUT it is also one of the most lucrative.  The lifecycle of healthcare documents is very complex which offers our dealers many opportunities to help out with secure printing, scanning and overall digital transformation workflows.  

Mooney: Clinicians spend an average of 4.5 hours per day entering information into electronic health records. Improving on that reality is one of the core focuses healthcare executives face and it involves curating an ecosystem of interoperable systems that lessen the need for further manual data intervention by the extended healthcare team. As operating margins get tighter and the delta between the demand for healthcare workers and supply in the workforce continue to push further apart based on healthcare worker burnout and proportionately fewer healthcare workers entering the force, the need to drive greater efficiency through automation has never been higher. 

Wesler: It is not a surprise that healthcare offers immense opportunity, specifically within document management and workflow automation. With their transaction volume, compliance mandates, the unstructured nature of records, and integration needs, healthcare is a “holy grail” for automation. However, like financial services, there is plenty of consolidation within healthcare regarding hospitals merging, being bought, doctor offices becoming health groups, and certainly the social-economic impact of health insurance on people and processes. 

Individual healthcare providers struggle with the cost associated with managing the level of care; that’s why you see many healthcare groups, not individual primary care doctors like we used to see 20+ years ago. The economies of scale for a healthcare group are much more efficient and profitable than those for individual providers. 

A bureaucratic corporate structure directly results from this massive shift in how healthcare as an industry operates. There is less opportunity to work with small-to-midsized organizations, meaning most pre-sales efforts are spent penetrating monolith-type organizations that are an enterprise play. 

Is the strategy of vertical marketing truly actionable or is it just hype?

Hart: When selling beyond the copier into specific vertical markets, software solutions can be complex and require industry-specific knowledge, which is why having a vertical marketing strategy is very important. We believe that investing in a vertical marketing team or specialist to understand the vernacular that is being used within a particular vertical so they can help your team learn to sell as a consultant not just a typical speeds and feeds rep. 

What are some specific vertical applications where AI will really make a difference? 

Mooney: One of the key vertical-specific applications where we’re seeing AI make a tremendous difference is automating an otherwise highly manual and error-prone correspondence process between a provider and payer. Part of the big picture result is cutting down the document backlog from two weeks to as little as two days, leading to faster reimbursement and greater revenue capture. 

Wesler: As a function of our work within the beer, wine, spirits, and food manufacturing and distribution industries, we identified a clear opportunity to translate these themes into the manufacturing and distribution vertical. Typically, these organizations have made a conscientious effort to invest in automation for their factory and warehouse operations but have not translated these same efforts into their back office. 

Manufacturers and distributors often have unstructured data from a wide variety of sources that needs input into a centralized system, which usually relies on the manual efforts of multiple employees. This data can be captured, extracted, and delivered directly into their ERP, document management system, or elsewhere through artificial intelligence by way of intelligent document processing. 

This is a scalable and repeatable process across organizations and can specifically be utilized in manufacturing and distribution. 

Are there any best practices that carry through multiple verticals that you can share with us?

Mooney: The nuance is the many forms and industry use cases with which it takes place, but we see extraordinary overlap in key areas across verticals. Specifically, we see our customer organizations building out dedicated teams related to:

  • Managing and extracting insight from the evolving places where their data is being generated
  • Creating customer and stakeholder experiences that are continually meeting and exceeding modern expectations
  • Relentlessly seeking out and implementing cutting-edge technologies to not just keep up with the pace of business but to set the bar

Are there verticals that still rely heavily on paper or have they all at this point embraced digital transformation?

Calise: The K-6 Market still relies heavily on paper. Lesson plans, coloring pages, assignments, tests and review sheets are produced for student use. Again, much of these materials are printed in full color.

Hart: There are still lots of verticals that rely on paper-based processes. Education and healthcare top the list but don’t forget about finance/insurance, government and even manufacturing. Although each of these verticals is well down the path of digital transformation, there are still specific areas within each that require paper-based processes that are driven by legal and regulatory requirements. 

Wesler: We often assume that all organizations are actively moving toward adopting new technologies, but we have found that it isn’t always the case, just as you would assume in 2024 all restaurants provide online ordering and when one doesn’t, you question why. This is the same analogy when consulting with companies that haven’t taken the leap toward automation. We work with both low-tech and high-tech industries, and despite vast differences in how these organizations operate, we’ve identified that “speaking their language,” regardless of industry, has been continually successful for us. 

Organizations, particularly low-tech ones, aren’t enamored by simply rattling off a list of features; they care about the direct applications within their business. By understanding what processes these businesses complete regularly, what technology they already use, and what solutions you can offer them specifically, you can have a far more productive conversation and truly help them understand the product’s value. 

A beverage distributor doesn’t care about how a school district eliminates paper processes, just as a law firm doesn’t care about how a widget manufacturer uses automation. Adjusting the marketing, sales talk track, and demonstration strategy for each vertical makes the sales and implementation cycle smoother. 

The best practice that’s taught in solution selling, or criteria selling, is finding pain, looking for gaps is the same strategy that needs to be used in both high-tech and low-tech organizations. 

  • Don’t assume
  • Reduce confusion by speaking at a higher level 
  • Quantify the problem with metrics to substantiate your solution’s value
  • See what bothers operators and where processes can be optimized without prospects worrying about job loss or using automation to remove headcount