Vertical SaaS Vs. Horizontal SaaS

Software as a service, otherwise known as SaaS, is a modern method by which clients can use a specific kind of software via the cloud as opposed to needing to download software onto physical devices. This modern service makes it easier to utilise software anywhere and at any time.

Instead of paying a once-off fee to purchase the software and download it onto the device of choice – for instance, a laptop or tablet – customers pay a regular subscription fee for the use of the software.

From there, users can log in to the software by means of its corresponding application, and this can be done from any linked device with an internet connection.

There are plenty of different types of SaaS platforms these days and there are products that are suitable for just about any and every industry you can think of. From fintech to the health sector, there aren’t many things that well-designed software can’t make easier and more effective.

However, in addition to different SaaS options that are designed for specific industries and uses, there are two fairly distinct types of software, and all SaaS platforms fall into either one or the other category.

That is, vertical SaaS and horizontal SaaS.

 

What is Horiztonal Saas? 

 

Horizontal SaaS refers to platforms that cater to a broad range of industries. They offer a service that is generalised and can be used across a variety of completely different sectors.

To identify horizontal SaaS, the best thing to do is just to look at what it does (or what it’s intended to do) and if it’s fulfilling a need that many different types of businesses have – that is, responding to a common problem.

For example, something that businesses across industries need to be able to manage is payments, so any kind of SaaS that provides a general payment software platform via the cloud would be an instance of horizontal SaaS. If it becomes specific to payments in a certain industry, however, that’s different.

Another very common example is customer relationship management (CRM) systems. Businesses in all sectors, from fintech to hospitality, need to deal with customer relations, so CRM systems are very generalised and are, thus, considered horizontal SaaS.

Horizontal SaaS is all about catering to common business needs and providing solutions that are flexible and scalable too, with the potential for customisation, in some cases.

 

 

What is Vertical SaaS?

 

Vertical SaaS, on the other hand, caters to the needs of more specific industries. This kind of software offers services that target certain sectors, making their client base fairly limited. However, if the product is effective, that isn’t a problem.

An example of vertical SaaS would be cloud-based software that is designed specifically for healthcare professionals. The software may offer services such as management of patient records, appointment scheduling, billing, practice management and more.

These things are incredibly useful for doctors and other healthcare practitioners, but the software would be pretty useless to anybody not in the medical field. Thus, this example of vertical SaaS provides a very specific, targeted service.

In many ways, this highly specialised kind of software enables businesses to solve more complex challenges in the most efficient way possible, potentially allowing them to be more effective, efficient and competitive within their niche.

A Direct Comparison of Vertical SaaS and Horizontal SaaS

 

In the most basic sense, the biggest difference between vertical SaaS and horizontal SaaS is that the latter has more general use in a wide variety of industries, while the former is specific and specialised, tailored for certain industries.

 

Target Audience

 

• Horizontal SaaS: Suitable for a broad range of industries.
• Vertical SaaS: Specifically designed for use in a particular industry.

 

Scalability

 

• Horizontal SaaS: Very scalable with great flexibility for a diverse range of needs in business.
• Vertical SaaS: Not particularly scalable but greater focus and deeper integration within specific sector.

 

Market Reach

 

• Horizontal SaaS: Broad appeal across markets.
• Vertical SaaS: Specific, niche market focus with an appeal that is completely industry-specific.

 

Competition

 

• Horizontal SaaS: Lots of competition across plenty of industries.
• Vertical SaaS: Less competition due to specialised design and purpose.

 

Customisation

 

• Horizontal SaaS: General design and usage that can be tailored to specific industries.
• Vertical SaaS: Provides particular features that are tailored to industry-specific needs.

 

Implementation

 

• Horizontal SaaS: Fairly quick and easy to implement due to its general nature.
• Vertical SaaS: Can require a bit more customisation to execute specific workflows and tasks.

 

Both horizontal and vertical SaaS platforms have important functions, making operations more effective and efficient by means of software.

Some industries require more specialised software than others depending on the complexities of their functions, so it’s possible that both vertical and horizontal SaaS platforms may be used by the same business simultaneously.