Table of contents:
Vertical SaaS
Horizontal SaaS
Real-world examples
Pros and Cons: Vertical vs Horizontal SaaS
Which SaaS model suits your business
Key Takeaways
- Vertical SaaS: Tailored for specific industries with specialized features (e.g., healthcare or life sciences), offering better alignment with industry needs but limited flexibility across other sectors.
- Horizontal SaaS: Broad solutions like CRMs that cater to multiple industries, providing scalability and versatility but sometimes lacking niche functionalities.
- Choosing the right model: Businesses often benefit from a mix of both Vertical and Horizontal SaaS, balancing specialized tools with adaptable, cross-functional solutions.
Understanding Vertical SaaS
Vertical SaaS (Software as a Service) refers to cloud-based solutions tailored to meet the specific needs of a particular industry or niche. These solutions are designed with features and functionalities that address the industry's unique challenges and requirements. For example, a Vertical software solution for the healthcare industry might include modules for patient management, electronic medical records (EMR), and appointment scheduling.
These providers offer more specialized and fine-tuned SaaS products for different industries by focusing on a specific vertical. This leads to improved efficiency and effectiveness for businesses operating within that vertical. However, the downside is that these solutions may not be as flexible or adaptable to other industries.
Exploring Horizontal SaaS
Horizontal SaaS, on the other hand, provides solutions that cater to a broader customer base in a wide range of industries, functions and business models. These solutions are designed to be versatile and flexible, offering a wide array of functionalities that can be used across various sectors. Examples of Horizontal SaaS include customer relationship management (CRM) systems, project management tools, and SaaS management platforms.
Because they are not tied to any specific industry, Horizontal SaaS solutions can be more adaptable and scalable. They are often used to address common business needs that transcend industry boundaries, such as sales, marketing, finance, and human resources. However, the trade-off is that they may lack the specialized features that a Vertical SaaS solution can offer.
Real-World Examples of Vertical and Horizontal SaaS
To better understand the differences between Vertical and Horizontal SaaS, let’s look at some real-world examples. A prime example of Vertical SaaS companies is Veeva Systems, which provides cloud-based solutions specifically for the life sciences industry. Veeva offers tools for regulatory compliance, clinical trial management, and customer relationship management tailored to pharmaceutical and biotechnology companies.
In contrast, Salesforce is an example of Horizontal SaaS. Salesforce's CRM platform is used by businesses across various industries to manage customer relationships, sales processes, and marketing campaigns. Its versatility allows it to be customized and used by companies ranging from small startups to large enterprises.
If you don´t know where to start or how to find SaaS that suits your business needs, there are several different online sources tailored to find the best fit for you, such as G2, SaaS Marketplaces, or NachoNacho!
Pros and Cons: Vertical SaaS vs Horizontal SaaS
Both Vertical and Horizontal SaaS have their own sets of advantages and disadvantages:
Which SaaS Model is Right for Your Business?
Choosing between Vertical and Horizontal SaaS depends largely on your business needs and industry requirements. If your business operates within a highly specialized industry with unique challenges and regulatory requirements, a Vertical SaaS solution might be the best fit. These solutions can offer the tailored functionalities and industry-specific support that your business needs to thrive.
On the other hand, if your business requires a more flexible and scalable solution that can address common business functions across multiple departments or industries, a Horizontal SaaS solution may be more suitable. These solutions offer the versatility and adaptability to grow with your business and meet a wide range of needs. Ultimately, the decision should be based on a careful assessment of your business requirements, industry standards, and long-term goals.
In many cases, businesses are in need of SaaS in both the Vertical and Horizontal categories. As SaaS has grown and evolved, subscription-type services are present in almost every aspect of a company, no matter how broad or narrow the area is. Since most businesses need both adaptability and efficiency in their industry-specific tasks, a mixture of both Vertical and Horizontal SaaS often creates the best results.
Whether Vertical or Horizontal SaaS is the best fit for your company, managing access, cost and utilization will always be crucial for efficiency within your software environment. With the help of Substly, SaaS management will become a breeze, allowing you to maximize the value of your IT investments, with minimum effort. Consider setting up a free trial or contacting our product team for a demo!
Related articles
SaaS Management: What is it, tips for getting started & best practices
SaaS Vendor Management: A Guide for Small and Medium-Sized Businesses
