To be horizontal or vertical? Or not to be horizontal or vertical? That is the question!
But hang on, what do these mean? Simply put, it is a decision that goes beyond mere software selection. Here is a quick background story: In the dynamic realm of Software as a Service (SaaS), businesses may or may not encounter a fork in the road: horizontal or vertical solutions.
Each offers distinct advantages and caters to different needs.
Enough with the anecdote; let’s cut through the jargon and dive deep into the heart of the horizontal versus vertical SaaS debate. Do you need one? Which one do you need? Get ready to understand the nuances and start making informed technology decisions today!
Read more: Fundamentals of Cloud | Public v Private, SaaS v Hosted, Multitenancy
What is horizontal SaaS?
Horizontal SaaS refers to cloud/ SaaS-based software, applications or solutions designed to cater to a wide range of industries and business types. They offer general-purpose tools, features, modules, and functions to address most common business needs.
Horizontal SaaS solutions are sometimes dubbed a “Swiss Army knife” due to their:
– Versatility to meet a variety of business challenges
– Flexibility to customise or integrate with third-party tools (e.g., Zapier) to suit individual needs, despite not being tailored to a particular industry
– Affordability compared to niche solutions, thanks to their economies of scale
– Familiarity and reliability, as many horizontal SaaS are well-established and widely recognised
Due to their nature, these horizontal SaaS solutions attract a wider range of users and customers. You may have already used at least one during your day-to-day work.
Does any of the following products sound familiar to you?
– Sales, Marketing, and Customer Service departments: HubSpot, WordPress, Salesforce, etc.
– Communication and collaboration: Slack, Zoom, Microsoft Teams, etc.
– Data storage: Dropbox, Google Drive…
Read more:Why Everything You Know About SaaS Software Might Be Wrong
What is vertical SaaS?
Vertical SaaS refers to cloud/SaaS-based software, applications or solutions that focus on specific verticals/ industries (such as hospitality, manufacturing, health care, energy, etc.), niche markets, or a smaller, more specialised customer base. Unlike horizontal SaaS, vertical SaaS has custom features that address unique pain points, challenges, and rules of a specific sector.
As a result, vertical SaaS solutions require more complex infrastructure to meet user demand and industry-specific regulations and can be more expensive. Providers of this type of cloud solution typically possess in-depth knowledge of the industry they serve, allowing them to design solutions that truly reflect and resolve the nuances of that market. Customisations for these solutions, though not rare nor impossible, are often complicated and time-consuming.
Examples of vertical SaaS solutions include:
– Hospitality management software like Infor HMS, Cloudbeds, and Opera for hotels and resorts
– ERP for manufacturing, like Infor CloudSuite, SAP S/4 HANA, Microsoft Dynamics, etc.
Due to being extremely focused, vertical SaaS solutions can help end users enhance their efficiency through streamlined, automated workflows while ensuring businesses stay compliant.
Read more:6 Key Criteria to Consider When Choosing a SaaS Financial Management Solution
Customers and software providers tend to have deeper relationships, strengthened through timely support and relevant digital transformation advice. The industry-specific solutions combined with a strong, ongoing relationship with an IT provider can lead to unique value propositions that are difficult for horizontal SaaS providers to replicate.
In short, the main differences between these two types of SaaS solutions can be summarised as below:
Nevertheless, both models currently experience positive growth in the growing SaaS ecosystem.
What are the key benefits of SaaS/multi-tenant cloud and legacy, on-premise solutions? Understand the basics in depth with this simple infographic.
A horizontal SaaS business case: HubSpot’s broad appeal
HubSpot is an integrated platform that aims to elevate fundamental business functions, i.e., marketing, sales, and customer service, with comprehensive toolsets and a unified, user-friendly interface. The platform eliminates the need for separate systems for managing contact details, emails, workflows, content, AI, and more.
Additionally, HubSpot provides a free, simple CRM function alongside an on-demand training platform (HubSpot Academy) to empower users to quickly get used to and run the platform on their own. This makes HubSpot incredibly appealing to businesses with limited budgets, encouraging them to explore HubSpot and, eventually, pay for more advanced features.
Read more:What is Lift and Shift? Is It the Cloud Migration Strategy for You?
Teams can create various campaigns for their specific industries with the provided building blocks, e.g., email templates, landing page builders, social media management tools, etc. For instance:
– A software company might use HubSpot to nurture leads through a webinar series.
– A non-profit organisation could leverage it for fundraising campaigns.
– An e-commerce store for personalised product promotions.
The underlying tools remain the same, but their application is highly adaptable.
The self-service, combined with a freemium approach, significantly lowers the barrier to entry for diverse groups of users.
Read more:Why CFOs should be looking to the Cloud
A vertical SaaS business case: Enhancing guest experience with Infor HMS
Infor HMS is a property management system designed to empower hoteliers to deliver not just streamline their operations; it can help them deliver exceptional guest experiences with a wide range of features and functionalities, including:
– Property management: Manage reservations, check-in/ check-out, room inventory, and guest profiles across chains, thus providing more tailored services.
– Revenue management: Optimise pricing, manage inventory, and forecast demand to maximise revenue.
– Business intelligence: Analyse data, track performance, and utilise insights for more informed decisions.
– Integrations: Seamlessly expand the capabilities to make a complete suite (by adding Sales and Catering modules, financial management, etc.) or integrate with other hotel systems, such as POS, CRM, procurement, etc.
– Mobile capabilities: Empower staff with mobile tools to access information and manage tasks on the go.
Read more:10 Questions to Consider for Successful Financial Management Implementation
Infor HMS creates a centralised hub for all operational data, thus empowering hotel staff to make informed and highly personalised decisions, enhancing the experience for each guest. Moreover, the mobile app allows staff to respond quickly to guest needs, from changing new towels and requesting in-room meals to booking a day trip.
Both horizontal and vertical SaaS offerings are experiencing significant growth within the expanding SaaS ecosystem and becoming integral to our day-to-day operations. Horizontal SaaS provides versatile, widely applicable solutions for a broad customer base, while vertical SaaS delivers tailored, industry-specific tools that address unique pain points and compliance needs.
Ultimately, the choice between them depends on a business’ specific requirements, size, and industry. Nevertheless, you do not have to choose one over the other; a combination of both solutions is also desirable if it can help your organisation. The key to smooth implementation lies in understanding the strengths and weaknesses of each approach.
With this in mind, will you consider deploying SaaS solutions to achieve greater efficiency for your business?
