Within the SaaS market, there are two main models which have reshaped how businesses offer their solutions: horizontal and vertical. These models represent two unique approaches which accommodate the diverse market needs, both horizontal and vertical solutions have their own set of characteristics and advantages. Businesses may opt to utilise a mixture of both types of solutions to meet their growing operational needs.
Horizontal Solutions: Versatile Solutions Across Industries
Horizontal solutions offer versatility, their software functionalities are designed to serve a wide array of industries. These companies, such as, Microsoft 365 (previously Office 365), Adobe, and HubSpot, focus on providing tools and services that are applicable across various industries. These types of solutions are popular because they offer standardised functionality, like Customer Relationship Management (CRM) systems or accounting, which most businesses require.
Horizontal solutions have a large presence in the market as they address universal business needs. By targeting basic yet essential operations, these solutions captured a broad market, leveraging their scalability to appeal to diverse businesses – from startups to large enterprises. This approach enabled horizontal solution providers to establish a foothold in the SaaS landscape by addressing common pain points across industries.
The main benefits of using a horizontal solution for businesses is that they are most commonly the cheaper option as they adopt a one solution fits all model. They are also widely used so can be easy to research and there are often multiple businesses offering similar solutions so users can shop around to find the solution which appeals to them the most.
Vertical Solutions: Specialised Industry Specific Solutions
Vertical solutions on the other hand cater specifically to individual industries, tailoring their software to meet the unique demands of a particular industry. These companies delve deep into niche markets, addressing industry-specific challenges and providing highly customised solutions. Elite Dynamics are an excellent example of a vertical, as they offer a range of software solutions designed specifically for the park & marina industry. Their custom-built solutions are made to address the needs of the park & marina industry, with functionality specific to businesses within the industry.
The success of vertical solutions lies in their ability to understand and address the intricacies of specific industries. This focused approach allows for more comprehensive solutions with greater value to the industry than horizontal solutions. What sets vertical solutions apart is that businesses often rely on them much of their day-to-day operations and can’t simply switch to an alternative solution.
For the user there are many advantages to implementing a vertical solution, the largest one being that the solution is unique to their industry and so has specific functionality and support which they would not have with a horizontal solution. These solutions are usually more expensive; however, as with most purchases, the price reflects the quality of the service or product.
Using Horizontal and Vertical Solutions in Combination
While horizontal and vertical solutions both have their place in the market and offer businesses unique benefits from one another, they can often be used in unison to complement one another and gain maximum functionality and efficiencies. As discussed, vertical solutions dive deep into niche markets to address the specific needs of that industry whereas horizontal solutions offer functionality which is needed across many industries and is not industry specific.
By using a mixture of both horizontal and vertical solutions businesses are able to leverage the strengths of both models. Horizontal solutions can be used for more broad needs like finance or human resources whilst vertical solutions can be used to gain functionality unique to the businesses specific industry.