Why vertical SaaS is booming

SaasCover
4 min readAug 20, 2023

Within the SaaS landscape, vertical SaaS companies have emerged as significant players by focusing on serving specific industries or niches. This article is our take on the rise of vertical SaaS companies and why we think that vertical SaaS companies will be more in demand in the future.

What is Vertical SaaS?

Unlike horizontal SaaS, which offers solutions that cater to a wide range of industries, vertical SaaS providers specialize in serving specific sectors or niches. By narrowing their focus, vertical SaaS companies can deliver superior customer experiences and provide more value to their clients.

Several successful examples of vertical SaaS companies exist across various industries.

E.g. — Veeva Systems which is a prominent market player in its category caters solely to the life sciences and pharmaceuticals sector by offering cloud-based solutions for those fields.

Procore Technologies is another prominent instance because it provides construction industry-specific project management software.

Market Stats

A number of factors are contributing to the explosive expansion of the vertical SaaS market. MarketsandMarkets predicts that the vertical SaaS market will expand from its current $20.5 billion in revenue to $60.7 billion by 2022. The significance of vertical SaaS in the modern business landscape is demonstrated by this rapid expansion.

The adoption of vertical SaaS solutions has gained a substantial pace in some sectors.

Electronic health records (EHR) and practice management systems from firms like Athenahealth and Cerner Corporation have changed healthcare.

Companies like Buildium and AppFolio have created property management software that does the same thing for the real estate industry by streamlining processes.

With fewer obstacles to entry, thanks to the powerful infrastructure and platforms that are readily available, vertical SaaS firms are thriving.

Growth Factors

Vertical SaaS companies have a great chance because of the growing need for specialist software solutions in specific areas. Some industries have distinct problems that aren’t easily solved by the typical horizontal SaaS solutions.

Improving the satisfaction of the consumer is another factor. As vertical SaaS providers are experts in their chosen fields they can tailor their offerings to meet the unique needs of their customers in ways that broad-based providers simply cannot.

Benefits

Costs associated with developing software from scratch, both in terms of initial outlay and ongoing upkeep, might make this option unfeasible for many businesses.

On the other hand, vertical SaaS solutions can be a cheaper option because they come with capabilities that are already optimized for a specific industry. Businesses can better allocate resources and concentrate on their strengths by adopting this low-cost strategy.

Another major advantage is a quicker time to market. Vertical software as a service (SaaS) solutions are tailored to meet the unique needs of a single market and typically include predefined functionality and processes.

This saves companies the trouble and expense of personalization. Businesses may quickly adopt the program and begin enjoying the benefits by making use of these pre-built capabilities.

This eliminating the need for development cycles that are mostly time-consuming.Providers of vertical SaaS solutions have extensive expertise in their respective fields. Businesses can have access to this specialized knowledge data by using their solutions.

Challenges

Vertical SaaS has several advantages, but before using it, enterprises should think about the drawbacks. One of the main challenges is incorporating vertical SaaS into already established processes. Integration of a new solution into an organization’s preexisting software and processes can be difficult. However, many vertical SaaS vendors provide extensive integration tools, which make for a trouble-free and smooth switch.

Due to the specialized nature of the capabilities given by vertical SaaS providers, vendor lock-in concerns may also develop. A common concern among businesses is that they would be stuck with one provider if they ever make the decision to transfer. Concerns like these can be reduced if firms take the time to weigh the long-term benefits and value offered by a vertical SaaS solution.

Another thing to think about is how limited the customization choices are in comparison to designing custom software. Despite the fact that vertical SaaS solutions include features and workflows that are tailored to a certain industry, customisation may still be necessary for some firms. In order to ensure that the available customisation options meet their requirements, organizations must first do a thorough analysis of those demands.

Conculsion

Inspite of few issues described above the vertical SaaS comapanies are set for major growth story as technology penetrates more into our lives.

References —

  1. Inc42 — https://inc42.com/resources/decoding-the-vertical-saas-opportunity/
  2. Mordor Intelligence — https://www.mordorintelligence.com/industry-reports/vertical-software-market
  3. SaasCover — https://saascover.com/saas-trends

4. FLG Partners — https://flgpartners.com/saas-industry-centric-business-models-horizontal-vertical/

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