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Vertical SAAS vs Horizontal SAAS

Updated: Feb 21

SAAS (Software as a Service)

The paradigm of software development and software user experience is changing expeditiously. It became strenuous to synchronize between the requirements and capacity/accessibility of the user while the hardware industry continues with its upward trend in terms of price and performance. . Hence with its upward trend in terms of price and performance.

The concept and practice of SAAS have changed the traditional model of software development and user experience. Instead of installing the application on local devices, SAAS allows us to provision a server, for instance, in the cloud. The underlying IT infrastructures then deal with the rest of the process to make the application available to the end-user.

In its simplest term, SAAS is a cloud computing model designed to deliver cloud applications, including required IT infrastructure and platforms, to end users. Technically, SAAS is one of the three main categories of cloud computing, namely SAAS (Software as a Service), PASS (Platform as a Service), and IAAS (Infrastructure as a Service).

In a nutshell, SAAS is an approach to delivering applications and software services over the Internet through a subscription model. The best part about SAAS is that the end-user does not need to be an IT Expert to use it. All that requires from the end user side is an Internet connection and an Internet browser.

E-mail applications and productivity tools from Google, Microsoft, and Adobe Creative Cloud are some most straightforward SAAS applications. SAAS is also used in small, medium, and even enterprise-level business operations like collaboration, communication, sales, marketing, CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), and more.

Vertical SAAS vs. Horizontal SAAS

Currently, two different SAAS models are available: Horizontal SAAS and Vertical SAAS. The size, type, and industry-specific requirements determine the appropriate SAAS model for any specific business and purpose. Some key factors that determine the type of SAAS are:

· Scalability of the business

· Adoption flexibility

· Customization and functionality of business operations

· Control and Security of the business process

· Type and size of the business

· Industry-specific market trend

Horizontal SAAS Model:

The horizontal SAAS model is designed and developed mostly for enterprise-level businesses. This SAAS model comes with a generic yet comprehensive approach to addressing the fundamental issues of an organization. Services offered by the Horizontal SAAS model are diversified and designed for various niches. The actual size of the business merely matters under the roof of horizontal SAAS. This model was introduced in the early stages of SAAS.

Vertical SAAS Model:

Vertical SAAS comes with an approach to identifying the industry-specific needs of a business. Compared to vertical SAAS vs. horizontal SAAS, vertical SAAS has considered the tailor-made solution. Vertical SAAS solutions have integrated AI and advanced technical features. This is one of the key reasons why vertical SAAS is regarded as an effective and appropriate solution for specific industrial purposes.

Differences between Vertical versus Horizontal SAAS:

It is essential to analyze the business requirement before selecting the type of SAAS appropriate for any particular business. Followings are some critical differences between vertical and horizontal SAAS.

Benefits of Vertical SAAS vs Horizontal SAAS

Horizontal SAAS

Vertical SAAS

​Horizontal SAAS has the capacity to cover a wide-range of business; hence it has the chance to acquiring more revenue.

Vertical SAAS addresses the niche market; therefore it has the option to generate more business leads.

With the help of horizontal SAAS, businesses have the chance of earning more market share.

In vertical SAAS, businesses can enjoy a lower rate for customer acquisition. At the same time, businesses can also ensure higher rate of customer retention with the help of vertical SAAS.

Some insights regarding vertical vs. horizontal SAAS:

Insight 01:

  1. In the case of horizontal SAAS, companies need to incorporate experts from different industries to design, develop, deploy and configure their cloud platform.

  2. Businesses having vertical SAAS need to include experts from specific industries, as these businesses are targeting very specific user groups.

Insight 02:

  1. Usually, horizontal SAAS companies need to expense more to showcase their products and services to reach a large user base.

  2. Vertical SAS companies can continue with a more economical model to reach their target audience as they focus on a niche market only.

Insight 03:

  1. Horizontal SAAS can easily meet the compliance issue as it follows the build once – fit for all approach.

  2. Services and solutions from vertical SAAS need to address industry-specific compliance issues for specific user groups.

Insight 04:

  1. The effectiveness of horizontal SAAS depends mainly on the number of features they incorporate within their solutions.

  2. Vertical SAAS products could be fine-tuned by getting the user-feedback.

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