What is the difference between vertical and horizontal SaaS?

Vertical SaaS (Software as a Service) and horizontal SaaS differ primarily in their focus: vertical SaaS targets specific industries with tailored solutions, while horizontal SaaS addresses broad business functions that apply across multiple industries. Vertical SaaS products are designed to meet the unique needs of a single industry, such as healthcare, construction, or finance. Horizontal SaaS, on the other hand, provides tools for common operational needs—like customer relationship management (CRM), project management, or communication—that are relevant to businesses regardless of their industry.

Vertical SaaS solutions are built to solve industry-specific challenges. For example, Veeva Systems offers CRM and compliance tools exclusively for the life sciences and pharmaceutical industries, addressing strict regulatory requirements like FDA compliance. Similarly, Procore provides construction management software with features for bidding, scheduling, and compliance tailored to contractors and engineers. These tools often include industry-specific workflows, data models, and integrations (e.g., with medical record systems or construction equipment APIs) that wouldn’t make sense in a generic product. Developers working on vertical SaaS might need deep domain expertise to ensure the software aligns with industry standards and regulations.

Horizontal SaaS products, by contrast, focus on universal business needs. Tools like Salesforce (CRM), Slack (team communication), or Mailchimp (email marketing) are used by companies in retail, tech, education, and more. These platforms prioritize flexibility, allowing customization to fit different industries. For example, a developer might use Salesforce’s APIs to integrate it with an e-commerce platform for a retail client or with a ticketing system for a software company. Horizontal SaaS often relies on modular design, enabling users to configure features like workflows, dashboards, or user permissions to suit their specific use case. While horizontal solutions lack industry-specific depth, they excel at scaling across diverse environments and reducing redundancy in common tasks.

In summary, vertical SaaS is niche and industry-focused, while horizontal SaaS is broad and function-focused. Developers choosing between them should consider whether the problem requires deep specialization (vertical) or cross-industry applicability (horizontal).