What is Horizontal SaaS?

Horizontal SaaS is a general-purpose sub-type of SaaS (software-as-a-service) that addresses common issues across multiple industries. 

These platforms have a wider application scope, covering core areas such as accounting, project collaboration, or customer relationship management. 

To exemplify the distinction between the two, a project management system is regarded as horizontal SaaS, while a medical clinic billing tool is vertical SaaS. 

Horizontal SaaS

• Market Size: Wide and diverse, spreading spanning across multiple sectors.
• Competition: Several options part on the market.
• Target Audience: Developers part of different industries
• Expertise: General business scope
• Examples: Salesforce, Slack, Zoom

Vertical SaaS

• Market Size: Niche industry-specific markets
• Competition: Few direct competitors
• Target Audience: Focused on the requirements of users part of specific sectors
• Expertise: Specialized in particular workflows belonging to specific verticals

Examples: Veeva Systems (life sciences), Toast (restaurants), Procore (construction)

eCommerce founders need to consider their target audience, skillset, and business goals when making the correct decision. 

On the one hand, horizontal SaaS solutions have a larger market focus, addressing general pain points. However, this may come with the challenge of facing an increased level of competition. 

On the other, vertical SaaS demands specialized expertise but justifies higher prices.

Horizontal SaaS brings forward several challenges like: 

• High Competition Level: Although horizontal SaaS provides developers with a larger potential audience, the increased competition level is a roadblock to business growth. Brands need to find ways to make their product be noticed.
• Broad Scope Versus Niche Features: Building a balanced feature set that can accommodate both general and specific requirements can result in higher production costs.  

Horizontal SaaS offers:

• Scalability: Horizontal SaaS software adjusts to the requirements of a broader audience.
• Market Size: Horizontal SaaS offers a general-purpose technology addressing to more diverse markets. This explains why horizontal SaaS companies can have higher revenue potential compared to a niche SaaS product. 
• Flexibility: This SaaS type permits modifications and integrates with existing applications. Developers can offer workflow-specific capabilities. 

Real-life examples: 

• Zoom: This is a highly popular video conferencing and communication platform that offers solutions applicable to a wide range of organizations from different industries.  
• Dropbox: Providing cloud storage and file synchronization features to users and businesses across various sectors, this platform is a horizontal SaaS.  

Yes, businesses can offer both horizontal and vertical solutions. The hybrid SaaS approach combines a broad, horizontal technology with niche features tailored for specific vertical sectors of industries.

A hybrid approach allows a company to provide its users with software that responds to different industry requests in a functional and technical manner.