How Vertical SaaS Vendors Could Attract Users in the Professional Services Industry

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Market research company, Forrester, recently published a study on SaaS solutions for the professional services (PS) market. The report revealed that 89% of PS organizations agree that vertical SaaS is the way of the future. Vertical, out-of-the-box SaaS solutions for professional services organizations drive material benefits for 91% of users.

Businesses across industries now use at least one Software-as-a-Service (SaaS) product. Horizontal SaaS—the ones that target a wide range of users—have long dominated the market. However, vertical SaaS is an emerging trend. In contrast to horizontal SaaS, vertical SaaS refers to apps that target specific users in a particular industry. They are usually built with features and functions unique to the requirements of the users. Also, vertical SaaS are purpose-built apps that often solve very specific industry problems.

Since vertical SaaS products don’t aim to be a one-size-fits-all solution, vendors in this market are able to narrow the size of their target customers. Therefore, vertical SaaS can also have lower resource requirements for sales and marketing and more opportunities in terms of customer acquisition for new vendors.

PS Organizations Adopting Vertical SaaS

Professional services organizations refer to businesses that offer services or their expertise as their primary output instead of manufactured products. These include consultants and professionals with their own practice or small business offering their services. A report predicts that the PS industry will be worth more than $9651 billion by 2026 and will grow at a 9.6% compound annual growth rate (CAGR).

Vendors interested in developing SaaS for PS organizations can see more opportunities as demand for software in this niche market continues to grow. For example, the Forrester report revealed that 84% of POS believe that their industry has unique processes and requirements compared to other industries. They feel that horizontal SaaS solutions can have limitations when it comes to addressing their unique business requirements.

Moreover, 9 out of 10 PS organizations that have adopted vertical SaaS reported that these solutions are driving material benefits for their companies. On the other hand, among PS companies that have not yet implemented vertical SaaS, 78% believe that their organizations would greatly benefit from such apps. Additionally, 64% said that they plan to increase their budget for vertical SaaS for PS in the future.

The Challenges of Vertical SaaS

As we learned from the statistics on the Forrester report, vertical SaaS vendors can take advantage of more businesses in their target niche looking for purpose-built app solutions. There is clearly an emerging trend for vertical SaaS and less competition in terms of dominant software vendors in the market.

However, just like any other business, vertical SaaS vendors face challenges. One of these is the fact that businesses in smaller niche markets are often conservative in their business approach and budgets. Thus, vendors should consider offering customized pricing plans or even freemium plans that might be more effective in attracting customers with a conservative IT budget.

Second, vertical SaaS vendors must also be prepared to spend more time and effort in educating businesses in their target niche. That’s because some of these businesses might not be fully aware of their software options unlike businesses already using horizontal SaaS solutions. It can take more innovative marketing to create awareness about vertical SaaS products, especially if the business is only at the initial stages of its digital transformation.

Vertical SaaS has great business potential as it offers laser-focused apps. But vendors also have their work cut out for them in marketing as their target users might still be at the awareness stage and are having difficulties defining their business problems.