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Horizontal-market software is designed for a function or need shared by users in multiple industries. Its scope is broad: a spreadsheet, word processor, or general accounting application can serve many kinds of organizations. Vertical-market software, by contrast, is built around the practices of a particular industry or discipline.
What does horizontal-market software mean?
The word “horizontal” describes the software’s market reach, not its technical architecture or delivery method. Horizontal software addresses recurring needs that cross industry boundaries. The U.S. Department of Justice’s Office of Justice Programs describes it as software that ranges across disciplines and market groups to serve varied users: Office of Justice Programs.
A product does not have to serve every possible user to be horizontal. The defining point is that its core function applies across multiple industries, rather than being designed for one industry’s distinctive workflows.
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Horizontal software includes both familiar productivity applications and common business functions. Examples identified in the sources include:
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- Productivity and communication: word processing, spreadsheets, email, graphics, desktop publishing, web browsers, and image viewers.
- Business administration: accounting, payroll, personnel and human resource management, scheduling, database management, inventory management, billing, accounts receivable, and invoice processing.
- Other general functions: statistical analysis and computer-assisted training.
These examples appear in materials from the Office of Justice Programs, a University of Ha’il-hosted management information systems textbook excerpt, and TechTerms. The textbook excerpt notes that functions such as payroll, billing, and inventory management can be similar across industries: University of Ha’il. TechTerms gives examples including browsers, image viewers, word processors, and spreadsheet applications: TechTerms.
How is horizontal software different from vertical software?
The distinction is the breadth of the market and the degree of specialization. Horizontal products address broadly recurring needs; vertical products target a specific industry, discipline, or market and may reflect its particular practices.
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| Aspect | Horizontal-market software | Vertical-market software |
|---|---|---|
| Intended reach | Users across multiple industries | A particular industry, discipline, or market |
| Typical focus | Common functions, such as spreadsheets, email, or general accounting | Specialized workflows and needs associated with its target market |
| Illustrative example | A general-purpose word processor used in different fields | A purpose-built application for a particular industry |
Neither category is automatically better. A horizontal product may be useful when the task is common across industries; a vertical product may fit better when the work depends on specialized industry practices. The labels describe scope, not quality or suitability for a particular buyer.
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Does horizontal-market software mean SaaS?
No. “Horizontal” describes whom the software serves and how broadly its function applies. SaaS describes a delivery model. Software can be horizontal or vertical regardless of whether it is delivered as a cloud service or another way. A USPTO-hosted office-action document uses the terms horizontal and vertical SaaS as market categories, illustrating that the scope distinction can apply to SaaS products too: USPTO.
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How can you tell which category a product fits?
Look past the product’s name and ask what its core workflows are built to support:
- Check its intended users: Is it presented for organizations in many industries, or for one specific field?
- Examine its core tasks: Does it handle a broadly shared function, or encode specialized practices and requirements?
- Consider its examples and use cases: A general spreadsheet points toward horizontal software; software centered on one market’s distinctive work points toward vertical software.
A product may combine general-purpose functions with industry-specific features. In that case, classify it by the market its core product is designed to serve, rather than treating the labels as a measure of quality.
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