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Vertical SaaS players will become one-stop-shops leveraging Embedded SaaS

Vertical SaaS players will become one-stop-shops leveraging Embedded SaaS
Photo by Oscar Nilsson


Small and medium businesses don't want to tinker around with technology, they want to do their job. If you are a lawyer you want to serve clients, if you are a coffee shop you want to serve coffee.

SMBs use many software systems, because they have to, not because you want to.

Vertical SaaS to the rescue

Vertical SaaS is starting to change this, in short, Vertical SaaS is software built for a specific industry (for example software for psychiatrists). Focusing on a very specific industry and customers allow Vertical SaaS players to solve the key issues for each industry (for example psychiatrist offices deal with a lot of "no-shows" for appointments so scheduling and reminders are even more critical than usual).

The downside of focusing on a specific vertical is that the market size is naturally limited to the industry you focus on. This means that Vertical SaaS players needed to be very thoughtful with their spending and R&D resources to focus only on the key needs of their industry. For anything that wasn't highly specific to their industry, they would recommend or integrate with other solutions. For example, no Vertical SaaS provided bank accounts even though virtually all businesses need one. This is now beginning to change and will result in a revolution.

Embedded SaaS will help Vertical SaaS players to become one-stop-shops with everything their client's needs

Vertical SaaS players know their clients extremely well and want to solve ALL of their needs (and capture the revenue from doing so). From the most important to the most esoteric. For highly differentiated needs Vertical SaaS players build specific software, but that's expensive to build and to maintain. For more generic needs Embedded SaaS gives them amazing new capabilities.

Leveraging Embedded SaaS (e.g., CheckHQ for payroll, Next-insurance for SMB insurance), Vertical players can offer their customers everything from banking, insurance, payroll, CRM, supply-chain financing and management, and much much more. All of this can be done within the Vertical SaaS solution without navigating externally. The client does not even need to know there are multiple companies involved.

Embedding SaaS modules into Vertical SaaS solutions adds massive value to all involved:

  • The end clients get a single solution to all of their needs which is integrated and reduces manual effort.
  • The Vertical SaaS player is able to "sell" more products to his customers increasing the Account Value without needing to develop and maintain these solutions "in-house"
  • Embedded SaaS players get a "low-cost" go-to-market approach which allows them to grow in each and every relevant vertical.
All this will eventually mean that Vertical SaaS will provide a single one-stop-shop solution to their clients. Similar to a mini-ERP with embedded modules. It will also make Vertical SaaS players incredible growth and profit machines.

The world of tech is amazing and converging.

Stay vertical!

Suga