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Vertical SaaS is having a moment. While horizontal SaaS—blanket software filling a need for everyone—dominated the software space for years, 89% of executives and IT leaders agree that Vertical SaaS is the way of the future. The number of Vertical SaaS companies has grown by 28% since the beginning of 2020 and continues to rise.
Traditionally, Vertical SaaS providers weren’t interested in being everything to everyone; things are shifting. Many are adding functionalities to become more viable multi-product platforms. They’re doing this to stay competitive and customer-centric in a market that’s growing in both size and prominence while still focusing on providing unparalleled service and solutions to their respective industries. They’re also embracing and adding AI functionalities to stay relevant.
A lot is happening in the world of Vertical Software right now. As a tech company that serves a large Vertical SaaS audience, we figured we’d do those of you growing your Vertical Software platforms a solid and consult our research, our conversations with customers, and our tech expertise to sum up four top Vertical SaaS trends for 2025.
Top Future Vertical Software Trends
- Multiproduct Aspirations
- Better Integrations
- Embracing AI
- Value-Oriented Buying
Multiproduct Aspirations
In today’s business landscape, companies expand by diversifying the products or solutions they offer. By becoming a multiproduct platform, Vertical SaS companies can reduce their dependence on a single product or service, capture new revenue streams, and stay ahead of the competition. Multiproduct initiatives are especially savvy since SaaS companies selling more than one solution increase retention by nearly 20%—SaaS platforms with at least four solutions have an 80% better retention rate than single-product platforms.
Vertical SaaS giants like Toast, Blend, and ProCore are, as the Fractal Software State of Vertical SaaS 2021 Report says, “proof of the massive upside for companies building industry-specific software.” All three of these owe much of their success to becoming multiproduct software whose niche-but-varied functionalities help dominate the industries they serve (restaurants, banking, and construction, respectively).
Fractal’s 2022 Report further emphasizes why the multiproduct approach helps Vertical Software grow.
The reason Toast can justify its $9B valuation is because it is a multiproduct platform…In 2011, its founders—Steve Fredette, Aman Narang and Jonathan Grimm—had set out to make an app that would allow restaurant customers to open a tab and pay on their phone. This was certainly a real pain point for customers, but hardly the basis for a multi-billion dollar business…Toast’s decision to switch its core product from a point solution that helped solve a particular problem for restaurants (i.e., collecting customer payments) to a comprehensive back-of-house management system was key to its success.
Traditionally, becoming a multiproduct platform takes a lot of time and resources. However, white labeling, purchasing a solution developed by another vendor and outfitting it with your company’s branding (and in the case of private labeling—a type of white labeling—the customizations your industry requires), is a way Vertical Software companies can quickly and efficiently add new solutions and become multiproduct platforms. We do white label hiring software here at HiringThing. Helping businesses grow through white or private labeling is something we’re passionate about here, but we know that even white labeling your white to multiproduct is a decision that shouldn’t be taken lightly. That’s why we’ve created The HiringThing Guide to Creating a White Label Partnership if it's a modality you’re interested in using to grow your business.
Better Integrations
Historically, many SaaS platforms didn’t come with complete integration solutions. It made sense for developers to save time by relying on third-party application programming interfaces (APIs). However, it led to customers purchasing multiple apps and suffering from what’s called “app toggling.” Today’s B2B customers want their SaaS apps to solve as many solutions as possible; they want to be able to stay in one platform.
Today’s B2B customers are also being increasingly inundated with B2B apps, which is cutting into workplace productivity. Take this example from the Harvard Business Review article “How Much Time and Energy Do We Waste Toggling Between Applications?” by Rohan Narayana Murty, Sandeep Dadlani, and Rajath B. Das.
Consider an example from a Fortune 500 consumer goods organization we studied. To execute a single supply-chain transaction, each person involved switched about 350 times between 22 different applications and unique websites. Over the course of an average day, that meant a single employee would toggle between apps and windows more than 3,600 times. That’s … a lot.
This kind of toggling is often dismissed as simply “how we work now,” even though it’s also taxing for people and a waste of time, effort, and focus. Yet these trends are likely to continue or get worse in an increasingly digital and remote work world. This should give companies pause. The cost of this way of working may be higher than they estimate, and if they recognize that, they may be able to find a better way of working.
The article also finds that over the course of a year, the average employee spends up to five working weeks, or 9% of their time, toggling between apps. As a Vertical Software app looking to make work easier, your goal should be to help businesses find a better way to work.
Smart Vertical SaaS platforms are rethinking this strategy and are providing greater integration capabilities instead of redirecting customers outside of their apps, which ends up being a more seamless experience for users.
Competitive Vertical Software Programs Will Have Open API
API is essential for competitive Vertical SaaS organizations for a number of reasons:
Interoperability
Open APIs allow SaaS organizations to integrate their software with other systems and applications seamlessly. This interoperability enables them to connect with various third-party platforms, services, and technologies, which can enhance their product offerings and expand their capabilities. It also enables easier data exchange and collaboration with partners, customers, and stakeholders.
Customizations
Open APIs enable Vertical SaaS organizations to offer customization options to their customers. This allows users to tailor the software to their specific needs, workflows, and requirements, creating a more personalized and user-friendly experience. This customization capability can be a significant competitive advantage, as it allows organizations to cater to diverse customers, preferences, and differentiate their offerings in the market.
Scalability
Open APIs facilitate the scalability of Vertical SaaS solutions. They enable seamless integration with other systems and applications, which allows organizations to expand their product offerings or functionalities without extensive development efforts. This agility in scaling and evolving the software can help organizations stay ahead in a competitive market, adapt to changing customer needs, and capitalize on new business opportunities.
Ecosystem Development
Open APIs foster the development of a vibrant ecosystem around the Vertical Software solution. By providing open and well-documented APIs, organizations can encourage third-party developers to build complementary applications, extensions, and integrations. This ecosystem can create a network effect, where more integrations and applications attract more users and customers, lending to increased adoption and market share.
Innovation
Open APIs drive innovation by allowing Vertical SaaS organizations to tap into external expertise and technologies. By enabling integration with other systems, organizations can leverage the latest advancements in technologies such as artificial intelligence, machine learning, or loT, to enhance their product offerings and deliver more value to their customers. This innovative-driven approach can keep organizations at the forefront of the market and ahead of their competitors.
Embracing AI
You’d have to be living under a rock not to know that AI is having a moment. In the future we predict significant growth in AI-focused software, as well as the AI functionalities and integrations being introduced into preexisting Vertical SaaS applications.
Gartner reports that 70% of employees want AI solutions to help them with mistake reduction, problem-solving, information discovery, and process simplification.
AI helps SaaS companies provide greater product service, content personalization, time-saving automation and helps gain deeper, data-driven understandings of audiences. AI is fast becoming the standard for SaaS applications—9 out of 10 companies are investing in AI, and most U.S. workers want AI to help them work smarter.
Have a strategy around AI deployment—according to a Mindtree study, only 31% of business leaders who had invested in AI saw a return on investment.
Get Ready for Vertical AI
Vertical AI—artificial intelligence designed to specialize in a specific industry or domain—is a term that’s starting to be used. From a Forbes piece titled “The Vertical Approach: Why AI Should Be Industry Specific:”
Like most technology solutions, there are multiple ways to deploy AI. Horizontal AI is often considered the standard or common deployment strategy, akin to solving a mathematical problem or providing tools for general data science purposes. Vertical AI, on the other hand, solves a business problem from top to bottom; in other words, it provides a full product which is driven by AI that aims to cover the user's needs and full workflows. Vertical AI is a newer strategy that drives a more industry-specific deployment.
The article goes on to point out that while horizontal AI is only helpful as the people using the tools, vertical AI will continually evolve to know and cater to an industry’s specific needs—Gartner found that by 2023, 85% of AI solutions by vendors will focus on industry verticals.
The Future of AI: Vertical Applications by Andrew Courey is a great read if you’d like to learn more about vertical AI, and how it will affect the world of Vertical SaaS.
Value-Oriented Buying
Today’s consumers aren’t necessarily looking for the lowest price or a ton of bells and whistles they won’t absolutely need. With the rise in competition in the Vertical Software world, decision-making has largely shifted towards useability and solution-oriented buying. Today’s consumers are more informed than ever. They do intensive comparisons on features, prices, and the value of various options before making a decision (for example, it takes mid-sized companies 4-6 months to research, evaluate, and buy HR technology).
Customers are more interested in overall value first and foremost, which tells savvy Vertical Software companies to prioritize the user experience, ensure they are consistently providing value, and lead their marketing initiatives with solution-oriented messaging.
Legitimizing Expertise
Vertical Software often did so well because it was conceptualized or produced for the industries it served by veterans or experts in that industry. However, with the explosion of Vertical SaaS applications, we’re seeing more and more Vertical SaaS applications being produced by savvy entrepreneurs with tech investment money, but no industry connections.
This is leading many Vertical Software providers to lean into their industry expertise to legitimize themselves to customers and stand out from an increasingly crowded market.
Overcome Common Vertical SaaS Challenges
Highly specific, niche industries can present highly-specific niche challenges whose solutions aren’t as discussed or covered as horizontal counterparts. That’s why we created Overcoming Top Vertical SaaS Challenges, specific to challenges that often arrive for Vertical Software providers.
About HiringThing
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable HR technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the HiringThing HR platform empowers anyone, anywhere to build their dream team.
