The SaaS industry has become increasingly well-known in Japan amid the global promotion of digital transformation and the dramatic changes in the business environment brought about by the pandemic.
It was originally a growing industry , but since 2020, BtoB SaaS in particular has been growing thanks to the changing environment . With HubSpot and Salesforce appearing in the top rankings of "best companies to work for ," it is becoming more widely known among the general public.
There are probably many companies considering entering the growing BtoB SaaS market and people considering changing jobs. However, after a little research, many people may turkey b2b leads find it difficult to understand the many foreign and katakana technical terms such as SaaS, PaaS, IaaS, LTV, and conversion.
So, as basic knowledge, this time we will explain the differences between the two SaaS business models: Vertical SaaS and Horizontal SaaS.
The idea of vertical and horizontal exists in every business, not just SaaS.
SaaS (Software as a Service) is a software service provided over the Internet. Users can use the software they need on a monthly basis, and can utilize various business systems necessary for B2B companies without having to develop their own software.
Differences between vertical and horizontal integration
There are two SaaS business models: Vertical and Horizontal. These two terms have the following meanings when translated literally, and are often used to explain business models (although their meanings change slightly depending on the context).
Vertical = vertical direction
Horizontal = horizontal direction
In the SaaS industry, "Vertical" is currently interpreted as " industry-specific" and " Horizontal " is "cross-industry." Salesforce, Zendesk, HubSpot, etc. are horizontal types that deploy solutions horizontally regardless of industry. In Japan, ANDPAD is known as a vertical type, specializing in on-site efficiency in the architecture and construction industry .
In the media industry, media that specialize in a certain area, such as sports or business, is called vertical media and contrasted with general media. Although the terms vertical and horizontal are not used, industry/specialty types and general business types exist in every industry .
In addition, the more general meaning of "vertical" is when a company handles everything from manufacturing to sales in-house, while a business model in which planning and development are done in-house and manufacturing is outsourced is called "fabless."
Toyota and Nissan are vertically integrated pyramid companies. Apple and Keyence are fabless companies. Surprisingly, Tesla is a digital version of vertical integration, with its own factories . Incidentally, Japanese automakers are being forced by Apple to move to a horizontal division of labor model .
