The dynamic evolution of business technology drives the proliferation of industry-specific software solutions that deliver customized services and incorporate substantial subject-matter expertise into their underlying technology. Vertical SaaS, a manifestation of this trend, enters stage right, revealing the vast potential of industry-specific software. In a separate article, we discuss Vertical SaaS in detail.
Vertical SaaS focuses on a single industry, unlike Horizontal SaaS, which offers cross-industry services. Using examples from innovative companies such as Nitrogen, Applied Epic, Textura, and WellSky, we can appreciate their ability to provide seamless, robust services tailored to a specific area, streamlining processes, enhancing efficiency, and promoting straightforward compliance with industry standards.
Scratch beneath the surface and an assortment of Vertical SaaS advantages emerge. A focused approach yields precisely designed software solutions, a reduced Sales and Marketing (S&M) expense to Revenue ratio, and a significant reduction in Customer Acquisition Costs (CAC) relative to horizontal competitors. This cost reduction can be as much as eight times cheaper. Incorporating domain expertise, which ensures industry conformity, results in software that enables businesses to flourish within their respective niches. This results in the ideal formula for fostering high conversion rates and customer retention, creating opportunities for continuous upselling and cross-selling.
Vertical AI is the next act, where artificial intelligence grows roots in industry-specific domains. Recognizing the transformative potential of AI’s diversified applications across industries, we’ve uncovered its fundamental value and vast spectrums.
“Just as electricity transformed almost everything a century ago, I find it difficult to think of an industry that AI will not transform in the next few years.”
Andrew Ng, founder Google Brain, LandingAI, deeplearning.ai & Coursera
Nonetheless, the rate and scope of AI’s expansion present their obstacles. The acquisition of sufficient industry-specific data for developing robust and dependable AI models is at the top of this list of concerns, which Vertical SaaS technology is well-equipped to address.
Combining the benefits of Vertical SaaS, such as domain-specific knowledge, rich proprietary data, and specialized customization, with artificial intelligence aptitudes produces Vertical AI: an ultra-relevant, ultra-efficient solution capable of accelerating business growth and digitization in the specified industry.
Now, let’s outline a few noteworthy examples:
- Healthcare
Vertical AI thrives in the healthcare industry at analyzing vast amounts of patient data, effectively identifying patterns, predicting potential health threats, and expediting accurate diagnoses. Notable advancements include the EyeArt AI Eye Screening System, designed for the autonomous detection of diabetic retinopathy, and Google’s Med-PaLM 2-a healthcare-specific chatbot, which propels individualized service offerings to new heights. Bynocs, an AI-based treatment for amblyopia, is another promising example.
- Financial services
AI has also penetrated the financial sector, enhancing security, assessing loan risk, and even trading stocks. With AI, lending platforms such as Upstart provide consumer loans based on non-traditional factors such as education or employment to determine a client’s creditworthiness. Moreover, SaaS fraud prevention solutions like Kount and Riskified employ AI to combat increasingly intricate fraud schemes.
- Legal
The legal industry is benefiting from AI automation in tasks such as legal research, document analysis, predictive analytics, and due diligence assistance. Consider Harvey, a chatbot designed to assist attorneys with various duties, and Akorda, a system for managing the life cycle of legal contracts and agreements.
In conclusion, Vertical AI emerges as the natural progression of Vertical SaaS. Combining the benefits of industry-specific software solutions with the transformative potential of AI, it distinguishes itself as the optimal solution, able to address industry-specific challenges as businesses continue to embrace digital transformation.
