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What is a Vertical Application?

By Troy Holmes
Updated May 16, 2024
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Computer software applications are designed to support either a specialized group or a general group. A vertical application is a software application that is designed for a specific industry or organization. This software contains business logic and functions that are specific to a particular industry.

The modern world uses computer applications for most business activity. This includes word processing, communications, and business specific activities. The vertical application is the application that is unique for a specific business industry. These applications assist an organization with sales, marketing, inventory, and overall organization.

Auto insurance is an insurance policy that, among other things, protects drivers from personal liability in the event of an accident. Typically this insurance policy requires specific background research and validation of an individual's driving record. Most large insurance agencies use an insurance application to determine the rates of each person's policy. This vertical application has enabled the insurance industry to provide near real-time quotes to potential clients.

The medical industry is a complex field with many specialized units. Computer automation has transformed the medical industry into a modern-diagnosis and record-keeping machine. Each patient has specific needs that require appropriate monitoring and management. The software application that is used in hospitals to register patients is an example of a vertical application.

The hospitality industry is a service-based industry that includes restaurants, hotels, and most vacation destinations. Within the hospitality industry there are several vertical applications. A hotel reservation system is a computer application that enables customers to reserve rooms for a specific date. These systems have evolved into Internet-based application where customers can check room rates for multiple hotel organizations. Typically each hotel chain has a vertical application that is specific for that organization.

A horizontal application is a software application designed to support multiple business units. It is a generalized application that can provide automation for an entire industry. An automated email application is an example of a horizontal application. Any business unit can use automated email applications as a communication device regardless of the specifics business flows of that industry.

A vertical market is a business term that describes a unique market within a specific industry. This market is specialized as a niche business unit. Video teleconferencing is a vertical market software application that enables live video with audio. This evolution in the telecommunication industry has created a new model in most organizations that has enabled the outsourcing of resources.

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Discussion Comments

By everetra — On Jul 21, 2011

@miriam98 - I agree that most development tools are horizontal in nature.

The only exception that I’ve seen are some of the next generation application building tools that are supposed to make development accessible to non programmers.

Some of these tools target accounting professionals and are specifically designed to churn out accounting applications, using a scripting and wizard-driven approach.

Because of their target market I think they are kind of a hybrid of vertical and horizontal applications.

By miriam98 — On Jul 20, 2011

@MrMoody - While I agree that applications like Microsoft Access are horizontal and not vertical in nature, the fact remains that a lot of people have used these programs to write applications for vertical markets.

I believe at that point, the horizontal application (be it Access or FoxPro or whatever) becomes vertical. I may be splitting hairs, but these products are after all development tools.

I even saw a company develop an accounting program completely in Access and sell it online. It was obvious that it was an Access application and they said as much on their website, but clearly it was a vertical application.

By MrMoody — On Jul 19, 2011

@NathanG - I’ve done some software development on the side.

Most applications are vertical in nature. Businesses aren’t interested in generic accounting or database programs when they hire out a programmer; they already have those applications in Microsoft Access and Excel, to name a few.

I once had to write a VB.NET application for a local security company. It was a complete billing system that generated invoices, tracked payments and generated reports.

I remember before taking on the assignment asking the customer why they didn’t just purchase an off the shelf product. There are, after all, commercial products that target the security industry.

They answered that they couldn’t find a package that they liked and worked just the way that they wanted. I explained that custom programming would cost more than buying something from the store but they understood that, and were willing to pay the money. In the end, they were very happy with the results.

By NathanG — On Jul 19, 2011

I work for a software company, and the software we produce is definitely for a vertical market. More specifically, it’s for the electrical utilities industry. This degree of specialization means that most of the people who work at our firm either have degrees in electrical engineering or have worked in the industry.

Our products basically fall into two categories for this market. They test relay equipment and they act as data warehousing products. The relay software is the most highly specialized product we have because it will only work with one piece of equipment.

The data warehousing software stores the results from the relay tests, but it’s very customizable – so much so, that we like to joke that you could probably do your taxes with it.

That’s an exaggeration of course but you can adapt it as you wish. You can, for example, customize reports and your data entry screens. In the end, however, it’s still for one market so it remains a vertical application.

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