SaaS- Vertical Market or Generic Platform?

I read an interesting post today from Julian (yes another fellow kiwi and further evidence of NZ's entrepreneurial spirit).
Julian discusses the pitfalls of building a SaaS application for a single vertical, where there is risk of that vertical reducing in size or changing in requirements.
I totally agree with Julian, that a generic based application should be the goal when building your product. When making design decisions you should consistently look at how you could build a specific vertical requirement as a configurable generic feature.

Julian then goes on to state that

Would you rather have 1% of 1000 vertical markets? or 100% of 1 vertical market? These days, I’d rather have 1% of 1000 vertical markets!

I don't quite agree with this, there are times where it isn't as clear cut.
Certainly companies like Salesforce.com and even the company I am currently involved with Forcelogix have built platforms where if your business is centered around a salesforce selling to customers, then its independent of the vertical market your business is tagged to. It could be Finance, Consumer Goods or Life Sciences and many others.

However, where might a vertically focused application be preferred?
1. Where the vertical has repeatable specialist requirements
2. The market is large enough to support a new SaaS player. US Pharma industry is a good example where there are around 100,000 Sales Reps in Pharma
3. Bootstrapping your own startup and you have years of specific industry experience and contacts within prospect organizations.
4. Prospective early funders/investors might more easily see the value proposition of your product if a vertical is targeted.

I tend to refer to Life Sciences regularly in my blog, and that is due to this very issue. Its happened more than once, where I have built a generic business application and because our initial customers happened to be Pharma, it made it a lot easier to sell to other Pharma organizations. We became experts in this industry. It doesn't mean you can't go on to be successful in other verticals,far from it, it just makes it easier to focus and to grow your business, at least in the earlier stages.

There are proven SaaS success stories with both vertical and generic approaches. You just need to evaluate what is best for you.

Web 2.0 again!! and Social Networking.

I actually read a lot of the questions coming through on linkedin.com via igoogle.
As we discussed in some of my earlier posts the term Web 2.0 appears to have different definitions depending on who you talk to.

On linkedin, everyone is talking about Social Networking and Collaboration and defining this as web 2.0. (Everything is X 2.0 nowadays as if by putting the number 2 in front of a term we have suddenly and miraculously discovered a new technology)

So now Web 2.0 is social networking which also includes collaborative tools in the business environment.I am an avid user and supporter of these types of tools being it a wiki, blog or networking sites like
linkedin.com

Less focus is placed on line of business applications being transformed by Web 2.0 in particular SaaS. My interest is obviously biased towards this, but I think the success of Web 2.0 collaboration tools within a business organization actually hinges on the adoption of a SaaS mindset first.

By having these SaaS business tools in place first, it gives context and sensible subject areas to Social Networking and colloboration.

A good example I think is Life Science CRM. I read an excellent post today
Scott Monty

Pfizer is partnering with a social networking site and will get access to the thousands of doctors who network there. Now this is something that the Sales reps would love to analyze and review for the zipcodes in their territories and the best place for this would be in their CRM system. Not an easy task if you aren't using a SaaS application. By having it in CRM, it structures what is essentially unstructured information. I can picture one day a Life Science SaaS CRM solution which has a social networking and blog portal for doctors as part of its feature set.
(Although you have to be in compliance with all FDA regulatory requirements.)