Horizontal vs. Vertical Accounting Software Solutions – Which Do You Need?

Updated: December 01, 2010

Businesses of any size most likely have an automated accounting software system of some type. Smaller organizations may likely use Quickbooks or Peachtree, which largely are designed around a "one-size fits all" approach. Larger organizations may have custom-designed applications written for the complex and unique needs of their particular operations, such as airport management or international distribution. The general terms for these applications are "horizontal" for the one-size fits all application, and "vertical" for the industry specific solution.

As organizations grow and become more complex, their perceived need for more specific functionality, able to efficiently handle their "unique" needs, drive their move toward a more vertical accounting software solution. Developers who have written an application for a client in a particular industry may package that program as a vertical solution for other prospects in that industry. Colleagues in that industry may recommend a package they use which is more industry specific.

But vertical applications also come at an increased cost. Typically industry-specific accounting applications are in the mid-range market, or higher. They often are packaged by modules, with the user selecting which modules they wish to purchase (further "customizing" the solution for the user).

The trend toward vertical accounting software solutions is increasing based on several factors. First, savvy users are not satisfied with the efficiencies gained simply by automating transaction and account level reporting. They want greater functionality related to their industry, such as depreciation and amortization calculations in real-estate firms, inventory for manufacturing, and job costing for construction. Recognizing this, entry level, previously-horizontal software packages are now offering "industry specific" versions of their software. So there is now Quickbooks for Retail, Quickbooks for Manufacturing, etc. Also, mature horizontal products with broad customer bases have continued to enhance their product development to the point where they now include many functions previously only available in the vertical solutions. Incorporating functions such as payroll, inventory, human resource management, and others make the previously horizontal application better able to handle a user's specific needs.

Another trend making these horizontal applications more flexible is the growth of cloud computing. Users may now share both the application cost and the infrastructure cost that used to prevent smaller organizations from fully capturing and sharing information across the organization. Through the use of software as a service or hosted applications, the smaller organization may now demand, and be able to afford, greater functionality than ever before.

Featured Research
  • Business Meeting Showdown

    It is no secret that communication and collaboration are at the heart of success and longevity for any business. However, as businesses become more global and more employees work remotely, video conferencing is being increasingly used as an alternative to face-to-face interactions. There are pros to both business travel and video conferencing such as personal connection and ease of use. However, there are cons as well ranging from travel delays to being technologically reliant. more

  • Mobile Communication Showdown

    It's no secret that businesses are becoming agiler and employees are spending more time away from their desks. The question isn't should we get rid of our landlines, but how quickly can we replace them?However, staying connected with your colleagues, clients, and customers is absolutely essential for cultivating long-term, lucrative relationships that will help your company achieve success. more

  • Signs you are Ready for Mobile BI

    With workforces moving more and more mobile on a daily basis, it is essential to ensure that your company is able to arm your employees with the analytics that they need to succeed. 89% of business leaders believe that Big Data will revolutionize business operations in the same way that the internet did. These numbers show the trend towards investing in a BI system. more

  • 15 Ways to Optimize Your Contact Center

    We live in a time where customer experience is seen as an important competitive differentiator. Given this, wouldn't you like to make sure that your contact center is fully optimized to meet your business needs? Deciding to upgrade and optimize your contact center is a big step, and one that shouldn't be done without due diligence and plenty of research. more

  • Stress-Free Video Conferencing

    It should shock no one that video conferencing technology is an amazing tool to connect and engage with business contacts in a more personal and effective way. In fact, only 7% of how we communicate is through words, whereas a whopping 93% is through tone of voice and body language. To further the strength of video conferencing, 99% of professionals feel that by improving communication and collaboration, productivity will be positively impacted. more