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
  • 16 Mistakes to Avoid When Buying a Phone System

    Purchasing a phone system for your business is a major investment. With the average business changing phone systems only once every seven years, it’s important to make the right decision. more

  • 2017 Video Conferencing Trends

    New advancements are also making video more beneficial to a greater range of business areas including marketing, HR, and internal operations. Many solutions are economical, easy to use, and very effective at making communication more personal. more

  • [Infographic] Top 11 VoIP Vendors

    A good VoIP provider will offer additional benefits as well, but many first-time buyers find assessing each option to be difficult. Nevertheless, this is an important step in the buying process because a substandard provider can easily waste both your time and money. more

  • Work Smarter Not Harder with Business Intelligence

    While this may have been true at one time, the days of BI requiring a dedicated team of experts to implement are over. Self-service solutions are making it possible for everyone, including small, local businesses, to easily implement BI in their decision making process. more

  • Best Practices for Contact Center Quality Assurance

    A contact center often brings about a prospect’s first real-time interaction with your company. As such, if it’s not a positive one, they’ll likely look elsewhere for help. With 69% of Americans more inclined to recommend a company to friends and family after a positive customer service experience, you’ll need to exceed expectations on the following fronts. more