Vertical Solutions

Should you avoid vertical solutions?

By J. Carlton Collins, CPA


As a general rule, I think that it is usually best to avoid vertical market accounting software solutions - particularly those offered by smaller vendors. While vertical solutions are supposedly designed specifically for your industry, in most cases I find that the "industry-specific aspects" of any given vertical product are really just a handful of unique features coupled with cosmetic window dressing and marketing hype. ( It would be useful to also read my article entitled accounting software terminology). Additionally, closer inspection of vertical solutions almost always reveals many fatal flaws such as poor financial reporting, older underlying technologies, non-existent customization tools, missing modules, weak product support, a skinny sales channel, lack of third party add-on solutions, and more. Are these significant shortcomings really worth a few extra industry specific features? I don't think so. I personally prefer to recommend well-proven products that have been installed 10,000 times that contain good customization tools. Read on and I will explain:

As you start the process of evaluating accounting software solutions, you will quickly discover that accounting software solutions fall into three general categories as follows:

  • Vertical Market Solutions
  • Comprehensive Off-the-Shelf Solutions
  • Comprehensive Off-the-Shelf Solutions Coupled with Third-Party Add-On Solutions

Vertical Market Solutions refer to products that are designed to meet the specific needs of a particular industry; for example: insurance, restaurants, churches, job cost, and government situations. Good examples of well-known vertical market solutions are Shelby Systems for Churches, Blackbaud for fund raising, Squirrel Systems for restaurants, Timberline for estimating and job costing, Yardi for property management, and American Fundware for government.

Comprehensive Off-the-Shelf Solutions refer to products that are designed to meet the needs of a wide variety of industry and business situations for example retail, distribution, job costing, services, consolidations, manufacturing, and much more. Examples of popular off-the-shelf comprehensive solutions include MAS 90, Great Plains Dynamics, Axapta, Navision, ACCPAC Advantage Series, ACCPAC ProSeries, and many more.

Comprehensive Off-the-Shelf Solutions Coupled with Third-Party Add-On Solutions refer to off-the-shelf solutions with one or more separate add-on modules added in to complete the solution. For example, you will see many end users couple the top off-the shelf packages with the following popular third party add-on solutions: Crystal Reports for report writing, FRx for financial reporting, Abra for human resources and payroll, Best! Fixed Assets for fixed asset management, Radio Beacon for multiple warehouse and wireless solutions, and the list goes on. A few years ago, Great Plains reported that 80% of their Dynamics customers purchase a third party add-on product to compliment the product. This is a rather telling statistic.

Most companies initially want a vertical market product designed specifically for their industry. However, after being burned on a vertical solution, most companies wouldn't touch one again. Instead, they look for well-proven products that are well supported - or as I call them - comprehensive off-the-shelf solutions. Personally this is here I think you will find you best solutions.  The reality is that most people ultimately purchase an comprehensive off-the-shelf solution coupled with a third-party add-on solution. This is just a fact of life these days. For example, MAS 90 with Radio Beacon, ACCPAC with MISys, or eEnterprise with Siebel are common solutions that are well proven. In effect, this solution gives you the best of both worlds - well proven core financials plus industry specific functionality.

The Numbers

According to Software Digest, there are about 500 off-the-shelf comprehensive solutions on the market today. There are also between 3,000 and 3,500 vertical market solutions and 1,000 to 2,000 third party add-on solutions in the marketplace. To further complicate matters, these 6,000 or so solutions target different markets ranging from entry level and mid-range companies, to high-end and tier 1 companies. With so many options, it is easy to see why customers are so intimidated. Please don’t be intimidated. More than 95% of these solutions can be easily eliminated because they are not well proven, they are built with older technologies, they are missing significant modules, they are backed by weak companies, or for other serious reasons. Only a small portion of these 6,000 solutions are well-proven and worthy of your consideration. Our top 40 list describes the bets comprehensive solutions, and our industry specific sections of our web site describe the best vertical solutions out there.


In October 2002, I consulted with a marble company that uses a vertical market accounting system (the company that produces this product asked me not to mention the real name of the product here, and I certainly want to respect their request). In this case, the company has 500 to 1,000 customers using this product, and they have released a new product to replace this older product line. While the company does not market this product as a marble solution, a reseller had picked up the product, modified it, and does market the product as a vertical solution for the marble industry.

Upon my personal review of the client's solution I found that the product is far from adequate when it comes to meeting the needs of this marble company. It appears that this marble company was "misled" (for lack of a better word) into purchasing this product - mistakenly believing that it is ideally suited for the marble industry - when in fact it is not. The company installed this system just 2 years ago - and now faces the realization that it must replace the system.

My point is that many companies get wrapped up in the terminology used in a particular product, or used to describe a particular product, and they jump to the conclusion that that product must be ideally suited for them. In many cases, it may just be fancy marketing or a little window dressing and nothing more. There are good vertical solutions out there, but my personal experience has been that the majority of them far well short of meeting the needs of popular well proven products such as MAS 200, Navision, ACCPAC Advantage, ACCPAC ProSeries, Axapta and others.

The Problem With Vertical Solutions

After more than 15 years of installing accounting systems, I have dealt with many vertical market solutions – and my experiences with vertical solutions have left a very bad taste in my mouth - similar to the one described in the example above. In general, with only a few exceptions, I believe that vertical solutions are almost always the wrong way to go. Hundreds of companies concur – I receive more complaints about "poor" vertical products than any other topic related to accounting software. The following story describes my current impression of the vertical software industry:

I picture two guys in Tampa, Florida (Ralph and Joe) who own the rights to a “has been” accounting software product, which I will call Wombat software. Years earlier a push had been made to create and sell this accounting package. However, because of missing features, missing modules, poor technological design, lack of a distribution channel, and the disappearance of investors – the product has all but folded. These two guys come across a gentleman who owns a boat marina, and this gentleman explains “if I could find an accounting software product that would keep track of the name of the customer’s boat, the slip number where that boat was parked, whether that boat has been re-fueled, and whether the customer’s trailer is kept on the premises – I’d buy that product”. Motivated by the prospects of making the sell, Ralph and Joe run back to their garage and work feverishly to add these requested features to their product. They show up on the boat marina doorstep a few months later to demonstrate their product’s new “boat marina specific” features. The boat marina owner shouts hallelujah and snaps up the product – “Presto”, a new vertical market solution for boat marinas is born. Over the next several years, Ralph and Joe continue to add functionality to their system specific to the boat marina industry. They also adjust their promotional materials and verbiage to position their product as a boat marina solution. In reality, the newly improved product may indeed have some neat features, however the inherent limitations, which kept the product from success in the first place, are still there. For example many, many vertical market solutions suffer from old technology, proprietary databases, lack of financial reporting, lack of corporate support, poor performance on a local area network, no customization tools, weak security, higher price, full of bugs, and a host of other problems.

Despite the multitude of limitations, boat marina owners across the land continue to purchase the Wombat Boat Marina solution for two reasons. First, they erroneously assume that they should purchase a solution specifically built for their industry. In reality, they allow a few impressive features to sway them. As my friend David Hood (President of ACCPAC International) likes to say, “You can put lipstick on a pig, but it is still a pig”. So true. The second reason that boat marina owners continue to purchase Wombat is that they are unaware of the product’s shortcomings until well after they purchase the system – by then it is too late.

Over the past fifteen years, I’ve talked to hundreds of businesses across the country that have told me about their nightmare experiences with vertical market solutions. I wish I had documented these stories. In each case, three prominent themes rings permeate their stories – 1) missing features; 2) bugs; and 3) “I’ll never do that again”.

There are explainable reasons as to why vertical market solutions tend to be very poor options. It is very had for any company to dominate an industry for a wide variety of reasons. Think about it. How big is the market for accounting software solutions for say – insurance companies, 100,000 companies, or 200,000? – I really don’t know. But I do know that a given insurance industry accounting software solution would need to own a sizeable amount of that market in order to generate the resources to support the product. Meanwhile off-the-shelf comprehensive products have between 7 and 9 million prospective customers out there. These products do not need to dominate a market in order to generate a base of 20,000 to 30,000 customers, which is normally needed to ensure profitability and longevity.

This same principle affects the products’ dealer channel as well. While there may be a sufficient number of insurance customers nation-wide to support the product, there may not be enough insurance customers in many markets to support a reseller of that product. For example, a potential reseller in Birmingham, Alabama may evaluate the market and determine that there are not enough prospective insurance customers in that area to support the sustained selling of an insurance accounting software solution. Based on this analysis, the prospective dealer decides not to support that product, and instead chooses to support and resell an off-the-shelf solution such as ACCPAC. This principle makes it very difficult for any vertical market solution provider to develop a distribution channel. The result is that most vertical market solutions are sold and supported only by the manufacturer of those products, or by only a handful of resellers.

The problem of a limited distribution channel gives way to another problem in that most customers want to buy accounting software solutions from a local company, so the company is nearby to provide support and assistance. The idea of a Birmingham based company being supported from Phoenix, Arizona does not produce a comfortable feeling for many of us. We sometimes fear that we will not see the vendor again once they have collected our money. For these reasons, many companies choose not to purchase products from distant vendors or resellers.


I am not a big fan of vertical market solutions. I find that while many vertical market solutions seem to be the best solution up front, closer inspect reveals many problems and weaknesses. I’ve heard many tales of vertical product nightmares, and I’ve experienced a few myself. In general, I think that customers should avoid vertical products like the plague. Yes, there are a few good vertical solutions, but 98% of them seem t be giving the other 2% a bad name. 

Worthy Vertical Solutions:

At the same time I do want to go the record to support a handful of vertical market solutions that over the years seem to consistently offer stellar solutions – contrary to my aforementioned arguments. The vertical solutions, which I feel warrant your consideration, are as follows:

  • American Fundware (Non-profit)

  • Blackbaud (Donor Software)

  • Shelby Systems (Churches)

  • Deltek (Government Accounting & Project Accounting)

  • Squirrel (Restaurants)

  • Yardi (Property Management)

  • Sun Systems (Oil & Gas)

  • Cougar Mountain (entry level point of sale)

  • Made 2 Manage (Manufacturing)

  • MIP – (entry and mid-level government accounting)

  • Scala – (hospitality & Pharmaceuticals)

  • Lawson – (Healthcare, government, education)

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Should you Avoid Vertical Solutions