4 min read

Why complex industries need special tools

Complex industries like biotech involve specialized people working in specialized ways. To power this effectively, underlying tools need to have certain core assumptions and use-cases baked in. In this Kaleidoscope post, we briefly cover the advantages of using vertical software for driving industry outcomes. If anything here resonates, please reach out.

One of the first articles we ever wrote was about why biotechs should buy, not build, more of the software they need. This gives rise to the question: what kind of software? 

For some context, the first wave of software was largely horizontal. This is software that can be applied across multiple industries, like Salesforce, Notion, or Snowflake. Rather than target a specific type of company, these software target functions that exist within most companies. These horizontal software are compelling where there’s a general, foundational function or workflow that looks the same from one company to the next. A sales team in a software startup and a sales team in a finance company will, largely, need to do the same things: pull leads, send emails, repeat. As a result, it makes sense for them to use the same generic software. 

But the situation gets more complex the more intricate, messy, and siloed an industry – and especially a workflow – becomes. For industries like biopharma, insurance, and legal, promises of a universal software you can just plug in and run, never quite pan out. The reality is, when horizontal software is built for a fundamentally different use case than the one you need, you’re forced to patch together brittle workarounds that don’t scale in the long term. 

Taking biotech as an example. Last week, we wrote about all the phases involved in taking a new drug to market. The end-to-end process is a stunning amount of work that spans over a decade in total. The critical workflows within each phase are intensely manual, siloed, data-intensive, and constrained by factors like regulation, security, and risk aversion. 

As biotechs mature, they will need to plan experiments and manage the data they generate in ways that traditional tools just don’t facilitate. Within our biotech example, this might look like figuring out a way to capture metadata, track large amounts of data and hand-offs over time, or configure different levels of access permissions, all within a generic PM tool like Smartsheet, Clickup, or Trello –  tools that were built for simple ‘tick box’ project management. In making these changes, you’re forcibly creating a space into which to try and fit your workflow. 

Space that doesn’t naturally exist in these tools

This concept applies outside of biotech, too: when you use horizontal tools for niche or highly-technical use cases, you have to shoehorn your way of doing things into a predefined schema. Coming up with these workarounds and making sure everyone on the team actually learns them takes a good amount of time and mental energy, and can lead to an even higher cost of using software. There are many companies who, to avoid the ‘customization headache’, will pay for an outside party to develop these workarounds for them – all because their software is fundamentally misaligned with the demands of their industry. 

In these scenarios, good, vertical, purpose-built software is easier to set up and use: it’s created to handle the intricacies of specific workflows that specific people, within specific companies and in specific industries, do every day. Rather than functionality for all, these tools have functionality for you – instead of thinking of a way to configure and track experiment metadata, for example, you just have to use the feature that’s been built for tracking it.  

The case for vertical software goes beyond just being easier to use: they give customers higher-quality experiences, too. Since these software have a targeted end-user, they focus intensely on what those users want, and end up figuring out how to serve their needs better than anyone else. Veeva is a great example of this. Their first product was a vertical CRM for pharma that has over 60% of the market share. Their customers ended up consolidating around Veeva for various other software needs — allowing Veeva to layer on additional, vertical products. Ultimately, it’s a better experience for customers when a technology vendor deeply understands the industry, has a team that goes to the same conferences and events as them, and is rapidly evolving the product to suit customer needs.

This deeper customer relationship has a big advantage when it comes to expansion. Vertical software is better-placed to launch new product lines that resonate with customers. They not only have the pre-existing customer base to launch these products to, but they’ve critically built up the sector-specific data and knowledge to facilitate launches they know people want. Last year, Procore, a construction management software, launched a construction insurance brokerage, Procore Risk Advisors, to connect general and specialty contractors with insurance carriers. Procore’s advantage within the insurance space was the data they had on various products, allowing them to handicap risk better. The more vertical you are, the more intimately you understand customers, the more knowledge you accumulate on new pain points, and the more you’re able to expand within that vertical – like a flywheel that feeds into itself. 

This isn’t to say the era of horizontal software is over. In reality, we use horizontal software every day, and they work extremely well –  when we use them for what they’re built for. This is the key nuance. As soon as your use case diverges from the intended purpose of a software or from the average or typical user of that software (which is often the case with complex industries like bio), generic tools quickly become much harder to navigate than solution-oriented software made specifically to solve your exact problems. 

If you want to chat more about anything we wrote, or you’re interested in finding a way to work together, let us know!