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Updated Apr 24, 2024

Should Your Business Use Niche Software?

General software solutions are widely available, but industry-specific tools may be a better option.

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Eduardo Vasconcellos, Business Strategy Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Businesses in every industry need software platforms to run their operations. Some opt for general-use software, often called software-as-a-service (SaaS) solutions, to handle accounting, word processing, office functions and more. Others turn to more industry-specific platforms tailor-made for niche functions. These solutions tend to be highly customizable but may require a deeper investment of time and money. 

So, how can you decide if a niche software product or general SaaS solution is the right fit for your business? We reached out to analysts, business owners and longtime SaaS users to get their take on industry-specific solutions and general-use SaaS products and how to make an informed buying decision.

What are general SaaS solutions? 

General SaaS solutions are broad-use, cloud-based productivity applications that can address a wide range of business needs. Typical services include cloud-hosted data storage, calendar apps like Google Calendar, email applications like Gmail, word processing programs and office suites like Microsoft Office and free Microsoft Office alternatives.  

Pros of general SaaS solutions

General SaaS products have numerous valid selling points. Many small and medium-sized business (SMB) owners we spoke to cited affordability as a top reason they use these solutions. Others felt that general SaaS solutions were suited better to small businesses because industry-specific offerings may cater more to enterprises. 

Here are some of the top reasons many businesses opt for general SaaS solutions:

  • They are affordable: Many offer free introductory subscription plans to introduce new customers to the vendor’s software ecosystem. SaaS service fees tend to be lower because these products have mass appeal and handle essential functions. 
  • They are easy to implement: Because SaaS solutions are cloud-based, they’re less dependent on specific hardware. All primary software processes are handled on the server side, so they’re compatible with many devices. Businesses with basic computer setups and mobile devices can start using SaaS products immediately. 
  • They are easy to upgrade: The vendor handles all maintenance and upgrades for SaaS offerings and deploys them via the cloud. All users can access the latest updates or new services effortlessly. 
  • They are scalable: Typically, SaaS services don’t limit accounts. Whether you have five or 100 users, these offerings are easily scalable and provide plans that suit your needs. Custom pricing options are usually available for larger organizations or businesses with unique situations. 
  • They have robust support options: General products tend to have excellent customer service, robust learning resources and online support to cater to large user bases. For example, an estimated 75 million websites are powered by WordPress. SMBs are unlikely to encounter a new WordPress problem or scenario — there will likely be a readily available answer to any conceivable problem.
  • They integrate well with other software: Many high-profile general SaaS solutions, including some of the best CRM software, enterprise resource planning software and content management systems, are part of broader product ecosystems and are compatible with third-party software and extensions. This makes it easier to introduce these solutions into your current tech stack.

Cons of general SaaS solutions

However, general SaaS solutions can’t fulfill every business need and have some inherent downsides, including the following:

  • They provide less control: SaaS services are developed in a controlled environment and client businesses have no control over how an application functions. Additionally, service providers monitor usage to ensure users aren’t sharing accounts. 
  • They may be less secure: While SaaS providers often have security guidelines, enforcing cybersecurity measures is the client business’s problem. The company and its information technology (IT) team must enforce security practices like strong passwords, access control and virtual private network connections with encryption.
  • They have limited application functionality: General SaaS applications are designed to fit a broad range of use cases. For this reason, they lack a focus on niche processes specific industries may require. Typically, general SaaS services sacrifice specific functionality for a few use cases in favor of maximum functionality for a broad audience.
Did You Know?Did you know
Beyond SaaS, cloud computing offerings include infrastructure as a service, platform as a service and backend as a service.

What is industry-specific software?

Industry-specific software is any application tailored to a particular industry’s standard use cases and specific needs. These applications aim to streamline processes across multiple roles. Industry-specific applications typically are built with the input of industry experts to help smooth and automate workflows and provide tools to address even the most complex situations. 

Pros of industry-specific software

Stephen Babcock, a lawyer and founding partner at Babcock Partners, believes industry-specific software adds enormous value because of the extensive knowledge poured into these solutions. “Industry-specific software allows you to benefit from many other businesses [that] have had input into the coding of the software,” Babcock explained. “Software coders are software coders. When they are writing software for a specific industry, they almost always seek extensive input from people in the field for updates and functionality.”

In contrast, general solutions are created with the most common use cases in mind and may require extensive customization. Babcock’s law firm uses Needles, a legal case management software with features he says generic software can’t match.

Similarly, Sonia Parekh of SymphonyAI Retail CPG says industry-specific applications can be enormously beneficial for retailers. She noted that while some business tasks sound similar across industries, they can vary greatly. For example, every company must build a financial plan demonstrating how its offerings will make money. However, that planning process varies significantly because the target customer, approach to inventory management and profit margin structure differ for products across industries.

“As a result, if you are selling software to support ‘planning,’ it had better be specific to an industry or it simply won’t work,” Parekh advised.

The experts we spoke with cited the following as additional upsides of investing in industry-specific software:

  • Tailored to specific processes: Niche software offers new efficiencies for industry-specific processes and regulations, helping teams streamline workflows, find innovations and keep up with the latest trends. 
  • Can handle complex situations: Industry insiders are typically quite familiar with the quirks found in any given process. That’s why niche applications often come with industry tools to optimize existing processes and provide customization options.
  • Can boost productivity: Industry-specific software solutions are tailored for efficiency. They boost productivity by reducing the time teams spend on manual or tedious tasks, freeing them to focus on more meaningful work, such as finding new clients, expanding into new markets or conducting competitor analyses
  • Comes with expert customer care: Niche application developers understand their products’ use cases and the specific industry scenarios their customers will face. This knowledge translates to expert guidance and resources. Indeed, several entrepreneurs we spoke with in real estate, law and retail agreed that it’s easier to work with customer service reps and sales staff who understand processes unique to a specific industry.
  • Can give businesses a competitive edge: Industry-specific products typically include unique features that general software doesn’t. Many SMB users believe that their biggest competitors already use industry products and that skipping such solutions may cost them sales in the long run. 
  • Can be easier to use and implement: Industry-specific solutions often have fewer overall settings and options, allowing for a less overwhelming design. Limited features and settings can make the implementation process faster and improve the user experience. Evan Roberts, a real estate agent and founder and owner of Baltimore’s Dependable Homebuyers, favors real estate-specific tools. “The reason I opt out of these more powerful systems and choose real estate-specific tools is that they offer a minimal feature set and have customer support representatives who are trained specifically to work with real estate agents,” Roberts explained.
  • Can meet compliance and security needs: Unsurprisingly, business users we spoke to in fields with specific security and compliance needs were uniformly in favor of industry solutions. Mark Anderson, principal at managed IT services firm Anderson Technologies, uses an industry-specific solution called IT Glue. Since IT Glue was created as an information repository for tech companies, it has built-in features Anderson’s company needs. “The managed IT services industry revolves around processes and systems,” Anderson explained. “IT Glue not only expedites those processes by ensuring information is always close at hand but also keeps every member of our team accountable and on the same page.” This solution also gives tech-savvy users granular access to information and multiple customization options. Not every business needs this level of complexity, but it’s invaluable for businesses that do.

Cons of industry-specific software

Not everyone is sold on the merits of niche applications. Mark Aselstine, the founder and owner of the subscription wine club Uncorked Ventures, has had negative experiences with such products. His business had significant cybersecurity issues with one wine-specific application; the company’s data was compromised and service was down briefly during a vital sales period. Another wine-related software the company adopted had fewer usability issues but was difficult to customize. A specialized programmer was required for even basic website updates — costing the company $250 per hour. 

So, what does Aselstine use now?

“I’m on WordPress and WooCommerce like everyone else,” Aselstine shared. “It’s secure. I can add pretty much anything I need by myself and it’s incredibly easy to get stuff fixed if it goes wrong.”

Here are some additional downsides of industry-specific software:

  • Can be expensive: Although industry-specific software gives a business a more tailored experience and improved efficiency, it can come at a premium. These applications typically offer tier-based plans with substantially higher costs than their general software counterparts.
  • Can be challenging to integrate: Implementing an industry-specific application into an existing tech stack often requires testing and training. While some industry-specific platforms are more intuitive than others, complex solutions can take several months to integrate fully. Niche applications also require third-party suppliers and internal tech teams to cooperate for updates and iterative quality assurance testing.
  • May lack third-party support: Industry-specific applications have varying levels of support for third-party integrations. That lack of support could be disruptive to a business as it attempts to consolidate its various processes into a cohesive workflow that works for everyone on the team. Many frustrated business users, especially those with industry-specific marketing and advertising software, expressed frustration with the inability of their niche products to integrate with third-party systems or each other. Some users had to juggle data input across as many as three or four systems to maintain consistent records because the tools they adopted weren’t compatible.
  • May have bugs: When dealing with niche software companies, especially smaller companies or those exiting the startup phase, you may encounter bugs and new issues with no known resolution. 
Did You Know?Did you know
Some businesses with unique needs turn to custom software development to deal with inefficient processes and time-wasting workarounds.

Should your business use niche software? 

Your business should use niche software if…

  • You have clear use cases for specific services.
  • You understand what your software solution must provide. 
  • Your business has a competitive or compliance-related need for niche software.
  • You have an internal technical team able to assist with niche software integration. 
  • Your budget allows for niche software. 

Your business should not use niche software if…

  • Your business has general software needs.
  • General SaaS solutions can address your specific use case.
  • You must set up and scale your service quickly.
  • You don’t have an IT team that can set and enforce cybersecurity guidelines. 
  • You must scale quickly for a growing workforce.
Did You Know?Did you know
As you grow your business and hire more employees, you must ensure your business software can scale appropriately to support expanded needs.

How to make an informed software buying decision

There are compelling arguments on both sides of the business software debate. Our experts agree that businesses must clearly outline their needs and avoid getting sidetracked by unnecessary features.

Cathy Reisenwitz, a consulting CRM analyst and freelance editor, says every business has unique needs. “One business might live or die by their calendar but rarely need to store documents in their CRM. Another might need social media integration but not need territory management,” Reisenwitz explained.

Reisenwitz thinks businesses would be better off prioritizing based on daily operations and requirements than industry.

“I’d guess that for most businesses, their industry doesn’t determine their CRM needs,” Reisenwitz noted. “The size of the team, the location of the team, the management structure, whether you have engineers on hand to make changes or will need to rely on the vendor’s support team, how tech-savvy your sales reps are and your sales strategy will [likely] have a bigger impact on the necessary features and setup than your industry.”

Tony Mariotti, a former software executive and current business owner and real estate agent, echoed Reisenwitz’s advice: “One the best ways to determine if industry-specific software will make a difference to your business is to first create a list of ‘must-have’ features,” Mariotti recommended. “I find that I can get away with general CRM for my real estate business, without having to pay a premium for software created for and targeted to, my industry.”

Above all else, both Mariotti and Reisenwitz recommend business shoppers do their homework before signing a contract.

Examples of industry-specific software

Consider the following resources to get more insight into industry-specific applications: 

Business software requires a balance

Careful thought is needed when choosing the best tech solutions for your business. Many companies use a combination of general SaaS solutions and industry-specific applications to address their unique needs. General solutions are increasingly offering industry-specific features, making it easier for small businesses to get the benefits of specialized industry software with the convenience of an affordable, widely used product. 

Business-specific templates are already the norm in contact management systems, app creation tools and e-commerce software and many software solutions offer optional add-ons and extensions that allow users to customize the product to meet their unique needs. 

As popular products continue growing their user base, they’ll likely add more themed features, optional add-ons and customizations to suit the needs of specific industries. 

Mona Bushnell contributed to this article. Source interviews were conducted for a previous version of this article.

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Eduardo Vasconcellos, Business Strategy Insider and Senior Writer
Eduardo Vasconcellos is a subject matter expert when it comes to technology at large, but particularly the tech small business owners use to run their companies. His understanding of IT concepts and the science beyond various software tools stems from the years he spent serving as a software quality assurance engineer. In the two decades since then, Vasconcellos has also become adept at other key aspects of business operations — especially marketing. Indeed, Vasconcellos now spends most of his time focusing on digital marketing initiatives targeting B2B and B2C audiences. His sharply honed efforts include creating email campaigns, developing promotional assets for new product launches and executing other strategies related to demand generation. Over the years, he has provided consultative services for local businesses while also working on co-branded projects with the likes of Apple, Marvel and the Cartoon Network.
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