Generic Verticalization Strategies in Enterprise System Markets: An Exploratory Framework

Abstract

In recent years, enterprise system (ES) software markets have been very dynamic. While contemporary customers are increasingly seeking ES solutions that require less and less customization and implementation effort, it is unclear whether all ES providers should take the ‘vertical’ path of offering functionality tailored to specific industries. Given the lack of conceptualization that explores ES markets’ segmentation, this paper offers a typology of generic verticalization strategies. Building on the resource-based view of the firm and the dynamic capabilities perspective, we match ES providers’ organizational characteristics of size and scope with the most effective verticalization strategy. A dynamic dimension is introduced to this framework by analyzing recommended strategies for market entry and growth. Finally, the applicability of the exploratory framework is illustrated using examples from the customer relationship management (CRM) software market.