Verticalization is back! Why? Horizontal business applications — as mature as they are — don’t fully support industry-specific workflows that span the front and back office. Manufacturers must track projects, schedules, time sheets, and labor efficiencies that are not core to customer relationship management (CRM) or inventory management. Healthcare providers must manage a patient’s health journey across practitioners, from initial diagnosis to long-term care.

Business software vendors have built industry applications for decades. Traditional on-premises solutions that were deeply verticalized — such as SAP CRM or Oracle Siebel — gave way to lightweight cloud industry templates. These templates offered scripted best practices, industry data models, and user-interface-specific labels and extensions to the horizontal product but never went deep enough to deliver maximum results. At the same time, highly verticalized cloud solutions emerged, like Blackbaud for nonprofits, Procore for construction management, and Veeva for pharmaceuticals and life sciences.

Now there is a fundamentally new approach to industry solutions, driven in part by the need to modernize core systems and adopt cloud solutions for agility and resilience, as well as by cost pressures to focus resources on differentiation. Forrester is seeing large CRM and digital operations platform vendors double down on industry solutions. Case in point: We estimate that Salesforce’s revenue from industry editions is on a trajectory to account for 10% of its total revenue, while Infor’s industry clouds account for a third of its revenue, per public reports.

These new industry clouds will be the preferred way to purchase five years from now, yet today’s decisions are not as clear. Many of these solutions are still pretty new. Plus, they can be more expensive and often require specialized resources to install, manage, upgrade, and service.

Read our report, which I authored with Liz Herbert on the rise of industry cloud solutions to understand their genesis and to guide you to make the right technology choice.