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The Next Wave of Industry Cloud is Data

Emergence has long believed that software tailor-made for the needs of an industry can deliver more value than horizontal software focused on a function. In 2008, we partnered with one of the first industry cloud companies, Veeva Systems. Veeva started with CRM for the life sciences industry, and over the last decade has grown to a $45B market cap with 30 integrated software solutions that span multiple horizontal functions.  

Similar to the rise of horizontal SaaS applications in the 2000s, we are excited today by the emergence of the horizontal Modern Cloud Data Stack. The core pillars consist of Ingestion, Warehousing, Transformation, and Output. Successful companies have demonstrated the value of modern tooling to turn data into insights, driven by the rise of cloud-native architectures. Many new companies are being built around these pillars in a way that feed the Modern Data Production Pipeline.

Modern Data Production Pipeline
Modern Data Production Pipeline

In the same way Veeva expanded from CRM to additional software solutions that power the pharma industry, we are bullish on startups building vertically-focused data stacks that can power an entire industry. These startups vertically integrate deeply within an industry to ingest data from vertically specific data sources, pipe that data into industry tuned data schema, and subsequently pipe that data out into industry-specific applications or analytics engines. An industry cloud data company can tackle the long-tail of niche, vertical-specific systems and vertical-specific data problems that don’t make sense for horizontal companies to target. 

Below, we've shared a lightweight example of our framework on what characterizes an industry cloud data company.     

Horizontal vs Industry Cloud
Horizontal vs Industry Cloud

Not all industries will be a good fit for an industry-focused cloud data company. We believe these are some of the necessary attributes of an industry that determine how ready that vertical is for an industry cloud data company: 

  • Legacy data systems that live in silos 
  • Large enterprises with hybrid / multi-cloud / on-prem deployments
  • Regulations around data sharing 
  • Accelerated digital transformation tailwinds

Even if an industry vertical is ripe for an industry cloud data company, there are numerous potential pitfalls that we have observed. First, building out a vertical data stack is difficult. It takes a foundation of building data integrations, ingestion pipelines, and data models before value can be delivered to customers. Second, every customer will trigger a set of complex choices – should I build a scalable integration for each data source, or should I use services to build a fast one-off point-to-point connector? Third, enterprise customers are at different points on the journey of becoming a modern data-driven company. Some customers need a lot of hand-holding to get all their data into a data warehouse in order to run simple BI reporting, while other customers may be fully ready to own their data model and build workflows. Identifying the right user persona and selling the right value proposition for the stage of the customer is a critical component of the go-to-market strategy.

While these treacherous waters require the industry domain expertise and technical prowess of strong captains, there are ample opportunities. Industry cloud data companies will have deeper vertical connections, more robust data models, and ultimately more powerful insights and workflows. These advantages compound with each new customer on the system and will ultimately yield enduring competitive advantage. 

Ultimately, Veeva was able to beat out horizontal competitors due to its ability to tailor the CRM product for an industry in a way that just worked for the unique industry needs of their customers. We are excited to watch vertically-focused companies tailor the modern data stack for industries in a way that just works for their specific needs and unlocks tremendous value.

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If you are building a next-generation Industry Cloud Data company, please reach out to us!

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