The role of an independent software vendor (ISV) is increasingly critical in today’s rapidly advancing tech and business sectors yet many outside the IT and cloud computing industries are still unfamiliar with the concept.
In this article, we explain in detail what ISVs are, what their role is in the tech industry, the benefits of ISV partnerships, and the key differences between this type of arrangement and others that are common between large platform developers and independent vendors.
What Is an Independent Software Vendor (ISV)?
An independent software vendor is an organization or individual that develops, markets, and sells software solutions that are designed to run on one or more hardware or software platforms. For example, a company that makes accounting software products for Windows computers or a developer who builds operating system platforms for industrial machines both qualify as independent software vendors.
Independent software vendors retain ownership of the intellectual property for their products through software licensing, unlike many consulting firms that create custom solutions for clients.
The software solutions created by ISVs typically add functionality to an existing computer hardware or software platform. The companies running these platforms often rely on ISVs to develop specialized software that would be too niche for them to pursue. These software applications are vital in nearly every market in the tech sector.
What Are ISV Programs and Partnerships?
An ISV partner refers to an independent software vendor that partners with a large company like a hardware, software, or cloud computing platform provider. These partners develop software solutions that integrate with or complement the platform provider’s products.
Several types of partnerships are commonly established between platform developers and independent vendors. Here’s a list of the 5 common types of agreements:
Direct Partner Programs
These are programs offered directly by large platform providers like Microsoft (MSFT), Apple, and Salesforce to provide resources to ISV partners. Direct partner programs give ISVs access to technical support, training, and marketing resources from the platform provider but are often charged an annual fee. Of course, they also get to sell software to their partner.
Indirect Partner Programs
Indirect partner programs are facilitated by third parties like resellers, publishers, or distributors. These programs connect independent software vendors to additional resources and benefits beyond what the platform provider offers directly.
Software Marketplace Partnerships
Large platform providers like Apple, Google, and Amazon operate software marketplaces and app stores. Independent software vendors can partner to list their products in these marketplaces without an exclusive relationship. ISVs may be featured by the marketplace provider or benefit from its large existing customer base.
OEM Partnerships
OEM (original equipment manufacturer) partnerships involve an ISV integrating their software products into hardware made by the OEM partner. The OEM then sells the combined offering under its own brand. For example, an ISV could partner with an automaker to provide software for in-vehicle infotainment systems.
Investment Partnerships
Platform providers or other tech companies may provide direct investment into ISVs through equity purchases or fundraising participation. These partnerships give ISVs capital to develop new products and scale their business in alignment with the investor’s interests. In return, investors gain early access to emerging technologies.
ISV Certification vs ISV Partners
ISV certification is a process where software publishers have their solutions validated and approved by a platform provider like Microsoft or Salesforce. A certification usually proves that the ISV’s software meets technical standards for integration and performance with the platform.
Becoming certified gives independent software vendors a higher level of credibility in the eyes of prospective customers and comes with a few other benefits depending on the certifier. ISV partnerships are quite similar but aren’t exactly the same thing.
Similarities Between Certification and Partnerships
- Both allow ISVs to market and sell solutions to users of a specific platform.
- Provide a stamp of approval from the platform provider.
- Require technical review of the ISV’s solution.
- Offer access to the platform’s technical resources and support.
Differences Between Certification and Partnerships
Partnerships
- It is typically easier to establish this kind of relationship.
- Often just requires signing up for a partner program.
- Does not always involve a formal review process.
- The program’s conditions are frequently less strict compared to certifications.
Certification
- More exclusive status.
- Rigorous technical review and testing are involved.
- Higher standards for product quality and support.
- Ongoing compliance is required to maintain status.
- May require fees and training to apply.
- Allows use of platform certification logo.
Benefits of ISV Programs, Certification, and Partners
Independent software vendors (ISVs) benefit from the programs created by large tech companies in many ways including accessing thousands or even millions of customers instantly and having a better pricing power due to their in-depth expertise on the platform.
Here’s a summary of the top five benefits of these partnerships and programs:
Access to Platforms, Tools, and Technical Support
ISV partner programs provide developers access to major cloud platforms like Microsoft Azure, AWS, and Salesforce to test and build solutions that can be integrated with those technologies. ISVs can leverage development tools, software SDKs, and technical documentation made available through the partnerships. This enables ISVs to cost-effectively develop products for these specific platforms.
Go-To-Market Opportunities
Partnerships allow software vendors to distribute software on cloud marketplaces operated by the platform providers. This gives ISVs a new sales channel to reach customers that are already using those platforms. The expanded go-to-market support helps ISVs scale and grow faster.
Added Credibility and Visibility
Certifications validate an ISV’s technical capabilities to build integrated solutions that meet the platform vendor’s standards. A certification gives added credibility when selling to customers of that platform. The credibility and visibility boost an ISV’s reputation.
Investment and Revenue Opportunities
Some partnerships provide access to venture capital or funding resources that help ISVs scale their business faster. Platform providers may also co-invest in emerging ISV partners aligned to their strategic interests. Partnership programs enable ISVs to earn higher revenue shares from marketplace sales and unlock performance-based incentives and marketing funds.
ISV Partnerships and Programs Examples
Some of the largest and most prestigious ISV programs and partnerships include:
Microsoft
- Offers the ISV Success program as part of their Microsoft Partner Network to provide vendors access to Microsoft’s cloud platforms like Azure, Microsoft 365, and Dynamics 365.
- Provides technical, marketing, and sales resources and support to enrolled partners. ISVs can potentially earn “certified” status.
Salesforce
- The Salesforce ISV Partner Program enables developers to build apps on platforms like Lightning, Heroku, and Einstein and sell them on the AppExchange marketplace.
- Partners leverage Salesforce’s training, tools, and go-to-market support. Apps can become “Built on Salesforce” certified.
Oracle
- Oracle Partner Network (OPN) offers resources and benefits to ISVs developing solutions integrated with Oracle’s cloud and on-premises products.
- Partners can achieve “Expertise” designations by meeting certain qualifiers that demonstrate their capabilities.
ISVs vs VARs vs MSPs vs IHVs vs SI
Apart from ISV partnerships, other types of arrangements can be made between platform providers and software developers. In this section, we provide definitions for each of these types of agreements and what makes them both similar and different to an ISV partnership.
Independent Hardware Vendors (IHVs)
An independent hardware vendor (IHV) is a company that manufactures and sells hardware components or devices designed for niche markets. Independent hardware manufacturers generally focus on specific types of computer hardware like graphics cards, printers, or disk drives.
How IHVs differ from other channels:
- IHVs design and build hardware components rather than apps and software add-ons.
- IHVs specialize in specific physical device types.
- IHVs enable partners and resellers to customize full solutions.
Value-Added Resellers (VARs)
A value-added reseller (VAR) enhances third-party products by bundling additional services and software. VARs customize solutions for clients.
How VARs differ from IHVs:
- VARs resell customized solutions as separate products that can be easily integrated with the main software.
- VARs focus on complete solutions rather than components.
- VARs leverage services and expertise to provide value-add.
Managed Service Providers (MSPs)
An MSP remotely manages and supports a client’s IT infrastructure and systems. MSPs provide ongoing management services.
How MSPs differ from IHVs:
- MSPs provide IT management services rather than specific software.
- MSPs maintain and support technology rather than develop it.
- MSPs are outsourced service partners, not vendors.
Systems Integrators (SIs)
Systems integrators implement customized solutions combining components from multiple vendors. SIs focus on integration and implementation.
How SIs differ from IHVs:
- SIs integrate multi-vendor solutions rather than building products for a specific platform.
- SIs combine software, hardware, and services into highly-customized systems.
- SIs implement rather than develop technology.
The Importance of ISVs Can’t be Understated
Platform providers rely on vibrant ISV partner ecosystems to expand the capabilities of their technology and meet diverse customer needs. Learning the basics of what ISVs are and their role in the technology landscape helps illustrate how software innovation is fueled in modern computing.