ISV (independent software vendor)

Contributor(s): Bob Lehto

An ISV (independent software vendor) makes and sells software products that run on one or more computer hardware or operating system platforms. An independent software maker also provides software in the form of virtual appliances that run on virtual machines. And, as cloud computing becomes more pervasive, a software maker may also target the cloud as a vehicle for delivering software.

Software applications: ISV delivery methods

ISVs typically provide software in conjunction with a hardware, software or cloud platform provider. In the case of hardware, a software producer builds software to run on a particular vendor's (or vendors') hardware platform and the operating systems that the platform supports. But an ISV may also incorporate software from a software platform provider into its offering, embedding database technology from Microsoft or Oracle, for example.

In the cloud world, an ISV may offer its product on a software as a service basis. In this delivery method, the ISV may sell its software through a public cloud or cloud marketplace. Examples include Amazon Web Services (AWS), Microsoft Azure and Salesforce AppExchange

Overall, an independent software vendor list would include companies with a general or horizontal focus -- a software maker focusing on human resources applications, for instance -- and companies with a vertical market orientation -- an independent software producer targeting discrete manufacturing companies. There are also many ISVs providing highly specialized niche offerings, such as data migration utilities.

Independent software vendor programs

The companies that make the platforms, like Microsoft, IBM, Oracle, Hewlett Packard Enterprise, Apple, AWS, Salesforce and others, encourage and lend support to ISVs, often with ISV programs. In general, the more applications that run on a platform, the more value it offers to customers. Of course, platform manufacturers, such as Microsoft and IBM, make applications, too, but don't have the resources or, in many cases, the special knowledge required to make applications for every conceivable vertical market or niche requirement.

An independent software vendor program will generally offer a mix of technical and marketing support for a software maker. Specific benefits may include technology training, briefings on product development roadmaps, ISV-specific pricing and licensing terms, product discounts and co-marketing initiatives. A platform provider may also offer ISVs a seal of approval via software validation programs.

At times, an independent software vendor program may operate within a platform vendor's umbrella business partner program. Such programs aim to cover a spectrum of partner relationships and interactions. While ISVs make and sell software that is added to platforms, original equipment manufacturers use hardware platform components to build larger products. Value-added resellers incorporate platform software into their own software product packages. And managed service providers remotely monitor and manage hardware and software platforms installed at the end-customer's location, and may also keep tabs on the public cloud platforms a customer uses.

Blurring lines: Software products in the channel

One development in the independent software vendor space is the convergence of the ISV business model with other IT channel business models, such as managed services and cloud consulting services. As the MSP and cloud services markets become more crowded and competitive, companies look for new ways to differentiate their services. Some companies have turned to software development as a way to standout from rivals. An MSP or cloud consultant that creates its own intellectual property is less likely to become commoditized than a company that offers readily duplicated services, such as server management, or a company that resells the same public cloud service that many other companies can supply. On the other hand, software development calls for skills that may be difficult for a channel partner to acquire and maintain.

This was last updated in October 2016

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Some channel partners are taking on the characteristics of an independent software vendor. Why is the ISV direction a good, or bad, idea for a partner company?


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