What is an Independent Software Vendor?
An independent software vendor (ISV) is an organization that creates and sells software products that are independent of the underlying hardware and operating systems. The software solution typically solves a specific customer problem, such as creating and managing sales or financial data. It could also be infrastructure software that supports data storage, security or authentication. The vendor ensures software compatibility with various hardware platforms to target a broad customer base.
ISVs sell their software in different formats like perpetual licenses, term agreements, or Software as a Service (SaaS). The software is licensed to customers but the ownership rights are retained by the ISV.
How do independent software vendors differ from other types of software manufacturers?
Hardware manufacturers make many apps closely tied to their operating system platforms, like the software interface of a Point Sales machine or a manufacturing equipment. These apps run optimally on the hardware they were built for and require workarounds to run on other systems. A platform provider is typically not classified as an independent software vendor.
Similarly, you may be using software by an organization where selling software is not the main business—like a banking or hospital app. Such software solutions may run on multiple platforms, but the software producer is also not an independent software vendor.
ISVs specifically sell software as their primary business function. The software is general enough to fulfill its purpose across various domains, industries, and platforms. Examples of ISV products include cybersecurity solutions, booking systems, data integration solutions, and more.
What is the difference between ISV and SaaS?
Software as a Service (SaaS) is a cloud-based software model that delivers applications to end-users through an internet browser. Instead of any particular platform, the SaaS solution runs on the cloud and can be delivered to end users over the Internet. SaaS is also distributed via licensing, and customers typically pay for the functionality they use as a subscription model.
SaaS refers to the software itself, while ISV refers to the organization selling software. “Born in the Cloud” ISVs start distributing their software as SaaS. Traditional ISVs started with on premise deployments but have now moved (or are moving towards) SaaS.
Many ISVs distribute SaaS solutions, but not all SaaS solutions have an ISV behind them. Platform providers and large non-software-related enterprises may offer SaaS to their end users but are not classified as ISVs, according to Gartner.
Why should independent software vendors move their solutions to the cloud?
Independent software vendors that built their software before the cloud era often struggle with their customers’complex IT infrastructure that hinders their ability to migrate workloads, innovate quickly, and scale. Competing with born-in-the-cloud vendors that frequently experiment, release new features, and target a global audience from launch is challenging. ISVs can increase business opportunities by modifying their tech stack and moving their software products to cloud platforms. Benefits include
Optimize operations
Cloud providers manage the underlying infrastructure, reducing the workload on ISVs to maintain physical infrastructure. This shift allows ISVs to focus more on core product development and customer service. They can also utilize the cloud's advanced analytics and computing capabilities to process large data and gain insights to improve software performance and user experience.
Increase profits
The cloud allows ISVs to shift from a capital expenditure model to an operational expenditure one. The recurring revenue model of a SaaS product generates substantially more revenue than a one-time perpetual license sale followed by recurring annual support that a customer may or may not renew. It also brings predictability to profit and expenditure. ISV’s can plan and reduce expenses to further increase profit margins. For example, Adobe’s transition to the cloud led to a dramatic increase in their bottom line.
Agility and innovation
A cloud platform provides development tools, pre-built templates, and managed services, simplifying and accelerating various development processes. ISVs can quickly develop, test, and deploy new applications or updates, reducing time to market.
Elasticity
The cloud provides a flexible environment so ISVs can adapt to changing demands by scaling resources automatically. Additional resources can be dynamically allocated to maintain performance during peak periods and scaled-down during quieter periods to save costs.
Resiliency
Cloud platforms inherently offer better resiliency compared to traditional on-premises solutions. ISVs can operate across multiple geographically dispersed data centers, which enhances disaster recovery and business continuity. Services can continue operating without significant downtime, and ISVs can offer better availability guarantees in their SLAs.
Ease of deployment
Cloud computing speeds up the software deployment process. With tools that automate various stages of deployment, including resource provisioning and configuration management, software can be rolled out much faster and with fewer errors. Additionally, the cloud supports various deployment models, such as multi-tenancy. ISVs can serve multiple customers from a single shared application instance, simplifying updates and management.
Enhanced security
Cloud providers offer robust physical and cybersecurity measures for any infrastructure they provide. They also offer full control so ISVs can configure security settings, manage access, and monitor network traffic and application activities. Thus, ISVs can more effectively protect their customers' data.
Scale distribution network
Cloud infrastructure's global nature allows ISVs to distribute software across borders more efficiently. With data centers worldwide, ISVs can deploy their applications closer to their end-users, improving performance and reducing latency. The cloud’s scalability extends beyond hardware resources, allowing ISVs to quickly adapt to new market demands.
How do you choose an ISV solution for your business?
You can choose from thousands of ISVs on the AWS Marketplace. Before exploring independent software vendors, it's essential to have a clear understanding of your business requirements. Identify the problems you are trying to solve or the processes you want to enhance so you can select an ISV solution that aligns well with your business goals and operational needs.
You can evaluate independent software vendors based on the following criteria.
Industry expertise
Research the ISV's expertise in your industry. Check their track record, customer testimonials, and case studies. A reputable ISV with a strong presence in your sector is more likely to understand your specific challenges and offer effective software solutions.
Integration capabilities
Consider how well the ISV solution integrates with your existing systems. Check for compatibility and support during the integration process. Integration is crucial for minimizing disruption and maximizing efficiency.
Cost implications
Analyze the total cost of ownership of the ISV solution, including initial purchase, implementation, training, and ongoing maintenance. Ensure the costs align with your budget and provide a reasonable return on investment. Evaluate whether the solution can adapt to future challenges and expansions without additional investments.
Service levels
Review the ISV’s service level agreements to ensure it meets your needs. Request demos and trials to see the solution in action. Trials also help gauge the learning curve and the ISV's support during the initial usage phase.
How can AWS support independent software vendors?
Amazon Web Services is an ISV strategic partner to accelerate their business and drive profitable growth. As the world’s most comprehensive and broadly adopted cloud provider, we provide over 200 fully-featured services from data centers globally. Whether you are a software company migrating from on-premises to the cloud, scaling a new service, or re-inventing your business, AWS can support you.
- AWS SaaS Factory program helps design and build scalable SaaS solutions.
- AWS Global Passport helps you reach new customers and access international markets.
- AWS ISV Accelerate connects participating ISVs with the AWS Sales team to drive new business and accelerate sales cycles.
- AWS Marketplace broadens your reach to millions of AWS customers.
ISVs receive direct access to technical and business content, best practices, solution architects, and technical and marketing experts. We support both business and technical teams on a wide range of challenges, helping you differentiate your software company and innovate on behalf of your customers.
Select your role to see how AWS can support growing your ISV business.
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