Demise of the ISV?

I ran across an interesting article today on the ITworld website.  The article, entitled In memoriam: the ISV can be found here.

The world of business software continued its inexorable march toward Total Consolidation in 2007. If IBM was off the mark in 1943 when it (supposedly) predicted a world with only five computers, it might have better luck today with a similar prediction about the software industry.

Catchy intro, eh?  Let me start with a definition. . .ISV is Independent Software Vendor (link is to wikipedia entry).  In IP Commerce terms, and in this blog, I typically refer to a broader category of "Software Company" but that two are often interchanged.

So what did IDG News Service, who authored the article have to say about the ISV?

So is it the end of the business ISV as we know it? In fact, probably not. For starters, some large independent vendors remain, like SAS, Sage, Lawson Software, Dassault Systemes and BEA. There are several reasons for their survival: SAS is privately owned, so less vulnerable to the type of shareholder pressure that shoved BEA onto the market. Some others lie only on the fringes of commoditized segments.

<snip>

More importantly, as sure as yesterday’s technologies mature and get acquired, so a new wave of startups — in virtualization, software-as-a-service or enterprise Web 2.0 — will grow to become large ISVs and begin the cycle anew. "Pure-plays will always be there, as long as innovation takes place in a given market," said Bo Lykkegaard, a research manager with IDC.

This matches very closely with what I have seen over the last year at IP Commerce.

Simply put, we are seeing a resurgence of the ISV.  In most cases, it is the niche ISV, particularly focused on a specific community or specific vertical within the SMB sector.  As IPC engages with this community, I find more innovation and attention to the needs of their niche than in many of the large software companies where I have worked.  These developers have experience, often substantive, and more importantly have unique knowledge of their markets demands.  Courting this community is particularly important for large companies such as Microsoft and IBM. . .their platform growth is dependent on technology adoption by the "decision maker" at a business.  In most cases, the ISV represents this trusted advisor.

With that said, this community has often been looked upon with scorn.  Again from the article:

Larry Ellison, Oracle’s rapacious CEO, has made it his favorite pastime this decade (after sailing) predicting the demise of the independent software vendor. "There won’t be, and nor does there need to be, tens of thousands of software companies," he said at OracleWorld in 2002, before launching a torrent of scorn on startups like Ariba, Commerce One and i2 Technologies. Ariba’s e-commerce software was so simple, he said, "two cats could have written it."

While the statement is humorous, it is rather short-sighted (granted, it is dated) and somewhat typical of the attitude that many large companies have towards the ISV community.  Two cats may have been able to write Ariba’s solution.  But the "cats" who performed the work added immediate value to a substantial community of users.  The article also notes that Ariba is, in fact, one of the ISVs that is still not been purchased.

There are some shining examples of ISV support in the world of commerce.  PayPal, for one, has a thriving developer community and has recently been touring US cities to help developers achieve certification and have their questions addressed quickly.  I highly encourage you to read the PayPal Developer Blog as it is an excellent example of the type of communication that seems to resonate with the smallest of ISV while remaining useful to the largest.

Tomorrow, I will focus on a specific ISV that I have worked closely with this year and the excellent solution they have developed for their community.  In the interim, feel free to take a look here* at a small sample of ISV solutions that have been developed using the IPC Commerce Toolkit for Applications

"The demise of the ISV?"

Not hardly.  Their contribution is more important than ever to drive scale adoption of software solutions on behalf of platform providers.

What’s your perspective? Agree? Disagree? Anything to add? Critiques?
The comment form is below. . .Digg!

 

*There is a promo code in this link.  I do not receive compensation/etc for anyone clicking through to this page.  It is solely for the purpose of assuring that traffic from this blog does not disrupt the statistical analysis of marketing campaigns using this page.

December 20, 2007

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