Common ISV business challenges

The Independent software vendor (ISV) market is growing at an annual rate of 30%. Not only that but the number of ISV’s has grown dramatically from 10,000 in 2008 to 100,000 in 2018 and this number is expected to reach 1 million by 2028.

To be competitive and succeed, ISVs face many challenges. These derive from the fierce and increasingly competitive nature of their market; the speed with which it changes because of being tech-driven; and operational obstacles to do with achieving an efficient IT environment, integrations, and scaling their business.

When developing go-to-market (GTM) strategies, ISVs are aiming to accomplish the following:

• Grow the business
• Maximise operational efficiency
• Simplified scaling of solutions
• Overcome resource constraints
• Achieve product validation

There are, however, a host of common business, technical, and commercial GTM challenges they will encounter. These include:

• Cost Optimisation – With rising capital and operational expenditure and high on-premises TCO, ISVs are often met with several roadblocks in optimising cost. Having no visibility or control over spend is one of the biggest challenges they face.
• Aging Infrastructure – An aging infrastructure can impact on an ISV due to a decline in performance and the high maintenance costs. A newer infrastructure will need to be put in place to receive the support and warranty needed to carry on.
• Security & Compliance – Strict regulations, global cyberattacks, and time-consuming audits can all impact on the security and compliance of ISVs. In addition, many ISVs rely on decentralised security, which can increase risk.
• Strategic Focus – A low business focus will inevitably lead to lower productivity. When ISVs are spending precious time and resources on other aspects of their strategy, they tend to lose sight of their core goals.
• Reliability – The impact of an aging infrastructure and other non-resilient systems can add an element of unreliability for day-today operations. ISVs have to work extra hard to move from reactive to proactive monitoring and predictive maintenance.
• Availability – Having high availability targets is not always easy when infrastructure implementation remains expensive.
• Scalability & Flexibility – Between vendor lock in and seasonal peak demands, scalability and flexibility are not easy to achieve. Paired with limited standby capacity, ISVs are challenged with finding the room to grow.
• Agility – Adapting at a moment’s notice is an absolute must, but many ISVs find it difficult to snap back. Slow service fulfilment and slow demand response are both a result of inefficient processes.
• Manageability – Disparate tools and complex management can lead directly to low productivity. Simplified management and centralised tools can remedy this situation.
• Recoverability – Low RTO and RPO, long data retention, and expensive infrastructure implementation all make recoverability a challenge for ISVs. A simplified recovery architecture will need to be put in place to improve poor recoverability.

Overcoming common ISV challenges in 2021 and beyond

For 2021 and beyond, ISVs face a series of critical challenges. From technical to operational, and from attracting and retaining the right talent to scaling effectively for growth maximization, the obstacles to overcome and achieve continual success are many. However, the increasing demand for ISV services – the market growing by the aforementioned 30% year over year and software-as-a-service revenues exceeding $100 billion – means business opportunities abound for those that are in a position to seize them.

ISVs need to operate with constant agility in the fast-moving market in which they operate.  To do so, they need to partner with the right third-party providers and choose the right technologies in order to be well-positioned to achieve their business goals.

Learn how independent software vendors are improving their business value and profitability by leveraging innovation on Microsoft Azure with Codec.  Learn more about how ISVs are becoming more profitable with Azure cloud solutions.