IDC: Microsoft ISVs Outperforming PeersBy John Hazard | Posted 2006-10-24 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
Program benefits and channel behavior have Microsoft ISVs outperforming peers, even those building on Microsoft but outside the program, according to an IDC report.
ISVs participating in Microsoft's competency program are more successful than their peers, even those building on Microsoft but outside the program, according to an IDC report released in October.
Microsoft ISV/Software Solutions Competency partners outperform ISVs building on alternative operating systems and those Microsoft shops working outside the program in 10 of 11 of key performance indicators, such as revenue growth, change in market share and business velocity, according to a survey by IDC of 365 ISVs in the United Kingdom and the United States. ISVs working on non-Microsoft platforms reported larger average deal sizes than the field.
The survey and report "Microsoft ISV/Software Solutions Competency: Partner Pathway to Business Performance," were commissioned by Microsoft in preparation for program changes to the ISV partner organization for the release this year and next of Windows Vista, Office 2007 and Exchange Server 2007.
Microsoft competency ISVs experienced average annual revenue growth of 25 percent, while Microsoft partners outside the program saw 20.3 percent and non-Microsoft ISVs 15 percent, IDC and Microsoft.
Average deal size was $155,300, $116,200 and $343,300, respectively.
Sales cycles were an average 6.1 months, 7.1 months and 9.1 months, respectively.
Implementation time was 3.6 months, 6.2 and 7.1, respectively.
IDC researchers chalked up most of the gap to efficiencies gained from the Microsoft partner program, such as research and development benefits, sales and marketing support and the difference in go-to-market strategies between the different channels.
Microsoft partners spent less on research and development than non-Microsoft ISVsan average 33 percent and 50 percent of revenue, respectivelyand invested the bulk of the savings on sales and marketing efforts, granting them a leg up in market share, researchers said.
The Microsoft channel's reliance on a high-volume approach versus the low-volume, high-value approach of its competitors' channels also impacts performance figures, according to IDC analysts Matthew Lawton and Stephen Graham.
"In a business that is heavily oriented toward packaged software sales, the bulk of an ISV's revenue will come from selling the packaged software primarily to new customers, since existing customers typically do not replace their packaged software annually," a situation likely to change as SAAS (software as a service) delivery proliferates, the report said.
The survey also found that ISV partners with more narrow technical and business focus perform better than do those with broader partner networks.
The study underscores the need for vendors to make their channels profitable.
"Vendors have come to realize that attracting and maintaining a roster of profitable partners can lead to competitive advantage and enhance relationships with end-user customers," wrote Lawton and Graham in the report. "[And] partners are increasingly making technology adoption decisions based on hard-dollar business rationale."
The software maker is launching five new programs this year, including International ISV Assistance and ISV Telesales, to help get partner applications built to run on, and take advantage of, the three coming products.