Tap the Potential of ISVsBy Michael Vizard | Posted 2006-07-24 Email Print
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Infrastructure vendors that educate ISVs about the value of their channel partners will gain a strategic advantage.
For far too many years, solution providers and ISVs have been like ships passing in the night. They occasionally fire off a salute to one another around a specific project, but, for the most part, they usually don't engage each other on a regular basis.
Fortunately, in the last couple of years there has been a lot of progress in bridging the gaps between solution providers and ISVs. However, there is still a very long way to go before these types of relationships reach anywhere near their potential.
Buell Duncan, general manager of ISV and developer relations at IBM, in Armonk, N.Y., said IBM estimates that one-third of all infrastructure sold is selected at the time the application is deployed. So while most ISVs are relatively small, the amount of influence they can exert over the infrastructure used underneath the application is significant. It also follows that the amount of influence that ISVs could exercise over what solution providers get selected to install and service those IT projects might be substantial.
But the problem that most solution providers have with engaging with ISVs is that the majority of ISVs are small companies with limited sales organizations. According to Duncan, less than 20 percent of all enterprise software sales are accounted for by Oracle and SAP. The next 50 or so vendors with the most sales represent an additional 25 percent of the enterprise software market, and the rest of the sales of enterprise software are made up of thousands of companies. And the number of enterprise software companies, despite waning interest from the venture capital community, continues to grow. All told, Duncan said IBM invests $1 billion annually in relationships with ISVs, such as Cognos, and the investment drives close to $20 billion in IBM sales.
IBM is not the only infrastructure vendor that has put a lot of emphasis on ISVs in the last few years. On a smaller scale, Symbol Technologies has been pushing alliances between its solution providers and ISV partners for the past year. In the Americas, the company has signed up more than 150 ISVs to participate in a channel program in which Symbol essentially acts as a dating service for resellers and ISVs, according to Symbol channel chief Michelle Crissey in Holtsville, N.Y.
Symbol hopes that, down the road, these alliances will result in a wide variety of high-margin managed service offerings powered by Symbol infrastructure.
Unfortunately, the process of hooking up solution providers and ISVs still requires some old-fashioned matchmaking, which probably accounts for why we don't see enough of this activity in the channel. As yet, there's no real equivalent of Match.com for the channel, but that day will come.
In the meantime, to be successful, the channel executives at an infrastructure vendor have to be pretty knowledgeable about what ISVs offer and what the capabilities of their channel partners are.
This means they have to do a lot more than build a partner locator online to really make this work. However, if the vendor does the necessary work, it puts competitors in the unenviable position of trying to usurp a rival that is already well-established in an account, thanks to its relationship with the ISV.
Unfortunately, the hard work associated with forging these types of relationships means that most infrastructure vendors either have made only a token effort or chosen to just focus on the top-tier ISVs. This is because most ISVs really have no idea how to engage with solution providers in the channel, given the fact that they typically have small sales organizations that usually focus only on direct sales.
But the good news is that infrastructure vendors that take the time to educate ISVs about the value of their channel partners will have a strategic advantage for years to come.
Michael Vizard is editorial director of Ziff Davis Media's Enterprise Group. He can be reached at email@example.com.