Independent software vendors (ISVs) stand to gain considerably from today's customer-centric, platform-powered software market. Rather than reinvent the wheel for every new feature, ISVs can use the cloud, business platforms, third-party integrations and collaborative ecosystems to remain competitive and relevant.
"Staying ahead in software development is no longer just a question of having enough skills or resources," explains PJ Bishop, Vice-President: Services for Africa and Middle East at Sage. "There are several new requirements that today's ISVs should look at. Some examples are rapid testing and deployment of new features, incorporating governance, reporting and security services, and integrating transaction networks. These specialised areas work better if you access them in the platform ecosystems that the cloud era provides."
ISVs are under pressure to change. End-users and their organisations rapidly embraced agile digital services during the pandemic, and many technology providers are still catching up. But that goal is within reach if ISVs focus on six steps that will facilitate the shift.
Adopting cloud-first development and business models
Cloud adoption is accelerating. Specifically, companies are moving more applications and workloads into the cloud. It's not an absolute transition: some workloads and applications fit best in public clouds, others are better on co-hosted or on-premises private clouds, and the rest move around in the multicloud world. However, this can be confusing and expensive if approached incorrectly, leading ISVs to delay the change. They should grab the opportunity: companies such as Sage and hyperscaler providers such as Amazon Web Services (AWS) and Azure provides courses, frameworks and toolkits to help recode and migrate traditional software to cloud platforms.
Creating security and compliance
The scale and threat of cyber crime creates an expectation that software services have native security, compliance and governance features. Such features integrate with other security products in a customer's environment, helping them create multi-layered security. But unless an ISV specialises in security, they shouldn't try to cultivate that capability themselves. They should utilise relevant features and APIs on business platforms that they partner with, integrating those with their products. Additionally, hire or outsource compliance and security officers and establish processes to probe security features, such as penetration tests.
Migrating from servers to the cloud
Shifting from in-house servers and software models to cloud-powered alternatives is crucial for ISVs. Embracing the cloud encourages the adoption of new development capabilities such as micro-services and application programming interfaces (APIs). It will also substantially reduce the overhead costs of running a server environment. Many companies shy away when they see the upfront costs of cloud migrations, yet savings related to redundancy, backups and maintenance more than justify the investment. Instead, since subscription annuity models are different from once-off licence purchases, there is a hidden danger that the shift will alter cashflows. Be prepared from a business strategy vantage. Many ISVs are moving to privately hosted clouds to start understanding these differences.
Establishing payments gateways
Customers can adopt an operating expenses (opex) approach to costs in the cloud world, paying smaller amounts regularly and managing their costs predictably upfront. Successful ISVs must establish the means for those cashflows, which is different from expecting a fat deposit into a bank account. Online payment gateways are useful and customer-centric, but ISVs don't have to build these from scratch. Payment gateways operate over peripheral component interconnect (PCI) compliant networks and integrate with highly regulated banking systems. Rather than develop their own, ISVs should look at leading payment gateway APIs provided by appropriate platform owners such as Sage.
Simplifying internal IT environment complexity
Traditionally, the software would be installed on-premises by an onsite technical team. It's a costly and complicated process, especially when there are change requests. In contrast, cloud-based software is always up to date and relies on ISV infrastructure, not the customers. Yet ISVs don't need bulky and complex internal systems. They can exploit cloud platforms to spin up resources, host software and facilitate online delivery. Their teams can manage and maintain customer systems remotely. Don't ask why an ISV needs the cloud. Ask if an ISV needs complicated internal IT environments.
Reduce total cost of ownership (TCO) and IT overhead
All of the above points share a common theme: reducing an ISV's IT overhead and total cost of ownership. A common pitfall when evaluating the cloud is comparing apples with pears. But looking at the price of a server room – air conditioners, infrastructure, cabling, maintenance, rental, salaries – and the costs of maintaining onsite development teams reveal a different picture. Teams can work remotely through development hubs and access ad-hoc infrastructure. By reducing all that TCO, an ISV can reinvest in research and development (R&D), new skills and extra revenue streams or products. And by working with a business platform ecosystem, ISVs can use native reporting and business intelligence services to manage their costs better.
The cloud is a winning proposition for ISVs, says Bishop. "If you evaluate the advantages of a cloud-first business and delivery model, it becomes very appealing. But don't do it alone. Speak to platform partners, particularly the platform you want to associate with your software products. Lean on the platforms and public cloud providers to help transform your software for the cloud. And take the opportunities of workshops and partner discussions to develop your cloud business model. It's all within reach."
For more ISV solutions, visit The Sage Partner Programme to explore its benefits.
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