​5 common ISV business challenges and their solutions in 2021

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5 common ISV business challenges and their solutions in 2021

The Independent software vendor (ISV) market is growing at an annual rate of 30%. Alongside this sharp growth, the number of ISVs has increased exponentially, from 10,000 in 2008 to 100,000 in 2018. However, this increase is likely to be dwarfed by ongoing development in the ISV space. According to Forrester principal analyst Jay McBain, it could grow by another ten times, to reach one million ISVs by 2028.

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

In this article:

  • A clear, informative guide to ISV challenges
  • Five of the most pressing that ISVs face
  • Effective solutions to overcome each of these five points

The top ISV business challenges and tips to overcome them

Here we discuss five of the most pressing challenges for ISVs and their five corresponding solutions.

  • Migrating from servers to the cloud
  • Integrating third-party provider products
  • Integrating a third-party payments gateway API
  • An inadequate testing framework
  • Untangling and simplifying internal IT environment complexity

ISV challenge #1: Migrating from servers to the cloud

Cloud migrations vary in time of completion, according to the complexity involved, the collaborative workflow between the company and the cloud service provider, and the pedigree and speed of the provider. It may take as little as a few weeks, although according to one study, 73% of cloud migrations take a year or longer.

Solution #1: Prepare well and set realistic expectations

A sound approach includes an overarching strategic roadmap, a diligently implemented technology feasibility study, a complete inventory audit, and full stakeholder alignment, not least the central involvement of an ISV’s financial department. ISVs may overestimate how quickly they can achieve a full migration and later on, the time involved in optimizing it, as well as underestimating the budget required to fund it.

With these points in mind, it is a good rule of thumb to include room for variable change for both time and budget necessary for a successful cloud migration.

ISV challenge #2: Integrating third-party provider products

Integrations of third-party hardware and software are crucial to an ISV’s ability to operate optimally and an ability to scale. Of course, ISVs want integrations of products to be as quick as possible and achieve the desired performance outcome, but they can become complex, take longer than they need to, go over budget, and vendors can experience problems with them once integrated.

Solution #2: Keep it simple

To take advantage of the benefits that third-party integrations can provide and minimize the impact of any detrimental developments, ISVs can adopt a specific approach. Integrations should be kept as simple as possible by partnering with a small group of providers, each of whom has a stellar reputation for integration efficiency.

Taking a chance on a provider that is short on experience or even potentially funding is simply too big a risk for ISVs to associate themselves with.

ISV challenge #3: Integrating a third-party payments gateway API

Given the central importance of an API payments gateway integration to an ISV’s business, they require a specific type of preparation. All too often, there can be a trade-off between reducing costs and improving performance by outsourcing API needs to a specialist third party against an over-reliance on them.

For instance, should a technical problem occur, an ISV’s IT department may struggle to address it themselves without the right kind of API provider collaboration and instruction. As a result, ISV operability and customer experience may suffer. On the other hand, developing an API in-house typically requires high-caliber, specialized talent; high costs; a long period of time; and opens an ISV up to development issues that they would have to solve in-house.

Solution #3: Choose a collaborative payments gateway API provider

Rather than choose a provider that merely provides a service or taking on the enormous technical task of developing an API in-house, ISVs can find the right solution that makes most business sense in terms of scope, cost, and time to market by benchmarking payment gateway providers in search of one that is collaborative and works with their IT departments at every step of the way.

This includes preparing for integration, the process itself, and consultation once the API is up and running. Should any issues arise, by working together with the right kind of payment processor - one that guarantees on-hand support availability - ISVs can take advantage of all the benefits that outsourcing API needs provides while also minimizing the threat of technical or security issues.

ISV challenge #4: An inadequate testing framework

For numerous reasons, ISVs can find it difficult to execute appropriate testing at all applicable stages of the software development process. These include small budgets to work with, particularly for smaller vendors; expedited release requirements, meaning that ISVs have less time to carry out testing; and unforeseen bottlenecks in the development process.

Solution #4: Implement a continuous, dynamic testing protocol

Continuous testing sees the execution of automated tests as an inherent part of the entire development process. It enables ISVs to get a tighter rein on quality and performance control through constant testing feedback. ISVs can enhance their testing framework by integrating software development models like DevOps, which equip them to execute automated tests in a dynamic environment.

ISV challenge #5: Untangling and simplifying internal IT environment complexity

Complexity can be “a silent killer” for companies. Standardizing IT infrastructure and implementing uniform development procedures can be a considerable challenge for ISVs — and especially important, as a client’s own technical infrastructure must be alignable. Moreover, it is critical that client expectations and requests fit with what an ISV can actually provide. If an ISV has built its infrastructure on a foundation of separate servers, network components, and storage processes, for instance, complexity is likely to creep up on them.

Solution #5: Implement an IT infrastructure management system

The opportunity cost of foregoing a streamlined IT infrastructure management system can be high. Potential clients simply may opt to go elsewhere should they catch wind that an ISV’s own internal environment could generate bottlenecks. By integrating software that simplifies and standardizes procedures across the entire IT infrastructure, ISVs can eliminate complexity and focus on serving their clients better with superior software solutions.

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 on year and software-as-a-service revenues exceeding $100 billion - means that business opportunities abound for those that are in a position to seize them.

Should ISVs be able to respond to the fast-moving market in which they operate with constant agility, partner with the right third-party providers, and choose the right technologies to invest in, they will be well-positioned to achieve their business goals.

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