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How ISVs have survived the recession

Many independent software vendors (ISVs) have been feeling the pressure recently, trapped between procrastination over resellers' and customers' buying decisions and tightening margins. Cost savings, combined with administrative overheads and a "just in time" mentality to trim fat have pushed many businesses to the brink, writes Darran Neary, technical director at Magic Software ISV FactoryMaster.

There are some success stories however, and these may point the way to success for the future. One common theme is flexibility. Finance has been the top concern across the board over the last year, with banks tightening lending regulations and a lack of market confidence reducing budgets. However, some ISVs have taken the initiative and adopted more forward-looking pricing models. For example, by offering flexible terms on SaaS packages, longer interest-free credit terms, or grace on maintenance support. Additionally, changing to a rental-style model to reduce capital outlay costs has also seen great success. Some companies have taken the view that revenue from maintenance and support is guaranteed in the longer term, offsetting fewer sales in the short term.

ISVs have also had to ensure that systems are robust yet flexible enough to deal with a rapidly changing market environment. Being capable of providing client server, remote and cloud deployment offerings has proven an asset to many. Additionally, keeping a tight rein on development cycles that can slow market response times has proven invaluable.

Speed is what counts in this market - being the first to innovate is key. Development time can be reduced by using application platforms that allow quick, specialised roll-outs across multiple platforms. Innovative development processes can allow ISVs to respond fast to customer requirements, such as keeping pace with the sudden demand for mobile applications. It's likely that being able to deploy platform-independent applications fast is going to become increasingly important.

Flexibility in market choice is vital. Take the manufacturing computing sector, where some traditionally strong manufacturing markets have been forced to slim down, successful ISVs are replacing them by moving into new verticals to fill the gap. Adaptability and flexibility are the keys to cracking new specialist markets.

Most ISVs, in common with the business world in general, have felt some pain over the last year and most will be keen to broaden their horizons. Whether it's due to the loss of an important customer, the need for a new revenue stream, or they are looking to grow their market space, only the foolish are going it alone. Global opportunities are opening up, with many actively recruiting new partners that share their attitudes. The sensible bet is to partner with a specialist, rather than companies with broader, less focussed product portfolios.

Many ISVs are still looking to the past, and are too rigid in their partner agreements. Flexibility is the key to success and without this, many more businesses will face difficult decisions before the downturn is done.

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