News

The ISV Competency Payoff

• By Scott Bekker
• 12/01/2006

The report is part of a profitability series in which IDC analysts compare partners in a Microsoft Partner Program competency with other Windows-based partners and non-Windows-based competitors. As part of the project, the IDC researchers have developed a set of Key Performance Indicators (KPIs) against which to track the companies. The most recent report, published in late October, focuses on the ISV/Software Solutions competency and identifies 11 KPIs affecting ISV profitability.

"ISV competency partners run businesses that outperform those of the benchmark ISVs whose primary operating system is something other than Windows in 10 of 11 KPIs," with average deal size being the lone exception, IDC researchers Matthew Lawton and Stephen Graham wrote. "The difference in performance in seven of these 10 KPIs is large enough to be statistically significant."

IDC based the study on surveys of 365 ISVs in the United States and the United Kingdom. The researchers identified three main groups of ISVs:

• Those that were Microsoft Gold Certified or Certified Partners with competencies in ISV/Software Solutions
• Those that hadn't yet signed up for the competency but developed primarily on Windows platforms
• Those that hadn't yet signed up for the competency and developed primarily on non-Windows platforms

The researchers also found a progression in terms of business performance. The Windows ISVs did better than non-Windows ISVs, and the ISV competency partners did better than other Windows ISVs.

Microsoft appears to have multiple goals in commissioning the study. For partners who have signed up for the ISV competency, the KPIs provide a framework for evaluating and improving their profitability and the report reinforces their decision to invest time and resources in pursuing a competency.

Non-Windows ISVs are also a target, but are probably less likely to switch, especially based on Microsoft-funded research. The key audience is probably the large contingent of Windows-based ISVs who either haven't joined the Microsoft Partner Program or haven't yet signed up for the competency.

"Microsoft partners who have not yet committed to the ISV/Software Solutions Competency are well advised to investigate the advantages it can provide, and companies that are not Microsoft partners may benefit from the Microsoft Partner Program and competency initiatives," IDC's Lawton and Graham wrote.

According to Naseem Tuffaha, senior director for ISV sales and marketing in the Microsoft Worldwide Partner Group, about 5,000 partner organizations have signed up for the ISV/Software Solutions Competency. But there's room for more: There are 25,000 ISVs in the Microsoft Partner Program as well as 40,000 to 50,000 ISVs total that develop primarily on Windows, Tuffaha says.

Getting a larger group of those Windows ISVs into the competency, with its tools for accelerating development, marketing and sales, would help Microsoft bring more Windows Vista, Office System and other Microsoft-based solutions onto the market. That, in turn, would pull through sales of much more Microsoft software.