The ISV Advantage: Turbocharge Growth Through Savvy Partnering

As an independent software vendor (ISV), you‘ve built something special – an application that solves real customer problems and delivers compelling value. But in today‘s hypercompetitive SaaS market, innovative features and happy early adopters aren‘t enough. To really break through, you need to get your solution in front of the right buyers at scale.

That‘s where partnering with the big guns – the major cloud, hardware, and operating system providers – can be a game-changer. By tapping into their massive customer bases and well-honed go-to-market engines, ISVs can shortcut the path to high growth. But it takes more than simply signing up for a partner program. Savvy ISVs are strategic in choosing which programs to prioritize, proactive in achieving certifications, and all-in on joint marketing and selling motions.

In this guide, we‘ll unpack exactly what it means to be an ISV and how to parlay partnerships into a powerful growth lever. You‘ll learn:

  • What core characteristics define an ISV
  • The benefits of joining ISV partner programs
  • Key types of ISV partnerships and what each entails
  • Real-world examples of ISVs winning big through partners
  • A practical framework to optimize your partner strategy

By the end, you‘ll be armed with everything you need to make 2024 the year of partner-powered growth for your ISV business. Let‘s dive in.

Demystifying ISVs: A Working Definition

At the most basic level, an ISV is a company that develops and sells software that runs on third-party hardware or operating systems. Essentially, it‘s a software company that isn‘t vertically integrated with its own proprietary hardware or OS. Classic ISVs include the likes of Adobe, Intuit, and Autodesk.

But the ISV landscape has gotten more complex in the cloud era. Today, many ISVs build their applications to run on or integrate with major cloud platforms like Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP), or Salesforce. This opens up new partnership possibilities which we‘ll explore more later.

ISV Examples: HubSpot, Slack, DocuSign
Leading ISVs: HubSpot (marketing automation), Slack (team collaboration), and DocuSign (e-signature) are all popular ISVs. Source: PwC.

A few common traits of modern ISVs:

  • Offer a packaged software product or SaaS application (not custom development)
  • Deliver targeted or specialized functionality (not a "full-stack" generalized platform)
  • License or deliver their software independently (not bundled by a vendor or reseller)
  • Operate primarily a direct sales model (though may have channel partners)

Basically, if you‘re selling business software directly to end customers, congrats – you‘re an ISV! Of course, not all ISVs are created equal in the eyes of the big tech ecosystem partners. Let‘s look at what they value in their ISV allies.

The Bar for ISV Certification

For major hardware, OS, and cloud vendors, their ISV partner programs are a powerful tool to drive stickiness and loyalty among their customer bases. By curating an arsenal of third-party apps that plug into their core platforms, they can become one-stop shops that meet more of their customers‘ needs.

But to protect their hard-earned brand equity, these vendors can‘t just let any ISV into their ecosystems willy-nilly. They need a way to separate the wheat from the chaff and only give their blessing to ISV solutions that clear a high bar for quality, security, and customer value. Enter ISV certification.

ISV Certification Process
ISV certification processes vary but often include technical and security audits. Source: Forrester.

Each major vendor has its own unique certification criteria and review process, often with different tiers or tracks based on the ISV‘s focus area and go-to-market model. But most follow a similar flow:

  1. ISV self-nominates and applies for the partner program
  2. Vendor reviews application and does initial qualification screening
  3. ISV completes any prerequisite training and enablement steps
  4. ISV submits their product for technical certification testing
  5. Vendor completes security assessment and business model vetting
  6. ISV and vendor sign official partnership agreement
  7. ISV solution is listed in vendor‘s marketplace or app directory
  8. Vendor conducts periodic reviews to maintain certification status

The rigor of the process underscores the seriousness with which vendors take ISV certification. Investing the time and effort to get certified is table stakes for playing in their ecosystems.

According to Accenture, over 80% of ISVs say certifications are critical for taking advantage of cloud marketplaces. And IDC finds that AWS and Azure now have over 100,000 certified ISV solutions each in their marketplaces, growing at double-digit rates.

For ISVs, certifications are the key that unlocks a host of partner program benefits (which we‘ll get into next). But they‘re also a valuable differentiator in their own right. Savvy ISVs prominently display their certifications in their marketing to build trust and stand out from uncertified competitors.

Partnering Pays Dividends

Ok, so you‘ve gotten the ISV stamp of approval from your ecosystem of choice. That‘s a big milestone – but it‘s really just the starting line. Now the fun begins! It‘s time to translate your newly minted status into tangible business results.

The range of benefits ISVs can tap into varies by partner program, but often includes:

  • Marketplace presence. Getting featured in your partner‘s online app store exposes you to a huge base of qualified, high-intent buyers.

  • Co-sell support. Collaborative selling with your partner‘s sales team can add rocket fuel to your pipeline. Many partners also offer extra incentives for reps to bring ISV solutions into deals.

  • Marketing megaphone. From joint content and webinars to event sponsorships and email blasts, partners offer a host of avenues to get your message out to target audiences.

  • Technical guidance. Stay up to speed on your partners‘ product roadmaps and get early access and integration support for new releases.

  • Financial incentives. Market development funds (MDF), revenue sharing, discounts on partner tech – the right programs put money back in your pocket.

Add it all up, and the impact can be staggering. Forrester found that 17 of the top 20 global ISVs now generate 25% or more of their revenue through cloud partnerships and marketplaces. And Tackle‘s State of Cloud Marketplaces Report revealed that 62% of ISVs saw a 2x+ year-over-year increase in marketplace-sourced deals.

But those results don‘t come automatically. To make the most of ISV partner programs, you need to actively engage and collaborate with your partner contacts. Align on goals, get plugged into key initiatives, and beat the drum with joint marketing. The ISVs generating the biggest returns treat partner ecosystems as a core pillar of their growth strategy, not just a box to check.

Pick Your Partner Flavor

As you‘re defining your ISV partnership approach, it‘s important to realize you have options. Most enterprise tech giants now offer a variety of partnering tracks and engagement models to suit different ISV profiles. The three most common flavors are:

  1. Direct/Full-Service. The partner manages the entire ISV relationship directly, from initial recruitment to enablement to go-to-market activation. Best fit for strategic, high-potential ISVs.

  2. Indirect/Distribution. ISVs are managed by a distributor or other third party, which provides demand gen, sales support, and customer service. Good for ISVs needing extra logistical help.

  3. Transactional/Marketplace-Only. ISVs simply publish their app on the partner‘s marketplace. The lightest-touch model for maximum reach with less hands-on collaboration.

Microsoft ISV Partner Tracks
Microsoft‘s ISV program offers multiple partnership tiers. Source: Microsoft

Many ISVs engage in multiple tracks simultaneously to cover their bases. For example, an ISV might have a direct partnership with Microsoft for co-selling and technical enablement, while also making their app available in AWS and GCP‘s marketplaces for transactional fulfillment.

The optimal mix comes down to your growth priorities, target customers, and internal bandwidth. If enterprise logos and high-touch deals are the goal, a full-service track with your customers‘ preferred vendor could be the ticket. If you‘re playing a volume game, distributing across many marketplaces offers the widest coverage.

Winning With Partners: ISV Success Stories

To bring the partner opportunity to life, let‘s look at how a few savvy ISVs have translated their ecosystem investments into outsized growth. These examples highlight the types of results ISVs are driving through well-executed partnerships.

Snowflake Makes It Rain With Cloud Partners

Snowflake is the quintessential modern ISV success story. The cloud data warehousing provider has been on an absolute tear, growing revenue from $100M to over $1B in less than four years. A key ingredient in that meteoric rise? Leaning into cloud partnerships.

As a platform that runs on AWS, Azure, and GCP, Snowflake has baked deep alliances with the big three into its go-to-market DNA. The company drives over 20% of its business through cloud marketplaces and routinely sees triple-digit year-over-year growth in marketplace deals. By making itself a no-brainer add-on for customers already running these clouds, Snowflake has tapped into a gusher of demand.

ZoomInfo Connects With Channel Momentum

For marketing intelligence powerhouse ZoomInfo, the indirect model has been a partnership home run. By recruiting an army of over 1,000 channel partners, the company now generates more than half its revenue from partner-involved deals.

These partnerships span various types, from system integrators and agencies to technology alliances. But they share a common throughline – extending ZoomInfo‘s reach into new markets and empowering partners to build lucrative practices around its platform. By equipping its ecosystem to evangelize and drive adoption, ZoomInfo has massively expanded its effective sales force.

RingCentral Dials Up Partner-Driven Growth

Cloud communications provider RingCentral has proven the compounding impact of long-term ecosystem investment. A decade ago, RingCentral did under 15% of its business through channel partners. Fast forward to today, and that mix has ballooned to nearly 40%.

Behind that growth is a relentless focus on removing friction for partners and stacking incentives in their favor. RingCentral‘s Partner Harmony program offers rich rewards for partner-sourced deals, turnkey marketing campaigns in a box, and even a dedicated Partner University for role-specific training. By making itself partner-obsessed, RingCentral has built an unstoppable ecosystem flywheel.

Fueling the Future: What‘s Next for ISVs

If the above examples make one thing clear, it‘s that ecosystem-driven growth is no longer optional for ambitious ISVs – it‘s essential. As customer demands for pre-integrated, best-of-breed solutions keep intensifying, ISVs that excel at partnership will have a huge leg up.

Looking ahead, IDC expects the enterprise ISV partner economy to eclipse $80 billion by 2025, growing at a heady 15% CAGR. With thousands of untapped niches still to fill, the playing field is wide open for ISVs to claim their piece of that pie.

To win in this next phase, ISVs will need to up their partnering game even further by:

  • Honing in on the ecosystems that best align with their ICP and solution areas
  • Getting religious about maintaining certifications and partner-friendly product standards
  • Investing in partner-specific headcount and programs to drive joint pipeline
  • Constantly monitoring ecosystem dynamics and adapting their approach as markets evolve

The next partner-powered ISV success story is out there, waiting to be written. Will you be the one to author it?