Inspiring local ISVs

Local ISVs would be forgiven for thinking that the tier one vendors are out to eat their lunch. In fact, many of the tier one software vendors setting up shop in the Middle East are actually keen to build partnerships with their vertically focused local counterparts.

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By  Stuart Wilson Published  August 4, 2004

Local ISVs would be forgiven for thinking that the tier one vendors are out to eat their lunch. In fact, many of the tier one software vendors setting up shop in the Middle East are actually keen to build partnerships with their vertically focused local counterparts.

They want these companies to develop business applications and programmes using their software as a foundation. The local ISV community — or tier two vendors if you prefer to call them that — are in demand as vendor giants pull out all the stops to reach out and cultivate partnerships with them. This scenario has already played out in the US and Europe, and there is no reason to believe the Middle East will be an exception.

Micosoft, IBM, Oracle and even SAP are all convinced that building links to local ISVs around the world is a vital channel-to-market to push their software building blocks out to a wider audience and boost sales. The contention is that there is little point in a local ISV wasting time and effort developing its own database software or any other core function within its application package or programme for that matter. Rather, it makes much more sense for them to use a tier one vendor’s product as a kernel and build vertical functionality on top.

Microsoft, IBM and Oracle are engaged in a battle to convince the thousands of tier two ISVs that exist in the Europe, Middle East and Africa (EMEA) that building applications based on their core database product is the right way to go. Oracle has a dedicated ISV migration fund in place and IBM and Microsoft also have a range of sweeteners to seduce local ISVs shopping around. This fierce competition is actually good news for the tier two ISVs as it forces the industry giants to come up with attractive terms to convince their target audience to sign up.

Scanning the Middle East markets, it is sometimes difficult to identify a meaningful local ISV community. In many cases, these companies may have only a few installations with a limited customer base. For these ISVs, picking a tier one vendor to work alongside and embedding core functionality in their applications and programmes is critical to securing a long-term future. It ensures that the core functions are strong and frees up valuable resources for concentrating on what really matters — building the vertical functionality and localisation features that customers really value.

The cycle of software development is shortening and many local ISVs do not have the cash reserves or massive R&D resources that the global vendors can draw upon. It makes little sense to tackle these players head-on by trying to build applications from scratch. Local ISVs can shine in the Middle East markets. Many customers have specific needs and often require Arabized applications and programmes. The customer base also prefers ISVs with an intimate understanding of the needs of the local market and value existing relationships.

Local ISVs should make the most of their existing customer base and market experience and work with tier one vendors. The bundling of technology from various vendors into one software package and adding value through seamless integration and vertical functionality is not a new concept — it has been happening at the enterprise software level for some time. Now this concept is reaching down into the midmarket and local ISV arena as well.

Here’s how the CEO at a major midmarket ERP vendor eloquently described the situation a while back: “I see embedding larger vendors’ technology into an offering and adding functionality as the route to take. Business application software could become like the car industry where manufacturers don’t actually build anything themselves but assemble a number of different parts from suppliers…Smaller vendors can continue to add functionality to the parts that they bring together.”

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