ISV or Big Tech: who builds the house and who fits the kitchen
The main difference is focus and the scale of the ecosystem. Big Tech builds enormous platforms that cover every need a customer has. An independent software vendor builds narrow, specialised software that runs on top of, or inside, those platforms.
An analogy makes it concrete. The IT giant is the developer that builds the whole residential complex and lays the utilities. The ISV is the design studio that fits a perfect kitchen in one of the apartments.
Side by side
What "independent" means
Independent does not mean small. It means the company does not make computer hardware and is not tied to any single equipment brand. Its business is software and nothing else.
- -Niche superiority. ISVs win because they know the specifics of one business better than a giant does. The giant builds a general-purpose database; the ISV builds the perfect application for dental clinics or port logistics on top of it.
- -Symbiosis with the giants. ISVs do not fight Big Tech, they complete it. They sell through marketplaces such as AWS Marketplace or Microsoft Azure Marketplace: the giant takes a percentage of sales, the ISV gets access to millions of customers.
What Big Tech is
The giants are the creators of infrastructure. They control the foundation of the IT market, and two habits follow from that position.
- -Ecosystem lock-in. The aim is to sell the customer everything at once, from the operating system and servers to office software and cloud, so that leaving for a competitor is as expensive and painful as possible.
- -Absorbing innovation. When an ISV becomes successful enough to threaten a giant’s position, the giant either buys it, as Microsoft bought GitHub, or builds the same functionality itself and squeezes the independent player out.
Where a distributor sits
A publisher-distributor works with both sides. We distribute Big Tech and enterprise vendors in volume and publish ISVs into the same channel, so a client gets the platform and the kitchen from one window. How ISVs defend their position against the giants is the subject of the next article.