How ISVs survive next to giants: six defences
Independent vendors survive and grow in the shadow of Big Tech with one strategy: they do what is economically pointless, or simply too slow, for a giant to do. Large corporations are heavy and built for the mass market, and that leaves wide niches for an ISV to defend.
Here are the six tactics, with the examples that make each one concrete.
1. Deep vertical specialisation
IT giants build horizontal products for everyone: a general CRM, a cloud database. ISVs build for one industry, with all of its legal and technical nuances. Microsoft Dynamics is an excellent general CRM; Veeva Systems built a CRM specifically for pharmaceutical companies, with the strict requirements of medical regulators built in. For a giant it is not worth spending years on pharma regulation for the sake of one segment.
2. Speed, and agile as a weapon
In a large corporation, approving a new feature or changing the product architecture can take months or years of bureaucracy. An ISV answers a customer request in days. ISVs are the first to adopt new technology, such as specialised AI agents for specific tasks. The customer understands the difference: a giant will not even listen to a request for customisation; an ISV ships it in the next update.
3. Multi-cloud and vendor-agnostic
Giants try to lock the customer into their ecosystem. Buy cloud from AWS and you will be pushed toward AWS analytics tools. ISVs position themselves as independent arbiters: their software runs equally well on AWS, Microsoft Azure and Google Cloud. For the business that is insurance. Change cloud provider, and the ISV’s software keeps working unchanged.
4. Inside the giant’s ecosystem: co-opetition
Rivalry and cooperation at once. Instead of fighting the giants, ISVs become their important partners and list their products on the giants’ marketplaces, such as Salesforce AppExchange or AWS Marketplace. The protection works like this: a giant benefits from having strong ISVs on its platform, because they attract customers to its cloud. The giant takes a percentage of the ISV’s sales and often promotes the ISV through its own sales managers, in what are called co-sell programmes.
5. A fanatical focus on customer success
For a giant, a mid-size business paying $50,000 a year is a statistical rounding error. For an ISV it is a VIP client. ISVs provide first-class, almost personal support, and customers attach to the people and the quality of service. A high retention rate, net retention above 110–120%, protects the ISV when a giant tries to lure the customer onto its standard services.
6. Patents and data moats
ISVs protect the core of their technology legally, with patents, and with accumulated data. If an ISV’s algorithm has been trained for ten years on closed medical images or on the specific logs of industrial equipment, a giant cannot copy the product in a day even with a hundred programmers, because it does not have that data to train its own AI.
Where a publisher helps
Three of the six defences are commercial rather than technical, and they are the ones a publishing partner takes off the ISV’s plate: packaging the product for multi-cloud, getting it listed and co-sold through the right marketplaces and channels, and running first-line support so the ISV’s own team spends its time on the customers who matter.