ERP software has come a long way since its introduction in the 1990s. Now, ERP systems are becoming platforms. A platform is a software ecosystem that businesses can use to deploy additional business applications, at less cost and with more flexibility than traditional software programs have allowed. ERP platforms manage the major processes throughout an organization, delivering the core functionality that a business needs. But a platform also enables growth through the ability to connect things – external applications, data, and processes.
ERP vendors offer the main applications that companies need, and independent software vendors (ISVs) fill gaps in niche areas. That is why the partnerships that ERP vendors have with ISVs are no longer the exception but part of core strategy. The combination of products and services from ERP vendors and ISVs delivers greater value than the two working separately.
What ISVs provide
An ISV makes software that is compatible with an ERP system. They deliver solutions that are specific to an industry (e.g., fabricated metal), a function (e.g., quality reporting), or a technological need (e.g., networking for IoT devices). All ERP vendors have ISVs who can help businesses address operational issues without the business needing to separately evaluate and integrate other third-party applications.
The benefits ISVs deliver
For niche or specialized areas, there may not be enough demand for the ERP vendor to include the functionality in their own product. But ISVs who focus on specific industries or technologies have specialized skills and knowledge in their subject area, and can provide the right solutions. They can also adapt solutions rapidly as new developments occur.
A rich ecosystem of complementary ISV solutions provides added value to businesses that use an ERP application by letting them choose those solutions that enhance the functionality of their ERP system.
Why not build your own app instead of using an ISV?
It’s not uncommon for some ERP customers to believe that they can build their own applications. The key question is, does that add value? Unless it is mission-critical and core to the business, the answer is probably ‘no’. There are other reasons for choosing to buy rather than build.
- Cost: the effort and time to build an application will almost certainly be much more than licensing an ISV solution. The ISV knows what is needed and can offer substantially more functionality than a business could reasonably deliver itself.
- Expertise: an ISV company that focuses on a specific area, like advanced analytics, is going to have a better understanding and will provide a better solution for that requirement.
A company should seek out the right ISVs with the right solutions and expertise to take their ERP system to the next level.
How ISVs are selected for a partner ecosystem
An ERP vendor will be highly selective in bringing an ISV into their partner program. The ISV should complement the ERP vendor’s existing solutions and provide a competitive advantage in terms of offering value to customers. In the current era of rapid technological and transformational change, keys factors that some ISVs offer are:
- disruptive capability.
ISV partners that fit this profile are often classed as start-ups. An early-stage start-up is high a risk for most companies, therefore it is more likely that start-ups selected are in a later stage of the funding cycle, such as Series C funding. Their product roadmap is also evaluated in the selection process to provide that option of a future-proof solution.
ISVs that offer a specialization factor are more often established and have a track record of successfully delivering solutions that provide ongoing value to businesses. Some of the solution areas that these ISVs offer are:
- Field sales and service;
- plant maintenance;
- business intelligence and analytics;
- computer-aided design;
- quality management;
- specific industry solutions for process or discrete manufacturing;
- tax compliance;
- payment solutions.
There is a final requirement that an ISV must fill to be part of an ERP ecosystem – easy connectivity and integration. To achieve this the ERP vendor must have a published integration architecture that enables ISVs to provide straightforward and cost-effective integration so that they can effectively ‘plug-in and go.’ This avoids the need for the business to do additional integration work and lets the ISV solution work seamlessly on the ERP platform.
The value of ISVs
Since the onset of the pandemic, technology and business are moving so quickly that it can be difficult for a company to stay up-to-date on all the technologies, practices and processes needed to maintain effective operations. ERP customers get value from the ISV ecosystem through having the convenience of a one-stop shop for their solution needs. Businesses can use ISV solutions to help them with new technologies, like IoT, and new business processes, like pharmaceutical compliance.
Using ISV applications, companies can build a business environment to match their business model. An ISV solution can meet needs more effectively, rather than the company undertaking heavy customizations of their ERP system.
ISVs with industry-specific solutions can transform the ERP system into a software solution that is fit-for-purpose. There are ISV applications that target solutions for specific functions, and therefore enhance the operational effectiveness of those functions.
With the drive for greater digital transformation, ISVs can aid businesses in preparing for the digital economy and speed up transformation initiatives.