What is a Microsoft Power Platform ISV? And what are the differences between a Power Platform ISV and Dynamics 365 ISV? 

Consider the term ISV, Independent Software Vendor. Wikipedia‘s definition of it, an ISV is an organization specializing in making and selling software, as opposed to hardware, designed for mass or niche markets.

The key word here is the: I for Independent, so in other words, you are not part of Microsoft. You are independent of Microsoft in this situation.

Being independent of Microsoft, you should be acting independently – do not build your idea, your solution, your software expecting Microsoft to sell it.

In other words, develop your own business plan, your go-to-market model, applying principles of lean startup to your organization and startup-type thinking to your business model.

I’d recommend the following books as a starting point, The Lean Startup and Zero to One, two great books that you should consider as you think about becoming an ISV.

Make sure you maintain your independence is really important.

MICROSOFT PUBLISHER vs MICROSOFT ISV or BOTH

Are you an ISV, or are you a publisher? What’s the difference?

A publisher is not necessarily an ISV, you might create software, but then you’re hoping that by publishing your software on AppSource, people are going to flock to your door – they are going to inquire about your brilliant invention and you’re going to retire a millionaire.

In other words, you are putting the dependency on your success on other people to actually sell your product or go to the market, which is not necessarily a bad thing.

You can be a publisher and not an ISV, in other words, you’re really relinquishing the independent nature of your business, although you might be a software vendor.

When I consider a publisher, they generally want other people to sell their product. They want others to own the relationship with the customer, and they need a marketplace to actually take their product to market. I feel that this is really just a channel, so you can still be an ISV and a publisher because publishing is a channel to market for the ISV.

But I think you should clearly ask the question, “Am I an ISV, or am I a publisher?”

THE ISV BUSINESS

To be an ISV you need to consider the following areas of your business.

1. CUSTOMER SEGMENT

This can consider the size of the customer, what industry you’re targeting, what problems your software solves that fits a particular segment.

There might be geographical segmentation as part of the way you think of your product. Whether you’re a startup or an existing ISV, you need to be very clear about the segments you operate in.

For example:

• Are you clear about your customer segments?
• Do you know exactly which segments of the market you’re targeting with your product?
• Are you targeting everyone with your product? Therefore serving no segment well.

2. VALUE PROPOSITION

What is it that you are actually doing?

• What is the problem you solve?
• How do you differentiate yourself to everybody else?
• Is your value prop just to take a product that exists in some other software, or industry, or location, and build it on the Microsoft Power Platform?

3. WHAT SETS YOU APART?

You need to be clear on how you differentiate, and also is your differentiation large enough?

Are you a ‘me too’ of some other product in the market? You’re doing something that someone else has already done. That’s ok, but your product needs to be a minimum of ten times better.

The last thing you want is people to look at your product alongside your competitors and go, “So what”?

4. CHANNELS

What are your channels to market?  There are many that you can use such as:

• Publishing on a marketplace is a channel.
• Your local Microsoft staff are potential channels.
• Microsoft partners are channels.
• Microsoft consultants in whatever role, whether they be architects, developers, and/or functional business analysts – they are all potential channels that you can tap into.
• Digital channels, that exist in the market – things like Facebook. Google AdWords. YouTube, as well as things like blogs, your website.
• Industry events.

They’re all channels to engage your market, and you need to really assess which channels you need to be in, which channels do you need to invest in as part of developing your business.

5. CUSTOMER RELATIONSHIPS

• How are you going to manage or engage with your customers?
• Are you always going to do engage them via somebody else, via Microsoft, or via a Microsoft partner?
• Will you have direct customer engagements? As an ISV, you can potentially create risk for yourself if you are also trying to do the implementation part of your product. System integrators would see that you’re competing for their business, so it may be harder to work with partners when they see that you’re potentially going to also take over their consulting work.
• I think as an ISV you need to be clearly separate from a system integrated type business, and then decide how you are going to manage those customer relationships.
• What’s your frequency of communication? Not just around the sale, but ongoing. How are you going to communicate value over time? How are you going to overcome things like buyers’ remorse?
• How are you going to handle support?

And I’m talking about support in a global market. How do you handle 24/7 support in all time zones? How do you handle payments, etc, from geographies or different currencies around the world?

This is all part of how you manage your customer relationship. How do you train your customer? How do you educate your customer? How do you make sure that the way they are on-boarded is absolutely fantastic, that they become –  ultimately raving fans?

6. REVENUE STREAMS

How are you going to make money?

• Are you going to make money on support? Or are you going to price your product via a user license?
• Are you going to use a Client Access Licence (CAL), or measure monthly active users?
• Are you going to licence at an organization level?
• Do you have different price points based on the different size of customers? Do large customers get a different price point than perhaps an SME or an SMB, or a mid-market type customer?
• How will you charge for sandbox instances?
• Maintenance is of a bygone era, particularly working with cloud, but these are the kind of decisions that you need to make. Are you a purely cloud business, or a cloud on-premise business? How will you handle those different cost or revenue streams in what you do?

7. KEY RESOURCES

• What resources do you need in your business?
• What development resources do you need?
• How will you understand the Subject Matter Expertise (SME) of what your product will do?
• Will you work with key accounts where you might give them the software, but on the condition that you can frequently run workshops with them, uncover their pain points in more detail, refine your process?
• How will you resource things like marketing, sales and raising capital?
• What resources will you need to address risk in your business?

8. KEY PARTNERSHIPS

• What are the key partnerships that you need to have?
• Microsoft would naturally be potentially one of those partnerships, but if you were targeting the healthcare industry, for example, there might be other businesses that you need to develop key partnerships with.
• What key events that you need to attend in that industry to talk about your software.

9. COST STRUCTURE

• What about cost or overhead?
• Keep it to an absolute minimum. Don’t build/develop anything that is not A/B Tested and validated with customers.
• If you don’t need offices yet, don’t waste money on them.
• More and more, we live in a global economy where your key resources could be situated all over the world. I always love the story of 37signals, now called Basecamp, and Jason Fried shows how nine staff distributed around the world created a billion-dollar software business.
• The leaner you can run as a business and apply lean principles, particularly around keeping your costs low and build based on profitability, the quicker you will see success.
• Don’t fake it to you make it, run lean.

I’ve definitely not covered everything. You might have other ideas and thoughts to add to this. I would love to hear them. Please note them in the comments below, or reach out to me on any social media channel. I would love to continue this discussion with you.

Listen and learn from great people talking about their ISV experience:

Running an ISV Successfully with Alistair Dickinson 
ISVs and Growing with Dynamics 365 with Mike Dickerson
The ISV King Jerry Weinstock
The ISV Industry – Challenges and Tips with Christian Ternek