What's A Dynamics ISV? So Glad You Asked!

I caught up with Tim (one third of MOSSIG) this morning to discuss my new role, and from our chat I decided to keep a running manifesto on something that has already become near and dear to me... the concept of a Dynamics ISV.

So first let's break the term down:

Dynamics - Used to be called MBS (Microsoft Business Solutions), and is our line of business management solutions

ISV - Independent Software Vendor. A company (or organization) that builds and sells products (as opposed to a Systems Integrator or SI who implements products)

The key thing here is it's about building a business around creating Core + Differentiator Products to distinguish yourself in the market. Huh? Don't I already do that? Well, depends on what sales model you use. See, the model I'm proposing is one that is heavily based on the ISV building the product, and the SI selling and integrating the product based on their core platform SI business.

Now the reason this is a good model is based on reach and spectrum. SI's have great reach, some (if not many) are global, and have local teams in many different marketplaces who are capable of selling into domestic verticals.

ISV's on the other hand have proven, well developed, tried and tested processes (or should have anyway) for building and releasing product. This is really important, because many organizations wander into product development frivolously, and then realize how hard it is. In fact, I've always believed that many companies that build product ignore the value of a finely tuned SDLC's ability to increase profit by reducing the bottom line rather than focusing on increasing sales to pump up the top line! But I digress!

So back to my tale. Now, take the ecosystem angle. There is also a economy model, but I'll get to that later. SI's bump up against other SI's at the point where vertical market needs meet horizontal platforms. So they belt it out, and from the process, two numbers emerge; wins and losses. Take the losses column, look at what contributed to the loss, and most times you'll find a vertical requirement or need.

Now take that vertical need, and look at it from a product sense, and when broken into an architecture, you get edge, middle and core feature/functionality needs. The key to the ISV then is to build high-value, innovative edge functionality upon a middle to core platform base, then pass that onto the SI to sell and implement.

Back to the score board! SI walks into the standard loss scenario, but this time, doesn't lead in with just Dynamics AX 4.0 for example, with the promise of customizations (too high risk and very hard to justify up front), but with product A which is powered by AX 4.0. Product A happens to be built on the latest .NET platform, integrates all the moving AX 4.0 bits (SharePoint, SQL Server, BizTalk), follows all the proper design guidelines and standards, and is also certified. The risk to the customer of purchasing product A is far lower than just engaging an SI to implement AX 4.0 and then customize up. What's better, they can select a range of "Built for Dynamics" products from a range of ISV's, and mash-up their own Enterprise solution!

The last bit I'll talk about is the funding model, because there is a level of risk borne by the ISV when having to hook into an existing, third-party platform instead of rolling it themselves, and this is where the SI comes into it. See, having Product A is actually a differentiator. If SI 1 goes up against SI 2, then if both have Product A, there isn't a competitive advantage. If SI 1 however has exclusive license within a geography or vertical to resell Product A, then they beat Severyonelse every time. For that honor though, they need to tip in.

So it makes sense for SI's to work with ISV's to build "Built for Dynamics" solutions that meet the needs of customers in a particular vertical (especially where that is the differentiator that contributes to the SI losing opportunities to competitors), license that product (in exchange for a seed or "intention" payment) in a limited way (a completely exclusive arrangement isn't good for the ISV), then use that to pull through their core Dynamics SI business.

Over the coming months I'll break this idea down into smaller pieces as things pop up, but over all, I think it's a solid looking model... I'm going to run with it ;)