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Keys To ISV Success

It's not easy being a Microsoft ISV. You are one of approximately 77,000 independent software vendors within the vast Microsoft ecosystem. Keeping up with the giant vendor's product and market directions, critical to your own plans, can be a full-time job. And navigating Microsoft's partner programs to figure out what assistance and benefits you're entitled to can be like working with a government bureaucracy—in a foreign government.

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Oh, and at any time Microsoft could decide that your technology or market is a good business opportunity for itself, build a substitute for your product into the next release of Windows Server or Dynamics ERP and make your business obsolete practically overnight.

Despite such obstacles, many ISVs are thriving in Microsoft's orbit, keeping up with the company's ever-evolving technologies and leveraging its technical, sales and marketing resources to build successful businesses. So what are the keys to successfully working with Microsoft?

"It's all about product alignment and communications," said Richard Blackham, a program manager at Omada, a Denmark-based ISV that develops identity management software for Microsoft platforms. "We have to know what they are thinking, basically. And we have to be very creative in order to keep an edge." Blackham manages Omada's relationship with Microsoft. In October, Microsoft named Omada its 2007 ISV Partner of the Year for Denmark.

Virtually every ISV interviewed for this story agreed that maintaining lines of communication with Microsoft is the single biggest success factor in the Microsoft universe. It's also the biggest challenge.

"Dealing with Microsoft is like dealing with a country—they're so big," said Guy Cervi, president and CEO of eBuild.ca, a Toronto-based developer of applications for the construction industry. Microsoft named eBuild.ca, which develops its software around Microsoft's Dynamics CRM and Dynamics NAV applications, last year's Dynamics ISV of the Year for Canada. But aside from the issue of Microsoft's size, Cervi said Microsoft is pretty "transparent" with its intentions. "There's not a lot of hidden agendas. They're pretty up-front with where they are coming from."

Some ISVs are fortunate enough to be assigned a partner account manager who helps the software developer navigate through Microsoft and its myriad partner programs and benefits. "That person is really critical to our success with Microsoft," said Paul Chapdelaine, president and founder of Avon, Conn.-based RMI Corp., which builds software for the equipment rental and service industry and last July was named Microsoft's U.S. Dynamics ISV of the Year. "That one person can save us a lot of time and effort."

Microsoft assigns partner account managers to ISVs based on how much software license sales they generate, with $5 million generally the entry point, or according to strategic importance or partner program membership (all Gold-certified ISVs have account managers, for example).

"They're paying more attention to the up-and-coming ISVs," said Chris Will, CTO of Apriso Corp., a Long Beach, Calif.-based ISV that develops .Net-based manufacturing operations management applications. Microsoft has been devoting more field resources to such ISV partners, including partner account managers and Microsoft "architecture evangelists," as part of its Microsoft High Potential Managed ISV Partner Program. ISVs are tapped for the program based on such criteria as revenue growth and their track record for working closely with Microsoft.

Many ISVs aren't blessed with so much attention from Microsoft, however, and all ISVs—account partner manager or no—said they have to work hard to keep the lines of communication open.

Some companies have managers who are tasked with serving as their liaison with Microsoft. Binary Stream Software, a Vancouver-based ISV that develops applications for Dynamics GP, has a business development manager "and his role is mainly to get to know the key people within Microsoft," said Binary Stream CEO Lak Chahal.

Quest Software, which develops management tools for Microsoft infrastructure software and was last year's Microsoft Global ISV Partner, has an employee based on Microsoft's Redmond, Wash., campus who keeps Quest up-to-speed on Microsoft's product development plans. Still, convincing Microsoft development teams to share their product road maps with ISVs can be a challenge, said Steve Dixon, vice president and general manager of Quest's Windows management business unit.

"Staying current with [Microsoft's] ever-changing technology is tough for every ISV to do," Apriso's Will said. It's particularly a challenge for smaller ISVs with limited R&D budgets that must reinvent themselves every few years when Microsoft overhauls its platform technologies, as it will do this year with Windows Server 2008, SQL Server 2008 and Visual Studio 2008.

Will makes it a point to attend Microsoft's annual platform strategy review sessions where ISVs get updates on the vendor's product plans. Binary Stream's Chahal sits on a Microsoft ISV collaborative committee that shares information about upcoming releases of Dynamics GP. Managers at Diamond Municipal Solutions, a Paris, Ontario-based ISV that develops Dynamics GP-based revenue management apps for the public sector, likewise sit on Microsoft product advisory committees.

Next: Working With Microsoft John Powers, president and CEO of Oakland, Calif.-based ISV Digipede Technologies, even argues against the idea of relying on a single point of contact at Microsoft, saying such a person will inevitably miss things. "We do a lot of networking within Microsoft. That's important to us," Powers said, noting that he and Digipede's CTO, products director and vice president of client services all work with Microsoft product marketing and sales teams.

One sure way to get Microsoft's attention is having a customer that Microsoft is interested in having a relationship with, either because of its influence or visibility or because it's in a strategic industry. Will knows he has such a customer when he mentions the name and Microsoft managers respond with an interested, "Oh really?" Understanding what customers Microsoft covets takes careful listening during meetings and briefing sessions with the vendor and staying clued in to Microsoft's goals and directions.

Publicizing customer wins is also a good idea. "You have to tout your own successes and stay visible. Otherwise, you can get lost in the crowd," RMI's Chapdelaine said.

Ultimately, the best way for an ISV to get Microsoft's attention is to increase Microsoft's sales, either by reselling Microsoft products or "influencing" sales of its products that ISV applications run on, such as Windows Server and SQL Server. Microsoft estimates that the ISVs in its ecosystem generate $210 billion in annual revenue with approximately $9 billion in "influenced revenue" going to Microsoft.

"Sales volume is going to be a big, big deal if you really want to garner Microsoft's attention," said Jeffrey Porter, vice president of business development at RockySoft Corp., a Fort Collins, Colo.-based ISV.

Some ISVs succeed by extending or filling gaps in Microsoft's application lines. Binary Stream does both, developing enterprise-class software for the health-care industry that works with Dynamics GP and products that provide add-on functionality such as the eMail Manager document delivery module.

Others ISV offerings extend the value of Microsoft products. Quest's ActiveRoles Server helps customers manage Microsoft's Active Directory while its Vintela Authentication Services extends the directory's reach into Unix and Linux environments. Quest, likewise, offers products that help customers get more value out of their investment in Microsoft's SharePoint software.

Grid computing technology from Digipede, last year's Microsoft Innovation Partner of the Year, provides Microsoft with an entree into the realm of high-performance computing, Powers said.

ISVs are split on the best product strategy to pursue. Many ISVs consider having a laserlike focus on a specific industry to be a major strength. "As an ISV, we are very focused on our vertical market," RMI's Chapdelaine said. "Our motto is to be very, very good at what we do." Ditto for RockySoft: "We're very focused on the wholesale distribution marketplace," Porter said.

That presents its own set of challenges, however, in that while some ISVs stick to a limited geography, RMI sells, implements and services its applications around the world. While RMI makes judicious use of remote management technology to monitor customer installations and Microsoft Office Live Meeting for customer support and training, RMI employees still rack up a lot of frequent-flier miles to keep customers in 45 states and nine countries happy, Chapdelaine said.

Dixon, in contrast, said Quest's work with a wide range of Microsoft products, including almost all of Microsoft's Windows Server technologies, is one of the company's key success factors. That provides lots of cross-sell opportunities—customers for Quest's Active Directory-related software are also potential customers for its identity management products, for example. Dixon also believes it gives Quest more visibility within Microsoft because Quest engages with more Microsoft product managers, developers and sales representatives.

Being a successful ISV also takes a fair amount of technical savvy.

"A lot of ISVs struggle every time Microsoft puts out a new release of a product," said Mike Belongie, sales vice president at Axonom, a finalist for last year's Dynamics ISV of the Year award, that develops vertical industry modules for Dynamics CRM. Axonom has become adept at quickly adapting its products to new Microsoft releases.

The trick is keeping close tabs on Microsoft's product road map and tracking how an ISV's products fit into those plans, eBuild.ca's Cervi said. That provides the added benefit of being able to leverage Microsoft's massive marketing efforts, such as next month's scheduled debut of Windows Server 2008, SQL Server 2008 and Visual Studio 2008, at a Los Angeles gala.

One way to track Microsoft's product direction is to become familiar with the Infrastructure Optimization Model, a blueprint for assessing and improving IT infrastructure that Microsoft has embraced, said Jeff Thorpe, business development director at Quest.

But while ISVs may pride themselves on their technical expertise, Omada's Blackham says success goes beyond that. "A lot of it is winning on the business value," he said, "not the technology value."

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