What is an ISV (independent software vendor)?

ISVs—which can range from startups to large companies—develop software solutions that help businesses improve efficiency, streamline processes and solve various other challenges. Widely used offerings include general-purpose applications such as customer resource platforms (CRM), enterprise resource planning (ERP) systems and human resource management (HRM) tools. ISVs also provide specialized software for sectors such as healthcare, finance and ecommerce.

ISV software is commonly offered in the form of perpetual licenses, term agreements or software as a service (SaaS)—with ownership remaining with the ISV. Today, ISV licensing is closely tied to independent software partnerships. These partnerships often involve collaborations between ISVs and other companies—such as hardware vendors, cloud service providers or larger platform providers—that help distribute, integrate or support the software in various ways.

Before cloud computing, ISVs (independent software vendors) faced significant challenges in scaling, maintaining and securing their applications. The rise of cloud computing has transformed the traditional infrastructure landscape, providing ISVs with greater agility, flexibility and scalability for their software products.

Today, most large enterprises have migrated toward a hybrid multicloud architecture, which provides more control over workload deployment. The wide-ranging functions offered by large cloud platform providers—such as Amazon Web Services (AWS), Microsoft Azure, IBM Cloud®, Google Cloud and Oracle Cloud—allow ISVs to build apps that scale and combine with other services to reach better business outcomes.

Cloud environments enable ISVs to use open source technologies such as Linux and Kubernetes. Also, cloud platforms offer access to advanced artificial intelligence (AI) tools so ISVs can integrate technologies such as machine learning (ML) and big data analytics into their products for more intelligent solutions. According to research from Technavio, the global ISV market is expected to grow by USD 1.56 billion from 2025 to 2029.¹

The cloud offers ISVs numerous benefits, including the following:

• Global reach

• Scalability

• Cost efficiency

• Faster time to market

• Improved security and reliability

Independent software partnerships, also referred to as ISV partner programs, are collaborative business models where ISVs develop applications that run on a specific platform or technology within a partner ecosystem. Major ISV partners (e.g., Salesforce, SAP, Red Hat®, IBM) allow ISVs to build upon their technologies—such as cloud platforms, AI and data management systems—to create integrated solutions that enhance customer value.

Through these partner networks, ISVs also gain access to resources such as technical training, marketing support and customer assistance. Also, they can use software development tools, customer outreach programs and distribution channels to broaden their market reach and promote their solutions.

ISV certification is a process through which independent software vendors confirm their applications are compatible with a platform’s systems. This helps ensure that the solutions meet standards for performance, security and interoperability. Certification typically includes technical validation and support from the platform provider, and it also helps an ISV build credibility and expand their market reach.

ISV licensing allows software companies to grant customers the right to use their products. Traditionally, ISV licenses were offered as perpetual licenses or one-time fee purchases for a fixed number of users or devices. With cloud computing, licensing has shifted toward pay-as-you-go subscription models based on usage, such as the amount of storage being used or the number of users.

The pay-as-you-go pricing model is more flexible and cost-effective, allowing businesses to pay only for what they use, easily scale up or down as needed and avoid overpaying for unused resources. Additionally, the vendor handles maintenance and updates, reducing the need for businesses to invest in IT infrastructure.

AI integration is transforming the ISV market by enabling smarter, more efficient software solutions. By using machine learning, natural language processing (NLP) and predictive analytics, ISVs can automate workflows and enhance user experiences. AI-powered chatbots, for example, improve customer experience by handling inquiries, while predictive maintenance in ERP solutions reduces downtime by detecting equipment issues early.

Generative AI is also expanding ISV capabilities. For instance, gen AI helps flag fraudulent transactions in finance and analyze medical images in healthcare for faster, more accurate diagnoses.

An AI-driven approach supports scalability, accelerating development and enabling ISVs to stay ahead of market trends. According to research from Gartner, more than 80% of independent software vendors will have embedded gen AI capabilities into their enterprise applications by 2026, up from less than 5% in 2024.²

An ISV integration strategy defines how an ISV partners with a platform provider to integrate its solution into their ecosystem and use the platform’s infrastructure. The following steps can help build an effective ISV integration strategy:

• Choose the right platform

• Define integration requirements

• Collaborate on marketing

• Use platform resources

• Foster a collaborative partnership

When looking for a platform provider, start by thoroughly evaluating their pricing structure, its partner program features and related case studies. Select a platform that aligns with your product and offers robust application programming interfaces (APIs), cloud resources and cutting-edge tools to reach your target market.

Work with the platform’s technical team to help ensure smooth integration by defining clear technical guidelines and using provided resources.

Engage in joint marketing efforts for selling software such as co-branded campaigns and webinars to boost visibility and attract new customers.

Use the platform’s APIs, cloud services and support to ensure seamless integration. Set performance metrics and use analytics tools to track and optimize the integration’s success.

Maintain open communication with the platform’s support team to explore new technologies and opportunities for growth and innovation.