Independent software vendor (ISV) selection – A critical step to profiting from your ERP investment 

Why independent software vendors (ISV)?  

According to an IDC survey conducted worldwide, 55% of companies want to digitally enhance their product and services, and 49% want to future-proof their business. In the face of constant change, companies can leverage ISV partnerships to build a more robust business ecosystem and become digitally resilient

Although most ERPs cover the basic technology needs for businesses out-of-the-box, your company might require the help of ISVs who offer industry-specific solutions and enhanced functionalities. By integrating their solutions into your ERP’s core, ISVs help complete your existing platform while keeping users in mind and your business goals on track. 

If you’re thinking of taking this next step, this article is a guide to help you choose the right ISV partner to take your digital transformation to another level.  

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In an increasingly digital world, businesses have noticed gaps in their current processes and their negative impact on supply chain relationships and staff engagement. In a recent survey, “74% of businesses reported having to shut down during the pandemic due to not having the tech in place to digitize”.  

Thanks to their specially designed technology and expert knowledge, ISVs can help you meet the unique needs of your industry and eliminate inefficient processes. By finding an ISV who can integrate their solutions into your ERP, you can seamlessly jump from one application to another quickly, securely, and without compromising essential data. Additionally, most ISVs provide extensive support and resources, significantly reducing stress and errors for your teams.  

Potential challenges  

When a third party is involved, it can be challenging to navigate changes if parties are nonaligned in their goals and approach. Since you are investing a lot of time and money to work with an ISV Partner, it’s essential to set realistic expectations by identifying your needs and communicating them early in your interactions with your potential ISV. 

Moreover, in his “10 Steps to Digital Transformation and ERP Implementation Success” video, ERP systems expert Eric Kimberling from Third Stage Consulting mentions the importance of the people-side of a transformation and how it’s often overlooked but can make or break an ERP implementation. One of the crucial challenges then is to develop a clear strategy and plan covering all aspects of your business. 

With that being said, companies must think beyond a simple ERP implementation. We recommend working with a consultant or advisor like Third Stage Consulting to help you establish a clear digital transformation strategy so the ISV partner can effectively align your implementation goals with your business goals.  

Go through the checklist below to select the right partner for your business.  

Choosing your ISV partner – 7 considerations for a strategic partnership 

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1. Leading technology solutions

Each ISV offers its own set of technologies designed to meet the unique needs of businesses, ranging from cloud vs. on-premises products. Many companies are looking for hybrid and/or multi-cloud solutions to “embrace functionality such as data residency standards, enforcement and legislation, low latency, and low cost that improves mobility, and provides enhanced protection, enhanced user interface, and ubiquitous access.” 

Blockchain, security, and API are some of the many additional features available today that you can explore to help your business operate more efficiently and transparently. Since there are many solutions to choose from, it’s vital to ensure that when selecting an ISV, their technology empowers your business to do what you want it to do inside your ERP, not just for today but for tomorrow and beyond.  

2. Depth of integration 

Introducing a new application to your system can come with uncertainty as it directly affects the way you do business. The new solution needs to feel natural and intuitive for users so it doesn’t add a barrier to their day-to-day tasks. On the other hand, if the new solution feels like a completely different platform, it can negatively affect your staff’s workflow and slow down your processes. 

Ultimately, an ISV should give your staff the ability to manage data with more visibility and control in the ERP they work in every day. A simple way to determine whether a solution is right for you is by asking your stakeholders: Will it make your lives easier or harder? 

3. Solution scalability  

Your ISV might address the needs of today but should also address the needs of tomorrow. Jason McGee, VP and IBM Fellow, used The Weather Company as an example to describe the importance of being able to respond to an increase in demand. He said: “When extreme weather like a hurricane hits, pages views can spike 5x to 150 million views per day, along with 25 billion on-demand forecasts… and 40 billion API requests [to connect the forecast to other app services].” 

As you anticipate growth for your business, find a solution that can support increases in sales volume so you don’t waste away your investment and are forced to move to a new solution. If the solution is not scalable, the loss you could experience is financial and practical since looking to replace it can significantly disrupt the flow of your business. Instead, choose a technology that can adapt to you in times of change and will not leave you stranded. 

4. Speed, flexibility, agility & possibilities of customization 

It is no surprise that you might face a new situation down the road and need to adapt, whether that is an increase in customer demand or a change in business requirements. However, not all ISVs have the same capabilities, so you should take the time to establish your preferred approach.  

While speed and flexibility are essential in any successful ISV partnership, agile solutions allow you to quickly adapt to changing needs and make new features available to users. The possibility of customizing the solution can also help you meet specific business requirements and allow you to perform certain tasks with more ease and accuracy. 

There isn’t a single answer as to what you should prioritize, but you can try to anticipate your greatest needs when selecting your ISV to make the most out of your partnership.  

5. Experience in the field

Finding a reputable ISV is an essential step in lowering your investment risk and setting expectations for the type of collaboration you will experience. You can find out what customers say about an ISV through online reviews, ratings, and video testimonials, giving you some insights into their work and impact on the supply chain. In your search, pay particular attention to the following:  

  • What do their customers say about them?  
  • What have they accomplished?  
  • Whom have they worked with before?  
  • What have they contributed to your industry?  

Ultimately, your choice should reflect your trust in them to provide you with expert guidance, the ability to solve complex issues, and a great desire to collaborate with other stakeholders.  

6. Pricing models 

The most common pricing models when working with ISVs are: 

  • Software as a Service (SaaS): A subscription-based model where you can access the software via the cloud through a license.  
  • Perpetual: In this model, customers pay a one-time fee and purchase the software with the option to pay annual maintenance fees.  
  • Time and Material: These are additional fees, including consulting hours, training, and any other support you might need from your ISV. 

Most customers prefer the SaaS model since they can use the software for the duration they want, giving them time to test out the technology and see the benefits without paying a lot upfront. As more companies are looking to expand their software ecosystem with new applications, The SaaS pricing model is key in helping small to midsize companies grow. Over the long term, perpetual pricing could be financially advantageous. 

7. Support and customer experience 

In a recent McKinsey survey of 1,000 B2B decision makers, lack of speed in interactions with their suppliers emerged as the number-one “pain point,” mentioned twice as often as price. 

ISVs partnerships can help businesses achieve their goals through excellent support and customer experience. Learn more about the kind of support your ISV partner offers, especially as taking the right steps in your digital transformation goals can be overwhelming to do on your own.  

For example, find out who in their team will answer your questions, their typical response times described in Service Level Agreements (SLA), and what kind of resources they have online to help you troubleshoot on your own. This step is as crucial as determining the technology you need because your team will want to know what to expect and establish trust with the selected ISV. After all, you are entering a partnership and need to see if they align with your values, communication methods, and overall objectives. 

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When selecting an ERP, ISVs play a crucial role in ensuring your specific needs are met while optimizing your business. In this process, your part is to determine the weight of each consideration mentioned above to facilitate your organization’s decision-making. This commitment takes time and requires input from various stakeholders to ensure your supply chain operations run smoothly, both internally and externally.

If you are a business currently doing EDI with your supply chain partners and plan to transition to a new ERP, please consider contacting us next time you evaluate an ISV specializing in EDI & API automation.  

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