The Emerging Software Broker & A New Twist to ISV Alliances?

This IDC study discusses the emerging software broker business model as it is currently evolving in the industry and examines the corresponding alliance priorities and issues. While software vendor direct sales continue to generate the majority of worldwide software revenue, few dispute the value of the customers' trusted advisors, who frequently influence the customers' technology strategy and selection of specific products and services. IDC research suggests that software and services firms are often customers' preferred source of information regarding solutions and therefore represent an important target for complementary technology companies to intercept customer demand.

The IT industry has been actively ramping up efforts to better partner with the ISV community. But IDC believes there's a potential twist to the ISV landscape that will impact these partnering initiatives. CIO demands for IT providers that go well beyond software functionality to address issues of increasing solution complexity are leading to the emergence of a new type of player ? the software broker. Brokers are emerging from both the software and services industries to address customer concerns regarding the difficulty of integration and handling increased IT complexity.

Many companies destined to become software brokers have characteristics that may not be in the DNA of a conventional software publisher. One of these characteristics is the ability to build and maintain lasting alliances, which will pose unique challenges for companies considering becoming software brokers and companies wishing to partner with brokers.

"The emergence of software brokers presents a unique challenge for IT firms' traditional ISV alliance approach," says Stephen Graham, group VP of software business strategies with IDC. "Understanding these firms is important, since any attempt to treat them as VARs, service firms, or software publishers would significantly undermine the partnership."