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           Figure 1 - IDC Leadership Grid: Worldwide Independent Software Vendor Programs

The IDC Leadership Grid, depicted in Figure 1, plots vendors along the following two axes:

• Opportunity alignment. This is measured by five criteria: ability to set industry standards, market share, potential for market dominance, potential for place or show, and product and service breadth.
• Ability to gain share. This is measured on relative vendor performance against seven criteria: comprehensive core program, valued training and certification, responsiveness/quality of support, sophisticated infrastructure, structured marketing and communications, appropriate coverage model, and partner networks. These elements are drawn from the partner program model measurement criteria outlined in Architecting Partner Programs for Success (IDC # 31612 , July 2004).

IDC notes the following with respect to the positioning of the vendors on the grid:

• IBM provides leadership in ISV programs based on its ability to do the following: effectively recruit ISVs in all geographic markets, maintain a strong infrastructure, provide strong industry and product alignment, and focus on business development with ISV partners. Overall, IBM's offering is viewed as a program in the maturation stage that is well integrated with its go-to-market strategy and that provides significant value to partners. Microsoft closely follows IBM, but the vendor is somewhat hampered in its efforts due to a lack of industry alignment, primarily programmatic approach to business development, and competitive issues.
• Sun, Oracle, Progress, Intel, BEA, and EMC have demonstrated varying degrees of growth and commitment in their ISV programs. These programs are evolving from an initial product-focused approach to one that is aligned with the vendor business and other partners in the ecosystem.
• SAP and HP both offer a "legacy" style ISV program — one that is mostly product focused, with little infrastructure or integration with other programs. Both vendors are significantly behind the evolutionary curve for ISV programs because of this.

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Programs designed to attract and nurture independent software vendors (ISVs) are steadily evolving and have become a significant focus for many key vendors. The need for scalable programs has necessitated the redesign of many offerings, with a focus on targeted and measurable growth, corporate alignment, business and technical enablement, and the formation of partner networks. IDC believes software vendors should consider five key areas in focusing efforts to improve ISV program effectiveness:

• Partner identification and recruitment. Emerging markets provide a significant potential pool of unaffiliated ISVs. Leading vendors are actively pursuing opportunities in Asia now and have already begun to think about Latin America and Eastern Europe. These vendors have the chance of securing the "best and brightest" partners by being first to offer a relationship.
• Partner management. Many software vendors have begun the process of extending ISV partner management capabilities down to the lower tiers through telemanagement activities and expanding on the business relationship through more robust business planning activity. Vendors are attempting to formally work through sales, market, and capabilities planning to bring smaller ISVs into alignment with corporate goals and initiatives.
• Partner enablement. It is an important component of an ISV strategy to have a strong combination of business and technical tools, processes, methodologies, templates, and support, which are also extended to other partners in the ecosystem. Many ISV programs still don't offer effective technical enablement resources, but these should be a primary focus of the program development process along with programmatic and consultative business enablement.
• Industry/solution alignment. Partner enablement at a generic level can proceed without industry/solution alignment, but to effectively serve ISVs, vendors will need to provide industry- or solution-specific strategies and initiatives that encompass business and technical development activities.
• Partner networks. Many software vendors are beginning to step beyond the world of partner/solution directories to actively build out ecosystem networks that go to market around customer business issues within industry segments. ISVs will play a key role in this process.

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This IDC study provides a review and analysis of the independent software vendor partner programs offered by key software vendors as well as guidance to vendors that are developing or redesigning programs or reviewing strategies in this area.

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IDC conducted formal interviews with key vendors that offer ISV programs. The interviews, conducted in 2005 and early 2006, covered program structure, participation, expansion strategies, measurement, and future directions. IDC also leveraged secondary research: vendor presentations and briefings, press releases, articles, and other publicly available information, along with searches of vendor Web sites, to develop this study.

The analysis of the relative competitive positioning of vendors profiled in this study is based on IDC's Leadership Grid methodology, which scores each vendor according to objective criteria.

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IDC defines three types of developer and ISV relationships:

• Individual developers. These are one-to-many relationships with professional developers that focus on fostering technology awareness and skills development. The ultimate aim of the relationship is evangelism, a broad form of influence that builds grassroots support for a vendor's technologies and products. Individual developers may work for corporations, ISVs, systems integrators (SIs), or as independent contractors. Developer Web sites and portals support relationships with individual developers, and they often provide the base resources for ISV programs.
• ISV partners. Relationships with ISVs are either as a channel (sell through), an alliance (sell with), or an influencer. ISV partners may have a solution that integrates with a vendor's software or they may incorporate a vendor's technologies (e.g., database or middleware) into their software products. Depending on a particular vendor's partner ecosystem, the vendor may have partner programs specific to ISVs or an ISV track within an umbrella partner program that supports all types of partners. ISV programs include marketing and sales resources in addition to technical enablement and support resources.
• Strategic ISV alliances. Software vendors are, by definition, ISVs themselves. Strategic alliances are one-to-one relationships between ISVs for a specific purpose. These are sell-with relationships with substantial one-to-one interaction between the two parties based on individualized contracts.

A detailed account of IDC's partner segmentation model can be found in IDC's Worldwide Partnering and Alliances Taxonomy, 2005 (IDC # 32968 , March 2005).

This study primarily analyzes the programs for ISV partners. While all programs have a top tier that is designed more for strategic ISV alliances, the primary focus of this assessment is to measure the relative strengths of the programmatic offerings for ISVs. IDC will publish a separate study on the programmatic offerings designed for individual developers.

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ISV programs have a fairly well-defined evolutionary path. In most cases, the program starts as an initiative from a product or industry-specific team. Characteristics of this initial program include:

• Primary focus on technical enablement (perhaps limited go to market)
• Little alignment with other partner, product, or industry groups (The program is most likely associated with only one of these as this team might have incubated the idea.)
• Limited systems and infrastructure to support the program, which is not well integrated with other corporate systems/infrastructure
• Company is still testing the waters and is not fully committed to the value of ISV partners (Typically this results in an "exclusive" strategy with a top-tier focus.)

As the ISV program matures and expands, it can transition into a corporate-aligned program. This transition is effectively the most difficult as it requires alignment with other partner teams and programs and requires a strong executive champion with a clear mandate to effect this alignment and consolidation. Program characteristics at this stage include:

• Technical enablement offerings that are well established, with a greater focus on go-to-market offerings
• Expanded alignment with other partner groups (i.e., aligned under an umbrella program)
• Product/industry alignment developing and being leveraged for benefits and requirements
• Initial stages of global ISV partner support and recruitment
• More established systems and infrastructure to support partners
• Company committed to the value of ISV partners and beginning to focus on the recruitment and incubation of new partners (key markets: product, industry, and geography) — an "inclusive" strategy with programmatic focus

The next stage is one of maturation. It is at this point that programs provide refined offerings and create key differentiators for ISVs through the following:

• Enablement and go-to-market offerings well established and field-level engagement facilitated
• Integration with other partner groups/program tracks (i.e., proactive effort in providing a clean road map for a partner to participate in multiple program tracks)
• High degree of integration with product/industry strategy and groups within the organization
• Better global ISV partner support and well-established recruitment and incubation processes and programs (e.g., venture capital [VC] and empowerment programs)
• Established, easy-to-use systems/infrastructure to support partners
• Company committed to the value of ISV partners
• Developing/supporting the development of partner networks
• ISV track becoming aligned with broader life-cycle approach to partner management (i.e., education, VC, other tracks, industry/product initiatives/tracks, and alliance initiatives)

The vendors profiled in this study can each be placed on this evolutionary path. Some are actively moving along this continuum and have recently announced significant changes to their ISV programs (Sun), or are continuing to make refinements in their offerings (Microsoft and IBM). Others are assessing the future direction of their programs to determine what, if any, modifications they need to enact.

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BEA
The BEA partner program went through a comprehensive revision in early 2004 to bring all partners under a single framework, although it can be viewed as two programs serving two distinct constituencies: influence partners (platform, services, and software partners) and VARs.

For its platform, services, and software partners, the vendor provides three levels charged at a flat fee of $1,995: Strategic, Premier, and Select. BEA supports approximately 600 ISVs, a small percentage (3%) of which participate at the Strategic level, with 17% at the Premier level, and 80% at the Select level. Most ISV partners (65%) are based in the Americas, with the remainder in Europe. BEA has a small percentage of ISV representation in Asia. The global program is leveraged by BEA resources in Asia to provide a local version of the program.

BEA's program is designed to provide ISVs and other partners with benefits as they grow through the vendor's partnership value chain (enable, develop, market, sell, and support). This mapping of partner benefits helps ensure that partners receive a comprehensive bundle of offerings they don't outgrow quickly and is considered by BEA to be one of the key benefits of the program.

Generally, BEA leverages a horizontal solution framework rather than a vertical focus to structure its offerings. However, the initial success of vertically defined partner support and offerings in telecom and finance has BEA planning to expand its offerings in these and potentially other sectors.

BEA provides a dedicated North American ISV support team focused on recruiting and working with ISVs to cultivate new applications. This structure is mirrored on a smaller scale in EMEA and Asia, with these teams also providing a bridge for United States-based ISVs that wish to expand into these markets. At a country level, local teams support and drive opportunities with ISVs opportunistically.

The vendor leverages a number of metrics — the number of ISVs, design wins associated with BEA technology, and participation in vertical sectors of importance to BEA — to measure the success of its ISV program and direct and influence revenue. Ideally, BEA expects to capture its wallet share of each partner's deployment, which is accomplished where possible through the account planning process with larger or more strategic ISVs.

BEA opportunistically links regional SIs with VARs that lack implementation capabilities and ISVs with regional and global SIs to support the development of solution frameworks. Generally, this impacts only those partners in the top tier. BEA currently doesn't actively enable ISVs to find resale partners in the ecosystem, although some may be using the BEA Partner Solutions Catalog to accomplish this goal.

BEA intends to continue to focus on the execution of its existing program while expanding on its offerings and actively pursuing new ISV partners to support its new product strategy (i.e., AquaLogic).

IDC believes that BEA's program and structure will support its immediate goal of targeted partner recruitment. In the longer run, BEA will need to address the limitations of its program — scalable partner enablement, emerging markets, and partner networks.

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EMC
EMC currently offers an expansive array of partner programs to the ISV community, each of which is related to a solution (i.e., Centera and Smarts) and run relatively autonomously by the teams charged with the program's execution. This current model serves about 600 ISV partners.

EMC announced its intention to consolidate its ISV programs and position a unified offering under the Velocity Program umbrella in January 2006. The motivations behind this major realignment include increasing partner satisfaction and channel revenue and creating consistency among the technology specialties/partners (i.e., networked-attached storage, SAN storage, content-addressed storage, content management, and network systems management). The best of each of its current ISV programs will be leveraged to build the new EMC program.

This represents a major step forward for EMC that will require a significant effort on its part to build infrastructure, develop internal consensus, and communicate the program effectively to its partners. EMC plans to officially launch the revised ISV program in April 2006.

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HP
HP offers ISVs the Developer and Solution Provider Program (DSPP). This program is distinct from PartnerONE and focuses on providing a basic level of support to solution providers at no cost. The program provides members with access to discounted technology and technical and business development support. HP offers two additional programs in which ISVs can participate: Enterprise Management Alliance Program (EMAP) and OpenCall Partner Program.

EMAP is designed for software vendors that complement, extend, or enhance HP management solutions by integrating with HP OpenView products. Members participate at one of three levels: Platinum Business Partner (fee-based), Gold Business Partner (fee-based), and Developer. HP supports approximately 73,000 registered developers in this program, of which only 75 are Platinum and 225 Gold ISVs. The bulk of the EMAP partners are located in North America and Europe, with a small number in Asia. The strategic direction of the program, its certification and technical support, are developed centrally, with recruitment and partner support managed locally.

HP believes that EMAP is designed to facilitate easy integration with OpenView. Partners interested in a sales engagement partnership can apply for an assessment and begin a dialogue with HP personnel in the program, product, or business development teams. The vendor believes it is important to set expectations around what HP wants and the partner's level of access to the HP sales channel.

HP gauges the success of EMAP through three measurement criteria: member influence revenue, member business efficiencies (headcount, certification, and program participation) and "breakthroughs." A breakthrough could be the acceptance in the program of a large or highly strategic ISV or a specific initiative that creates a joint solution in a particular area (i.e., business intelligence).

Key HP EMAP priorities in 2006 include the following: increasing the productivity of its members, simplifying product integration and certification, growing its management ecosystem, identifying the high-value solutions — horizontal or vertical — for customers, and recruiting partners to support these breakthrough initiatives. HP recognizes that it has the opportunity to present a more unified view to the partner community and plans to address this issue in 2006.

IDC believes that HP needs to take a more holistic approach to the partner community. The lack of a unified structure makes it difficult for partners to optimize their relationships with HP, inhibits the development of partner networks, and creates confusion for clients. HP has a very limited number of Gold partners and should develop an initiative to groom Developers for Gold-level participation. Finally, HP should develop an emerging markets strategy to ensure sufficient presence in these markets.

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IBM
IBM's PartnerWorld program, which supports partners in a dual framework — one for consultant/SIs and resellers, the other for ISVs — will be merged into a single structure in 2006. Almost 70,000 ISVs participate at one of three membership levels worldwide: Member, Advanced, and Premier. The IBM industry vertical sales and distribution groups provide face-to-face relationship management for the top 1,500 ISV partners. These teams are responsible for joint demand generation and closing joint business.

ISVs and, as of July 2005, all other partner types can also join IBM's PartnerWorld Industry Networks. This program was launched in March 2004, is designed to help business partners align with IBM's industry-tailored go-to-market strategy, and delivers industry-specific benefits and resources.

More than 5,000 business partners have joined Industry Networks since its launch. The initiative currently has 1,600 Advanced and 400 Premier participants. Achieving an Advanced status allows partners to access marketing and sales resources to help create and close opportunities. Advanced ISVs must be enabled to IBM middleware and hardware and have a customer reference, and they can choose to "optimize" in a specific industry by completing additional industry-specific requirements. This optimization gives the ISV greater visibility within that IBM industry group field team.

Premier ISVs are classified as either ISV Advantage or Strategic Alliance, both of which are by invitation only. ISV Advantage partners agree to increase their share of IBM hardware and middleware, lead with the vendor, and publicly support open standards. IBM commits to marketing, technical enablement, and relationship support. Strategic Alliance participants include nearly 100 top-level enterprise ISVs committed to leading with IBM middleware and servers, and in return IBM commits to lead with their application.

IBM structures its ISV benefits into four major categories, as follows:

• Business insight. ISVs have access to industry research, news, and internal publications as well as opportunities to attend Webcasts and teleconferences with IBM and third-party subject matter experts.
• Technical enablement resources. IBM's Virtual Innovation Center is a portal that provides partners with interactive courseware, FAQs, learning tools, hands-on laboratory experience, architecture and design support, porting and validation resources, and presales technical support. A recent offering is vServices, which provides partners with virtual access to IBM's physical Innovation Centers for interactive training, porting, and migration activities and interacting with experts. eArchitectural Consultation Requests enable ISVs to consult with an IBM enablement architect for two to three hours by telephone. The architect conducts a system architectural review of applications and provides customized recommendations for porting to IBM products and technologies. IBM also offers partners live access to 25 worldwide IBM Innovation Centers that provide technical consulting, education, porting, testing services, and access to the latest technologies, development tools, secure porting labs, and technical assistance.
• Sales and marketing support. IBM negotiates cost savings on behalf of its partners and offers discounted print advertising as well as telesales support, industry-tailored direct mail tools, and IBM Sales Connections, linking partners with the IBM global sales network.
• Networking and collaboration. IBM holds industry-tailored events, Web Forums, and teleconferences to help ISVs build their solution ecosystem through other partners and IBM sales associates.

IBM believes its commitment to open standards, vertical market focus, technical enablement, and sales and marketing offerings, and the fact it doesn't directly compete with ISVs, carries significant weight with this partner community.

IBM measures program success through revenue but also looks at the use and value of program benefits. The vendor relies on in-country teams to provide ISV coverage, benefit localization and execution, and market communications. The overall direction and strategy of the program as well as Web development infrastructure management are centralized functions.

IBM has developed and actively supports relationships with the venture capital community to identify the best VC-backed start-up companies. This initiative is designed to capture the explosive growth of innovation in emerging markets, promote adoption of open standards, and expand IBM's relationships. It's also aligned with PartnerWorld and has resulted in the development of more than 900 new relationships (both hardware and software) over an 18-month time frame. Future directions include expanding internal teams to facilitate more volume and deeper relationships with both the VC community and emerging companies, nurturing the VC Advisory Council announced in August 2005, and improving potential partner assessment models and methods.

In 2006, IBM plans to maintain strong relationships with Strategic Alliance and ISV Advantage partners to continue to drive that significant IBM business. Additionally, it plans to add more industries to PartnerWorld Industry Networks (i.e., energy and utility, consumer packaged goods, and electronics), foster adoption of Industry Networks by other partner types to promote networking, increase localization investments in Asia and Europe (i.e., China, Russia, India, South Korea, and Brazil), and continue to focus on ISV recruitment for specific industries, markets, technologies and delivery strategies (i.e., Linux and software as a service).

IDC believes that IBM's ISV program is a market leader that provides the benchmarks and best practices other vendors emulate when updating their programs. While offerings and initiatives can be copied, it is difficult for other vendors to match IBM's ability to create effective virtual teams. IBM has been refining its program, making significant infrastructure and resource investments, for a number of years. IBM's corporate "personality" and investment strategies have created a very mature and extensive ISV program that is difficult for others to reproduce. While IBM leads in many areas, it should focus on developing and supporting partner networks — programmatically. This will ensure that IBM's ISVs can leverage the vendor's entire partner community, both locally and abroad. Additionally, IBM should focus on delivering broadly focused business enablement activities. Effective, higher-touch business enablement support will need to be genericized to be applicable to a broader base of ISV partners.

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Intel
Intel Software Network is designed to support both ISVs and developers through access to a host of online resources. Under its Early Access Program, a single-tier program designed for ISVs, Intel currently supports about 2,000 partners — approximately half of which are located in the United States, with the remainder split evenly between Europe and Asia.

Intel provides both technical- and business-focused offerings to its ISV partners:

• Technical offerings include access to engineers, training (software college), and software tools and advanced access to hardware (machine on loan or virtual access).
• Marketing offerings include demo systems for marketing events, a solution catalogue, logo usage, marketing asset package, executive press quotes, marketing activities, and a matchmaking service (Software Connection Program) that highlights optimized ISVs on the reseller portal.

Intel measures success by the number of companies that port their products to its platform. As with other vendors, Intel's program strategy and infrastructure are defined at a global level. Local teams are tasked with managing the partners, undertaking specific partner initiatives (sales and recruitment) and localizing the program.

Intel believes that its ISV relationships currently have a very technical-focused slant through engineer-to-engineer interaction. Its strategy is to expand and improve relationships with these partners from a business perspective.

Intel, a relative newcomer in the world of ISV programs, has done a good job of tapping into the Asian partner community. It should continue to focus on building presence in emerging markets but will need to refine its program offerings to better demonstrate a focus on partner business enablement within a multitier program structure.

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Microsoft
Over the past 18 months, Microsoft has implemented a tiered, points-based program that segments partners into three levels — Registered, Certified, and Gold Certified — under one or multiple competency designations. ISVs, along with developers, are part of this program and must participate under the ISV/Software Solutions competency. Microsoft has approximately 100,000 ISV partners worldwide — 1,200 Gold Certified and 2,500 Certified. Of the remaining Registered participants, 14,500 are enrolled in the Empower Program, which is designed to accelerate partners to the Certified level.

Microsoft loosely aligns its partner management model with its published tiers. The Enterprise Product or the Developer and Platform Evangelism groups manage global partners. Other top partners are managed by localized Partner Account Managers (PAMs). A larger number of Certified partners are telemanaged. The remaining partners are supported by the portal and through local, regional, and worldwide events.

Microsoft aligns ISV benefits with the product life cycle and offers an assortment of resources that vary by partner tier:

• Planning. Resources include access to the partner membership center, sales and marketing planners, conferences/events, industry-specific initiatives (limited), toolkits, and licenses.
• Developing expertise. Resources include partner learning center, online labs, and access to Visual Studio.
• Market/sell. Offerings include configurator/calculator, logo, and access to Channel Builder, Solution Profiler, and the Partner Marketing Center.
• Implement/support. Benefits include the Partner Advantage offering (fee-based support service), presales and business phone support, Match License Plan, and competitive selling resources.
• Customer retention. Microsoft offers customer satisfaction index and Response Management (issue tracking tool) through partners.

Microsoft focuses on three primary measures of ISV success: influence revenue (estimated based on an influence model), partner satisfaction, and platform adoption by top-tier partners.

Microsoft developed an Emerging Markets team five years ago to identify ISV start-ups with potential for marketability to work with to get them ready for market. The team screens potential candidates coming from three primary sources — internal staff, inbound inquiries, and VC community resources — and it works with approximately 125 companies over an 18-month period. It is also responsible for developing the local software economy and driving product innovation, digital inclusion, and economic opportunity. Asia is a significant area of focus for this team in 2006.

Microsoft plans to maintain its deep sales and engagement strategy with top ISVs while expanding on the business enablement resources made available to other ISVs. In particular, Microsoft plans to identify high-potential partners and provide them with additional Empower Program resources to reduce their time to market, and it will heavily invest in ISVs that understand and embrace the software-as-a-service model. Microsoft doesn't view itself as a competitive threat to ISV partners and is trying to increase the level of transparency it offers Gold Certified and Certified partners to ally any competitive concerns.

IDC believes that Microsoft's highly programmatic approach to ISVs results in one of the most scalable, transparent, and programmatic offerings in the market today. However, it is struggling to bring an industry focus to the program, which is particularly relevant to ISVs. Microsoft needs to revisit its industry strategy and determine how best to implement this in the face of regional and country-specific go-to-market models and its overall program structure. It also needs to reconsider the Emerging Markets team's very broad mandate. The current strategies and resources are not sufficient to make the most of the opportunities presented by emerging markets.

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Oracle
Oracle continues to drive about half its technology and applications business with and through partners, with its highest indirect license sales growth coming from ISVs. ISVs account for almost half of all Oracle partners and are a growing segment of their ecosystem. The vendor's PartnerNetwork program offers ISVs three levels: Partner, Certified Partner, and Certified Advantage Partner. Marketing and sales engagement opportunities, discounts, and resources increase as partners move up the tiers. Oracle allows partners to apply for product focus/specialization in database, application server, applications (E-Business Suite, PeopleSoft Enterprise, JD Edwards EnterpriseOne, and JD Edwards World) and collaboration suite.

Progress
Progress' partner program serves predominantly ISVs but is being expanded to be more inclusive of other partner types such as SI/consultants and VARs, relationships the vendor is beginning to nurture. Progress has a total of 450 partners in the program: 1% are in the top-tier Elite level, 10% are in Premier, and the remainder — the vast majority of its partners — are in the Preferred and Member levels. Partners continue to represent approximately 65% of the vendor's revenue.

Progress' business planning process is the foundation of its program and considered by the vendor to be a key success factor in its partner relationships as it allows for gauging ROI and guiding partners through the program levels. All Progress partners are required to have growth targets and a business and marketing plan, and one-on-one business planning is conducted with approximately 50 of them. All other partners participate in more generalized business-planning activity in groups in full-day workshops with a conference call follow-up. All Progress partners have an account rep, two-thirds of which are outbound, with the remainder being inbound.

A key focus area for the vendor has been to be clearer with partners on the value of the program's growth stages. Criteria for moving up through each program level had consisted of 11 weighted requirements that weren't fully disclosed to partners, making it difficult for them to understand and maintain their status. Progress has now refined its criteria to nine requirements that are rated by level of participation across three categories: Business, Technical, and Financial. Sample requirements include a completed and validated business plan with market opportunity, specific goals and milestones, and solution alignment, all tied to key performance indicators; dedicated personnel and commitment to the Progress product set; and license and maintenance renewal and net new revenue and growth.

What's important to the vendor through its program is to get as many partners to the stage of selling their application or executing on a plan for growth. The execution of that strategy is supported through the partner program around a life-cycle focus on engagement (understanding the partner business), empowerment (understanding the partner product and its sustainability and functionality), expansion (understanding new market potential and enabling comarketing and coselling), and enrollment (recruiting partners with growth and collaboration potential).

This will also be extended to other partner types, especially as the vendor tries to formulate noncompete partnerships between its ISVs, VARs, and SIs for resale, influence, and implementation activity in expanded markets. All this activity then ties back to the program and the business planning process.

A key initiative for Progress is its BusinessEdge process, whereby the vendor works with a small number of partners in specific industry segments in drawing up a solution map and account planning strategy. Partners participate as a benefit of their standing in the program, and all deals sold through the network are done on Progress paper, with each partner-paid margin on its piece of the solution.

The catalyst for this initiative is the need for Progress to push partners to sell bigger deals into bigger accounts by leveraging the size of the combined partners and the Progress brand and technology. An expected outcome of this effort is the development of partner networks that work together in developing, positioning, selling, and implementing industry solutions. In manufacturing, as an example, Progress has brought together 12 partners to identify business issues and market opportunity to form a broader solution.

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SAP
SAP has three programs targeted to ISVs. The SAP Software Partner program targets partners that provide complete, technically verified turnkey software solutions that extend and add value to SAP solutions. Partners can participate at two levels: as a SAP Partner or as a SAP Global Partner (operates with a market coverage of at least two regions).

The NetWeaver Partner Program is directed at ISVs that develop packaged business applications and innovative SAP xApp composite applications on the SAP NetWeaver platform. The program offers members NetWeaver-specific educational resources, logos, solution catalogue listings, events, and joint marketing and go-to-market opportunities.

SAP's PartnerEdge program for channel partners was launched earlier in 2006 to put some structure around the vendor's focus on the SMB market and to build up an ecosystem of resale/service partners to serve it.

PartnerEdge, which supports partners that resell Business One and All-in-One — approximately 1,400 VARs and ISVs — is built on a points-based system with Member, Silver, and Gold levels attained through performance and capability-building activities. Partners move through the program levels following achievement of base-level requirements (i.e., internal sponsorship, business profile, activation fee, business plan, and signed partner agreement). Each successive level implies a closer business relationship with SAP, with commensurate degrees of discount, sales and technical support, and marketing funds.

SAP is developing infrastructure to support PartnerEdge, including an improved portal and PRM system. The vendor also maintains Channel Partner Solution Network for its PartnerEdge partners, which is a collaboration engine for matching partner solutions and capabilities to market opportunities. The ultimate goal of the initiative is to foster mininetworks that will organically develop, especially in vertical markets, and for network participants to be responsible for governance of their respective groups.

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Sun
Sun's recently launched Partner Advantage Program for ISVs — replacing iForce — represents a first step for the vendor in its effort to build out a single, inclusive program that supports the multiple needs and activities of all partner types. The ISV component of the program, launched in September 2005, was driven by partner feedback and was developed to provide a cleaner and clearer road map for ISVs to align and grow with Sun's platform strategy. Other partner types, such as VARs and SIs, will be folded into the Partner Advantage structure in 2006.

Partner Advantage for ISVs is Sun's first tiered program for these partners and provides a growth path that articulates mutual investment around shared goals and benefits at each level. Feedback from ISVs asking for a more consistent and transparent structure to effectively engage with Sun was the catalyst for the new design.

The highest-level Partner Advantage tier — Executive — is a nomination-only designation, while the lower-level tiers — Member, Associate, and Principal — offer partners successively more benefits with a number of opt-in, fee-based benefits, such as the media advertising package. Sun has placed its top 10 ISV partners in its Executive rank, and its remaining ISVs — almost 6,000 — at the Associate level. The majority of Sun's ISV partners are located in the United States, followed by Europe and Asia. Sun manages the majority of its partners — Member, Associate, and Principal — through Web and phone contact centers.

The new program provides an expanded set of benefits under four main categories. Some of these offerings are available at each level of the program, and others are fee-based benefits. Benefit categories are as follows:

• Education (technical readiness assessment)
• Technology and products (development hardware and software and technical services)
• Marketing tools (media advertising packages and partner directory)
• Sales engagement (Sun Solution Centers)

Sun also launched the Industry Advantage Track for ISVs, which covers six industries (government/education, healthcare, manufacturing, telecom, financial services, and energy and utilities). This track is available to selected ISVs at the Principal level and provides expanded technical, marketing, sales resources, and designated Sun contacts and priority treatment.

Sun believes that the implementation of the new program structure, hardware discounts, business accelerators (i.e., media advertising packages) and networking offerings like Partner and Channel Connect are highly valued by the ISV community.

Sun will assess the success of the program through a number of measures, including number of active partners, number of Principle partners, participation and utilization rates of Web and phone contact centers, and adoption of key technologies (i.e., Solaris 10).

In 2006, Sun plans to focus on converting its existing partner base to the new program, increasing the growth of partners to the Principal level, bringing on new partners through recruitment efforts (9,000 ISVs by the end of 2006), and driving partner awareness and utilization of the program offerings.

To achieve the migration of partners from Member to the Associate level, Sun needs to effectively articulate and show ISV partners the value associated with each level in the new program structure. Internally, the ISV team also needs to champion the expansion of the program to other partner types. IDC believes that Sun needs to develop emerging market and partner network strategies in 2006 to remain competitive in these areas.

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IDC believes that open source adoption trends, emerging global markets, and technology developments such as enterprise solution platforms (ESPs) will drive vendors to put a greater focus on ISVs and the programs that support them in the coming years.

Open source technology is making headway in the enterprise market, driven by a number of factors that include cost-conscious buyers, improved technology, and leading participants like IBM. This has increased the need for vendors to attract software development partners that support open standards and has driven vendors to review and expand membership in their ISV ecosystem.

Asia (in particular) offers vendors a large, diverse ISV pool from which to recruit and build partner commitment. The problem in this market is not so much in finding ISVs but in filtering for those with the right value and/or potential. Markets with future potential include Latin America and Eastern Europe. Some vendors are actively recruiting in these regions, but many others are still focused only on the United States and Europe because supporting partners in remote or unknown markets is a challenge. Vendors will continue to refine localized offerings and emerging market strategies to take advantage of the importance of these other regions.

IDC has identified macro trends currently impacting enterprise software, each of which will effect, to a greater or lesser extent, ISVs offering and participating in partner programs. The one with the most significant impact will be the development of enterprise solution platform offerings. Larger vendors offering ISV programs will be able to respond to virtually any kind of enterprise solution need with a comprehensive solution suite — not just an applications suite. IDC believes that most vendors will focus on the development of comprehensive partner ecosystems to virtually "build" ESPs. While all partner types, from service- to logistic-oriented partners, will be needed to participate in these ecosystems, ISV partners will be of particular import and are therefore the focus of significant vendor attention at this time.

Vendors that wish to remain competitive will be required to build effective ISV recruitment and retention strategies in addition to increasing their wallet share with individual members. It is unlikely that investment in ISV programs will decline over 2006 given these mandates.

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Vendors reviewing, evolving, and maturing ISV programs should use the results of this and previous studies (see the Learn More section) to gain a clearer understanding of where other software vendors are employing best practices.

IDC believes software vendors should consider five key areas in focusing efforts to improve ISV program effectiveness:

• Partner identification and recruitment. Emerging markets provide a significant potential pool of unaffiliated ISVs. Leading vendors are actively pursuing opportunities in Asia now and have already begun to think about Latin America and Eastern Europe. These vendors have the chance of securing the "best and brightest" partners by being first to offer a relationship.
• Partner management. Many software vendors have begun the process of extending ISV partner management capabilities down to the lower tiers through telemanagement activities and expanding on the business relationship through more robust business planning activity. Vendors are attempting to formally work through sales, market, and capabilities planning to bring smaller ISVs into alignment with corporate goals and initiatives.
• Partner enablement. It is an important component of an ISV strategy to have a strong combination of business and technical tools, processes, methodologies, templates, and support, which are also extended to other partners in the ecosystem. Many ISV programs still don't offer effective technical enablement resources, but these should be a primary focus of the program development process along with programmatic and consultative business enablement.
• Industry/solution alignment. Partner enablement at a generic level can proceed without industry/solution alignment, but to effectively serve ISVs, vendors will need to provide industry- or solution-specific strategies and initiatives that encompass business and technical development activities.
• Partner networks. Many software vendors are beginning to step beyond the world of partner/solution directories to actively build out ecosystem networks that go to market around customer business issues within industry segments. ISVs will play a key role in this process.

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• Worldwide Linux Channel 2005-2009 Forecast (IDC # 34499 , December 2005)
• Worldwide and North America Software Channel 2005 Vendor Shares (IDC # 34487 , December 2005)
• Worldwide Software Channel Program 2005 Vendor Profiles (IDC # 34472 , December 2005)
• Worldwide and North America Software Channel 2005-2009 Forecast Update: November 2005 (IDC # 34393 , November 2005)
• Software Macro-Trends: Reshaping Enterprise Software (IDC # 34006 , September 2005)
• Creating Partner Allegiance Through Program Attribute Alignment (IDC # 33526 , June 2005)
• SAP Launches PartnerEdge Blueprint (IDC # 33454 , May 2005)
• Worldwide and North America Software Channel 2005-2009 Forecast: Software Channel Benchmarks (IDC # 33390 , May 2005)
• Oracle Flows into SMB Partner Play (IDC # 33238 , April 2005)
• Software Channel Benchmarks: IDC's 2005 Software Margins Study (IDC # 33199 , April 2005)
• Product Life Cycle and the Impact on Partnership Strategies (IDC # 33129 , March 2005)
• Can Your Marketing Budget Support New Channel Development? (IDC # 33042 , March 2005)
• IDC's Worldwide Partnering and Alliances Taxonomy, 2005 (IDC # 32968 , March 2005)
• Channeling Professional Services: Partnering for Success (IDC # 32932 , March 2005)
• Worldwide Linux Channel 2005-2008 Forecast and Analysis (IDC # 32955 , February 2005)
• The SAP NetWeaver Strategy Firms Up (IDC # 32691 , January 2005)

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This IDC study provides a review and analysis of the ISV programs of key vendors as well as guidance to vendors that are developing or redesigning programs or reviewing strategies in this area. "Programs designed to attract and nurture ISVs are steadily evolving and have become a significant focus for many key vendors. The need for scalable programs has necessitated the redesign of many offerings with a focus on targeted growth, corporate alignment, business enablement, and networks." — Julie Tiley, director, Global Software Business Strategies.

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