HarmonyPSA Blog

The latest news and insights from the HarmonyPSA team

PSA trends for ISVs

Posted by HarmonyPSA on Dec 5, 2016 10:54:26 AM

One thing we know from our enquiry stream is the imbalance between MSPs and ISVs looking for PSA solutions.

MSPs are an established market, actually quite a mature market in the US and increasingly so here in Europe and elsewhere. They knew they needed software to book problem tickets to and as that drove their income, it was natural to develop PSA tools targeted at them. They also prefer to work for others instead of writing their own solutions.

ISVs on the other hand are a very immature market for PSA vendors and it has puzzled us why there should be such a difference in approach between the two major sectors of the technology supply industry.

However, following some conversations on a related topic, now we think we know why.

Let’s look at what’s been going on in the ISV world over the past 20 years. Back in the day when I worked in investment banking, we always bought software on a perpetual license (and often enterprise) basis and that had been the case since commercial software became a thing you could buy in the 60s. Later it became fashionable to switch this to a fixed-term basis, but the core concept remained the same.   Now, consider what a company that sells perpetual licenses with support needs to operate:

  • A CRM system;
  • A timesheet system;
  • A ticket system; and
  • An accounting system

The integration downstream from the CRM system is irrelevant as new customers are rare as orders tend to be large and infrequent. Timesheet-based billing is largely manual and deferred revenue modelling is static enough to model in the accounting system or on a spreadsheet. So, no need to put this all in one place, and so little need for a PSA market delivering tools to ISVs.

But, the world has changed forever.

These days it is increasingly difficult to find perpetual licensed software to buy. Software is more commoditised and so can be offered for less money. Unlimited-use deals are equally rare, named users have become the norm. Because of the fall in unit price and the (often cloud-based) term licensing model, license numbers change much more frequently, driving the need for integrated CRM/order management/contract management solutions. Also, contract profitability becomes more important and this (to get clean numbers) requires support software, contract management and timesheets to all be in one system. The variable nature of the license base drives the need for contract management to accounting integration. And so, the ISV market needs PSA tools, but ones that do this effectively are very hard to find as the world is still dealing with the change and the supply side has not caught up yet.

So, we have an immature PSA sector for ISVs and hundreds of ISVs writing glue between old systems and local end-user models to try to handle the complexity of today’s license models.

At Harmony we understood this trend many years ago and set about writing software that would deal with the emerging world. So, there is no longer the need to struggle with poorly coordinated point solutions, the new best of breed is an company-wide solution that pulls your entire business together.

Steve Duckworth, CEO

Tags: BUSINESS, cloud licensing, ISV trends, psa for software companies, SOFTWARE BUSINESS, software licence control

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