However, in my view, this model presents challenges for the ISV, primarily in managing customer relationships and navigating channel complexity. By operating through one or two intermediaries (the hyperscaler or a local partner), the ISV inevitably cedes some control over and proximity to the end customer.
Furthermore, while partner-involved arrangements simplify the transaction for the customer, they introduce a new layer of complexity for the ISV, who must now manage margin agreements, potential channel conflicts and the tax implications of an indirect sales structure, especially in international transactions.
The hyperscaler as the ecosystem enabler
As the ecosystem enabler, the hyperscaler provides the foundational infrastructure upon which ISVs operate. By leveraging their massive global customer base, I see hyperscalers strategically promote the marketplace with a dual objective: to increase customer loyalty and retention (stickiness) and to drive the cloud consumption generated by these ISVs.
