Improving technical competencies and selecting the right partners are top concerns for ISVs, which align with challenges that channel partners face, according to the Cloud Technology Alliance’s Partnering in the Cloud 2015 ISV Report.

Released on Wednesday, the report looks at Cloud Technology Alliance Report Looks at how ISVs work with the channel to bring solutions to market. Ninety-two companies responded to the survey, with the majority of respondents in North America working with the channel for three years.

Challenges in ISV and channel partner relationship

According to the report, channel partners working with ISVs are most concerned with improving technical competency of vendors’ solutions, selecting the right vendors, and improving how they sell vendors' solutions.

The biggest misalignment between ISVs and channel partners is channel conflict with direct reps, with 11 percent of channel partners surveyed saying this was one of the top challenges, with only two percent of ISVs identifying it as a key challenge.

The report suggests that in order to better align vendor and channel partner needs, proper channel managers need to be in place to handle issues such as the need for better business planning, training and forecasting.  

Pricing models, partner types differ between Microsoft and Google ISVs

Sixty-one percent of ISVs offer free trials of their product to go to market and 16 percent use a freemium pricing model. The majority of respondents price on a per-user basis. Slightly less than half (49 percent) of respondents have a referral program, with Microsoft ISVs leveraging referral partners more often.

Google partners are more likely to leverage cloud service providers (46 percent), while 33 percent of Microsoft partners leverage cloud service providers. Twenty-six percent of respondents take their solutions to market through managed service providers.

Forty-seven percent of ISVs receive less than 25 percent of their revenues through channel partners, according to the report. Forty-five percent of Microsoft ISVs receive between 25 and 75 percent of revenues through channel partners.

Partners: expectations and evaluations

The majority of ISVs work with less than 25 partners. Google Apps partners work with less than 5 vendors while Microsoft vendors typically work with 6-10 vendors.

The report notes that while channel partners are typically very good at evaluating vendor solutions, only 60 percent of the ISVs surveyed review and cut nonperforming partners. Only 14 percent do this systematically. Fifty-four percent of Microsoft ISVs report to review their channel partners’ performance while 65 percent of Google ISVs do so.

In terms of ISVs’ expectations of their channel partners, only 36 percent of respondents expect channel partners to be self-sufficient in closing business. When it comes to closing leads, 38 percent of respondents said partners are responsible for qualifying leads.

Solution deployment typically falls on ISVs with only 31 percent of respondents expecting their partners to deploy solutions at customers’ sites. Thirty-three of ISVs expect channel partners to support and bill customers.