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Why Do ISVs Need Appliances?

Julia Shih 0

ISV need appliancesDespite the rise in popularity of running software through the cloud and for ISVs to base their business models on selling software only to focus on core competencies, many companies are still choosing to deploy their software with a server appliance model. These server appliances, also called on-premise appliances or devices, are total turnkey solutions featuring software embedded on a server platform, validated as a total solution and shipped to end users. This solution model promises quick setup, easy installation and pre-validation for a true plug and play experience.

From security companies like McAfee who deploy server appliances for their SIEM, data loss prevention, firewall and advanced malware defense product lines, to networking companies like Riverbed whose SteelCentral product line provides network performance management and packet monitoring, software companies across various industries have found it advantageous to deploy integrated server appliance solutions. Even companies offering cloud products utilize integrated hardware platforms–Nutanix, winner of the Best of VMworld 2013 award for Private Cloud Computing Technologies for their Virtual Computing Platform, ships its converged infrastructure solution on a 2U server platform.

So why do software ISVs still choose to deploy integrated hardware products when it would seemingly require additional resources to manufacture, deploy and manage, requirements that may be outside of their software development expertise?

A survey of ISVs using an appliance model as part of their product strategy cite the following top reasons:

Total control of the customer experience1. Total Control of the Customer Experience—for many ISVs, part of the sales cycle includes a trial period in which the customers are able to test drive their software. Often, there will be minimum requirements for the software to run, but where the software can really showcase its performance and full capabilities is on validated, optimized hardware. By shipping a pre-loaded, pre-validated appliance to the customer as part of a Try & Buy program, ISVs are ensuring that their software will not only run, but perform optimally once it is set up at the customer site, limiting any potential frustration to the customer, poor performance due to hardware compatibility/capability, or operational burden on their tech support teams in getting the customer site set up properly for the trial. And ultimately, if the customer likes the product, it’s already up and running and embedded in the customer’s operations, so closing the sale is a mere issue of invoicing, lending an advantage to expediting the sales cycle.

2. Shortens Sales Cycles—MobileIron is a mobile-security company hot off a successful IPO in June, raising around $100 million off 11 million shares sold. Their product line including MobileIron Core, MobileIron Sentry and MobileIron Client is based on a Software-as-a-Service platform allowing enterprises to secure their mobile devices and content. They offer two deployment options for their platform—either as a cloud service or embedded on an on-premise device. For MobileIron, having an on-premise device was not only a major product strategy to have an easy-to-install platform that could plug into a customer’s corporate network and “be up and running in less than a day,” but it also had major benefits to the company’s sales strategy. “Having an appliance makes it easier to navigate the procurement process with large companies,” said Sandeep Chopra, Product Management, MobileIron. “With everything packaged in, there are less approvals to obtain to move forward with the project. Having an appliance product model reduces time to value.”

3. Additional Revenue—By including the addition of an integrated hardware platform to the software, ISVs can exponentially increase revenue streams for their product line including not only the total solution cost of hardware plus software, but additional revenue-generating licensing/support charges as well as upgrade programs for hardware upgrades.

4. Resource Efficiency—Some ISVs find creating and managing an AVL (approved vendor list) of compatible hardware platforms to be much more resource-intensive than managing an in-house developed line of appliances. Software companies using an AVL model often need to embed hundreds of drivers to ensure their application runs on a range of platforms from a wide list of vendors, with each platform requiring extensive validation testing before it’s approved. By developing a standardized line of appliance platforms, ISVs consolidate their compatibility testing and updates to a controlled product platform and ensure a plug and play experience for their customer base while efficiently managing their own internal resources.

5. Reinforcing Corporate Identity—Typically, appliances are custom-branded to help promote the company’s brand. This gives the company’s corporate identity a tangible presence in the data center that can be highly visible.

custom branding

6. Product Tangibility—for early-stage software startups, VC’s often steer software companies towards having an appliance due to the fact that the ISVs will have a physical and tangible product that they can deliver and demonstrate functionality.

Now You Want a Server Appliance Platform for Your Software—What’s Next?

ISVs that like the idea of deploying an on-premise server appliance but don’t want to divert resources away from software development, or companies that lack in-house hardware expertise, what are the options? For the most part, finding a full-service OEM/ODM manufacturer is the answer. These manufacturers should have the hardware expertise, extensive services and experience to help an ISV develop an optimized platform and even the logistics capabilities to deploy it to a global customer base. To decide whether an OEM or ODM manufacturer is the right fit for a particular software company, their key differences are:

ODM (Original Design Manufacturer)—these are companies like Dell and Supermicro who directly manufacture platforms. For software companies ordering large quantities of systems with a low mix of platform variety, working directly with an ODM will seem attractive for direct mass-production pricing and support. Drawbacks are that ODMs focus on low mix, high volume manufacturing so they may not be the right fit for a software company that has a more diverse product line, or if the software company is not ready to meet a required MOQ (Minimum Order Quantity) of servers per quarter. They also may not offer design flexibility as the platform choices are often based on their existing line of products, or may not offer a full range of OEM services such as customized test suites, revision control and Try & Buy program support.

Server OEM ManufacturingOEM Integrator/Manufacturer—these are companies who specialize in building custom appliance platforms and often bundle specialized OEM services. If they are an open-architecture integrator, they are able to design using a range of platforms from different vendors as well as a range of component providers, and integrate them into a custom-designed platform best suited for your specific software requirements. While pricing may not be the same as buying directly from an ODM, OEM integrators and manufacturers focus on total solution delivery and business value including and extending beyond the hardware, providing many value-added services such as prototyping/New Product Introduction (NPI) services, inventory/manufacturing services, custom design/branding, customized test processes, global support & logistics and compliance consultation/certification services. The range of services provided depends on the specific OEM partner, as well as what platforms they offer and their specific manufacturing processes.

Server OEM manufacturing process

When choosing an appliance partner, whether an ODM or OEM integrator or manufacturer, it’s best to have a good idea of your product platform needs and scale, and also what range of services are important to your platform build or deployment strategy.

Is low field failures and quality-control very important, particularly in ensuring builds throughout a product’s life cycle remain consistent?

You’ll need a partner with strong capabilities in OEM-specific manufacturing practices, test procedures and product life cycle management.

Are you new to deploying your product on an appliance and need a partner who can work with you to design an optimized platform for your specific software requirements and customer base?

You should make sure that your partner has strong platform design capabilities and offers NPI (New Product Introduction) services, and is also well-versed in both hardware and software validation and optimization.

Do you want to offer a Try & Buy program to stimulate sales and fast-track customer acceptance?

Look for a partner who can support Try & Buy programs which should include logistics services to work as an extension of your company to drop ship eval inventory and accept returns, as well as refurb or reverse logistics capabilities to take returned evals and recondition or remanufacture them up to your specific requirements to return them to the eval pool.

Do you want your product to stand out in the field with brand customization, from the bezels and faceplates of the actual hardware to the packaging, product documentation and logos?

Many OEM companies offer in-house creative services to help you design these elements.

Having an on-premise appliance model may not be the right fit for all software companies and products, but it can be a very efficient and productive way to increase your businesses revenue, fast track customer acceptance, reduce support overhead and ensure your product functions not just correctly, but optimally at customer sites. If you are a software company, ask yourself if an appliance model can take your company and products to the next level. If you are currently deploying your product on an appliance, take a look at the different services available from appliance manufacturers to make sure you are getting the most out of your on-premise platform.