CTO of Softengi with 30 years of experience in software development, business applications implementation and digital strategy creation.
Independent Software Vendors (ISVs) have long been the architects of enterprise technology. Their products digitized business functions, automated processes and delivered structured workflows that organizations could depend on. Traditionally, the success of an ISV is tied to the sophistication of its features, the quality of its user interface and the ability to integrate with surrounding systems. However, this foundation has already started to shift.
Traditional ISVs Are Losing Their Edge
Millions of people use LLMs daily, interacting with technology through natural language, prompts and intent rather than structured menus and forms. This has completely changed the way end users perceive software. They no longer want to enter dozens of values across multiple fields, navigate menus and remember process sequences. Instead, they want to state their intent and let the system execute. For example, in finance software, users can upload an invoice document and the system automatically pre-populates all relevant data, eliminating the need for manual entry of every invoice field.
GenAI accelerates software development to the point where many functionalities can be re-created swiftly and at lower costs. A clever prompt engineer and a small development team can reproduce capabilities that once took ISVs months or years to refine. A dual pressure from users expecting intent-driven interactions and rivals replicating features at unprecedented speed is eroding the value of traditional ISV offerings.
The ISV Crossroads: Evolve Or Fade Away?
Customers want results, not just software or features. They want invoices reconciled, shipments tracked, compliance reports submitted and financial closes completed with minimal manual effort. ISVs can either continue selling features and interfaces that are becoming commodities or transform into providers of outcomes.
ISVs As Business Process Outsourcing (BPO) Providers
Moving into the territory traditionally occupied by service providers, ISVs take full ownership of a business process. It handles payroll management rather than just providing software.
It ensures compliance by accurately filing reports on time, not simply licensing a system and is characterized by end-to-end accountability. The ISV becomes a process owner, entering into service-level agreements where payments are linked to outcomes rather than the number of licenses.
• Build strong customer stickiness through deep integration.
• Emphasize trust, compliance and domain expertise.
• Switching providers becomes complex and risky.
• ROI is clear and measurable by outcomes, not features.
• Ideal for regulated industries like healthcare, finance and government.
However, the BPO path requires ISVs to take on operational complexity, including staffing, process management and liability. Profit margins can shrink unless automation is heavily leveraged, as human involvement tends to scale linearly with the number of customers. ISVs have to compete with established global BPO firms that already dominate many markets.
This approach is most natural for ISVs with deep domain expertise and customers willing to relinquish operational control in exchange for guaranteed outcomes. It transforms software vendors into service companies, blending technology with execution.
ISVs As Agent Platforms
The second transformation path allows ISVs to remain primarily technology-driven, but with a fundamental shift in how they deliver value. Instead of outsourcing processes, enterprises retain control by deploying AI agents that execute tasks autonomously. The ISV becomes the provider of the platform, knowledge and governance required for agents to operate.
In this model, agents are more than copilots—they are digital operators. They interact with databases, APIs and workflows, automating tasks that were once performed manually. A procurement agent, for instance, could receive a supplier invoice, validate it against purchase orders, update records and route exceptions for review without human intervention.
• Scales effortlessly with no marginal labor costs.
• Enables massive ecosystem growth through open platforms.
• Allows partners and customers to build and share their own agents.
• Creates strong network effects and ecosystem lock-in.
• Offers a competitive edge with domain expertise, compliance and governance.
Building the orchestration environment in which agents collaborate, recover from errors and comply with policies is a technically challenging task. Enterprises will only adopt such agents if they are fully auditable, explainable and subject to human oversight. Additionally, the competitive landscape is crowded, with AI-native startups and hyperscalers competing to capture enterprise workflows with their own agent frameworks.
The AI agent path suits ISVs with modular architectures, strong APIs and developer communities. It enables them to remain technology providers while capturing value through outcome-based automation.
Roadmap To Transformation
Both transformation strategies move ISVs toward outcomes, with the difference lying in the level of responsibility. In the BPO model, the ISV owns the process and delivers results directly, often with greater operational overhead. In the Agent Platform model, the ISV empowers agents to deliver results inside customer environments, keeping clients in control while scaling through software. Each transformation approach implies three phases:
Foundation
ISVs capture knowledge from code, APIs, workflows and documentation. They integrate simple copilots into their applications, demonstrating intent-driven interaction to customers. ISVs built trust through governance structures, including logs, auditability and role-based approvals.
Expansion
ISVs deliver specialized agents or managed services for high-value use cases. They expand beyond their own applications, integrating across partner ecosystems. Measurable ROI and building customer confidence in automation gain focus.
Platformization
ISVs either industrialize BPO operations with heavy automation or launch agent platforms and marketplaces. Monetization models will shift toward consumption- and outcome-based pricing to build defensible differentiation through domain knowledge, compliance and trusted ecosystems.
Conclusion
In a new reality where the widespread use of LLMs has fundamentally altered what users expect from software, ISVs have to transform from software providers into outcome enablers. They can achieve this by becoming BPO providers, taking ownership of processes or by becoming Agent Platforms that leverage AI to operate within customer systems.
Even if an ISV chooses the BPO transformation path, it can still leverage AI agents to enhance efficiency. These agents can act as internal accelerators, ensuring that even a service-oriented BPO model remains technologically advanced and competitive. Neither path is easy, but both are preferable to clinging to a product model that is rapidly being commoditized.
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