This is a fourth blog post on the topic of niche market opportunities for smaller ISVs. It may be useful to take a moment to recap where we have come to in this series. The first point we are trying to make is that smaller ISVs will do well to carefully consider niche market opportunities as they piece together a business plan. As we broadly noted in the first post in this series, niche markets may not offer an opportunity for meteoric growth, but, for businesses with software development expertise that has some track record of success, these markets can be expected to deliver attractive revenue.
The second point we made is that the actual level of competition for these markets among smaller firms is comparatively restricted. The reason why, in our opinion, is a trend, over the last several years, on the part of smaller ISVs to address the market for software application development services, without much more than simply a matching focus on the applications themselves. Of course, the driver for this type of product marketing was the aggregate extensive demand for software application development services from:
- Enterprise Business Looking to Contract, and even Outsource Systems Development
- Public Organizations (like the Federal Government here in the United States) After Much the Same Services
- and Healthy Demand for New Systems Development from Start Up Tech Ventures
As we see it, these three markets (largely as a result of the proliferation of Software as a Service, SaaS, offers from large ISVs) are presently contracting. We think it makes a lot of sense for smaller ISVs to eschew this services focus and, once again, look seriously at product development (including SaaS offers for highly focused markets).
Finally, we started to touch on why we think that heavily regulated industries are a good place for smaller ISVs to start their research for niche market requirements. Of course, competing to satisfy the broader industry needs (for example, for medical systems, or financial systems, or even legal systems) in any of these categories will not make much sense. After all, the large ISVs compete fiercely for this business. But niche requirements can still be won and are worth a serious look.
In the next post to this blog we will start to broadly sketch out a scenario around simply a module of the operations of a hazardous waste management business as an example of a niche in need of its own highly specialized automated systems.
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