After all these years in the industry, I still struggle to understand with precision the distinction between an ISV, a VAR, OEM, and an SI. These terms are used generously in any industry especially in the realms of sales and marketing.

With this post, I intend to settle my confusions once and for all.

With my little research I realized that the lines between these terminologies are blurry. As much as we try to classify companies, expecting that they lie in one category or another, they may have activities that fit in more than one category.

Independent Software Vendors (ISVs)

The acronym seems to be most often used within the Microsoft ecosystem, so it carries somewhat of a Windows-centric connotation. But that’s not really part of its definition.

An ISV creates, markets, and sells software products. Consulting shops are not ISVs, although an ISV sometimes does consulting work.Value-added resellers (VARs) are not ISVs, although an ISV sometimes resells stuff from somebody else. In an ISV, you have to envision the product you want to build and take a risk that somebody will still want to buy it by the time you get it built. If you don’t have a software product, you are not an ISV.
Value Added Reseller

A value-added reseller (VAR) is a company that adds features or services to an existing product, then resells it (usually to end-users) as an integrated product or complete “turn-key” solution. This practice occurs commonly in the electronics industry, where, for example, a VAR might bundle a software application with supplied hardware.[1] [2]
The added value can come from professional services such as integrating, customizing, consulting, training and implementation. The value can also be added by developing a specific application for the product designed for the customer’s needs which is then resold as a new package. VARs incorporate platform software into their own software product packages.[3]

Original Equipment Manufacturers (OEM)

OEMs are manufacturers who resell another company’s product under their own name and branding. While an OEM is similar to a VAR (value-added reseller), it refers specifically to the act of a company rebranding a product to its own name and offering its own warranty, support and licensing of the product. The term is really a misnomer because OEMs are not the original manufacturers; they are the customizers

System Integrators

SI (System Integrators) are companies that link together different computing systems and software applications and make them “talk” to each other. By doing so, for example, a CAD software bought from one company, CAM software bought from another company and PDM developed in-house can communicate to each other: CAD can send directly the data to CAM, and PDM can extract and keep all the necessary data.