A software producer that is not owned or controlled by a hardware manufacturer; a company whose primary function is to distribute software. Hardware manufacturers that distribute software (such as IBM and Unisys) are not ISVs, nor are users (such as banks) that may also sell software products.

ISVs typically offer products that the primary vendor (i.e., IBM) does not offer, allowing clients of that vendor to round out their software needs. ISVs create price competition and also increase the pace of technology innovation in their markets.