Cloud isn’t “just a technology”- it unlocks the value of other tech, data and ecosystems to drive growth and innovations.
Let’s take a look how cloud goes mainstream, why and how much companies spend via cloud marketplaces and what do you need to win there.
Image: EY
Cloud-first goes mainstream
Today 55% of companies are “progressing on a cloud-first strategy” (from 40% in 2022) according to the recent research (Flexera).
2/3 of SMBs and 50% of Enterprise data and workloads are already in the public clouds.
Companies move sensitive financial/customer data to the cloud
18% - moving ALL corporate financial data to cloud/SaaS (from 11% YoY)
17% - moving ALL sensitive consumer data to cloud/SaaS (from 13%)
50%+ consider moving to the cloud at least SOME sensitive consumer/financial data
Cloud spend is growing despite headwinds
45% companies reported their cloud usage/spend is HIGHER than planned, while another 45% said that their cloud usage/spend remained within the plan.
In 2022 public cloud spend was already 18% over budget on average (up from 13% YoY), still 30% of companies expect cloud spend further increase in 2023
Shift to cloud marketplaces in 2023
As companies spend more on cloud, they increasingly buy 3rd party SaaS via cloud marketplaces too. These are catalogs of products from 3rd party vendors that you can buy with your AWS, etc. cloud credits.
“A successful cloud marketplace is a trifecta of value. Customers can more easily manage and procure products; software and app vendors gain a very efficient route to market and scale and cloud providers drive more consumption.” - Dai Vu, Managing Director, Cloud Marketplace & ISV GTM at Google Cloud.
Today:
63% of enterprise companies already buy SaaS via marketplaces
35% of them spend 20%+ of their technology budget via cloud marketplaces
Source: Battery Ventures State of Cloud Spending March ‘23
Importantly, 32% of CXO expect to spend MORE with cloud marketplaces in 2023.
Top 3 reasons why they prefer to buy this way:
Standardized Onboarding / Integrations
Better IT Governance and Controls
Internal Budget Allocation /Access
Crucially, all major cloud providers made their marketplaces the center of their GTM strategy, making it easier and more appealing for companies to buy and sell there.
Top Azure customers, for example, are onboarding 10+ third party solutions, as MSFT counts purchases via the marketplace towards Azure Cloud Provider Consumption.
MSFT recently launched the ISV Success Program to incentivise SaaS companies to list transactable offers in their cloud marketplace and to help them become more successful there.
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SaaS goes to cloud marketplaces
As the opportunity to grow via cloud marketplaces is becoming obvious, more SaaS companies are trying to leverage it. Among them are well-known names, like Crowdstrike and Palo Alto Networks. The latter is growing 300% YoY via cloud marketplaces and expects this channel to be its biggest source of revenue growth going forward.
Listing a transactable offer in a marketplace of one of the cloud hyperscalers opens 3 paths to market: [based on MSFT Azure example, but it’s very similar for AWS, GCP]:
1. Sell direct to consumer
MSFT has ~4M monthly visitors to their marketplace, who may discover and buy your product (more on discovery below).
2. Sell via partners
MSFT has 90K so-called Cloud Solution Providers who provide Azure and other cloud services to end customers. Customers buy from CSPs, not from MSFT directly. When you list on cloud marketplace and open your product to selling via partners, these partners can sell solutions to customers and get a commission - all conveniently managed and paid via marketplace.
3. Co-sell with hyperscalers sales team
MSFT has 35K field sellers that can potentially help introduce your product to new customers. These sellers have a quota they need to meet and are incentivized to sell some 3rd party solutions to customers. They also have CXO-level relationships across both technology and LOB in the world's biggest companies.
In 2021 MSFT closed 170K deals and generated $XXBn in revenue for partners that sold on the commercial marketplace.
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Crafting winning strategy with cloud marketplace for SaaS businesses
GTM via cloud marketplaces helps to reach more customers, simplify sales and unlock new enterprise buyers/budgets.
To sell via marketplace you need to
List your product
Offer Trials to potential customers before they buy
Create transactable offers to sell via marketplace with standard terms. As mentioned, hyperscalers are now focusing on increasing the number of transactable listings to unlock marketplace adoption.
Create private offers to sell with special terms to specific customers. This is now simplified by hyperscalers - you take your public marketplace listing, create a copy, set the pricing, adjust T&C and just send it.
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It starts with a marketplace strategy
Your strategy needs to be supported across functions, including CXOs, partnerships, engineering, marketing, CS, etc.
It’s too early to rely on a cloud marketplace discovery engine to bring leads automatically. Getting traction via cloud marketplaces requires active relationship management, marketing push, bringing/engaging partners (and usually customers too) to start transacting there. It’s a mid to long term strategy with high potential upside, when/if it works.
It’s therefore highly advisable to have a dedicated business resource to drive sales via the marketplace, ideally someone with experience of working with hyperscalers.
“How to drive co-sell?”
This is the 1 question that companies bring to hyperscalers. Everyone wants to take advantage of the tens of thousands of sellers and relationships that cloud hyperscalers built with clients.
You need to create a very crisp Better Together story on how your product fills the gap or expands their offerings. It’s key to explain how selling together can help them sell more of their own services.
Register deals even if you don’t need help
While you better react fast on the deals that the marketplace brings to you, you can also register your potential deals to help you build traction with the hyperscaler co-sell team and make sales motions bi-directional.
As you discover new business opportunities, you can register them even if you don't need hyperscaler’s help in closing these deals. Doing this builds traction and gives them better understanding of what industries, customer segments, geos you're selling into, and it signals to them that you're finding traction within your addressable market.
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