Putting the channel at the heart of the cloud marketplace economy

The rise of the cloud hyperscalers is one of the defining tech trends of the past decade.

In a few short years Amazon Web Services (AWS), Google, and Microsoft have reshaped the technology ecosystem and transformed businesses’ IT infrastructure on a global scale.

Combined, the three cloud titans accounted for around $50 billion (67%) of the $74 billion global cloud infrastructure services market during Q4 2023, according to data from Synergy Research Group, who also found that the market had grown by 20% year on year.

Those numbers emphasise the size and might of the hyperscalers and are testament to their phenomenal growth.

The pre-cloud era, when on premises was the only game in town, feels like a lifetime ago.

Reshaping software procurement

An important pillar in the cloud revolution has been the rise of cloud marketplaces, with AWS Marketplace at the forefront as market leader.

For the unacquainted, AWS Marketplace is a digital catalogue with thousands of listings that makes it easy for end-users from enterprises to SMBs to find, test, buy, and deploy software that runs on AWS, ranging from cybersecurity solutions to artificial intelligence applications and everything in between.

These platforms provide a seamless way for businesses to discover, purchase, and integrate new technologies, often with just a few clicks.

With their streamlined procurement processes and extensive libraries of software and service offerings, cloud marketplaces have become an indispensable resource for end-users looking to modernise or refresh their IT stack.

It’s hard to overstate the convenience and efficiency of these platforms. They eliminate the need for lengthy procurement cycles, reduce administrative overhead, and offer transparent and predictable pricing models. For enterprises, this translates to faster time-to-market and the agility to adapt to changing business needs and market dynamics.

The rise of AWS Marketplace in particular is leading end-users to change their purchasing behaviour as they strive towards the pre-defined budgets and flexible pricing on offer, including the ability to leverage AWS credits and retire spend commitments.

It’s no exaggeration to say that in simplifying the user journey, AWS Marketplace has done for software procurement and deployment what its parent company, Amazon, has done for online shopping.

Against this backdrop, it’s no surprise that growth looks set to be maintained, with Canalys predicting that global sales of third-party vendor software and services through cloud marketplaces will hit US $45 billion by 2025, up 84% CAGR over five years.

Channel lens

So what are the implications of all this for the channel?

It’s fair to say that, in the early days of cloud at least, some channel companies viewed the hyperscalers and their cloud marketplaces with a degree of trepidation, or at least uncertainty. The fundamental concern was that AWS Marketplace and the rest would make it so easy for end-users to procure software that resellers, distributors and others would see their business impacted.

Thankfully, reports of the marketplace-induced death of the channel have proved to be greatly exaggerated.

In fact, the channel as a whole has arguably never been in better health and the cloud era has coincided with many channel players achieving consistent year on year growth and becoming increasingly strategic cogs in the tech ecosystem.

I’d even argue that the advent of cloud marketplaces has triggered a wave of innovation in the channel, with several distributors launching their own digital marketplaces in a bid to bring the same ease of use and simplicity to their partners. 

Wake-up call

While the cloud hasn’t proved to be the existential threat to the channel that some feared or predicted, I think it’s also true that as a sector we have been slow to wake up and see the marketplace economy for what it is: a huge opportunity.

The scale of this opportunity is underscored by recent Forrester research showing that channel partners selling in AWS Marketplace can close deals up to 50% faster, with a 234% return on investment (ROI) driven by strong margins.

Thankfully, from my conversations with peers and partners, there is a growing (if slightly belated) realisation that the best approach to the hyperscalers is to become a part of their growth story, positioning your business centrally in the ecosystem they’ve created. The way to do that is by building deeper relationships.

Turning data into insights

Data is the new currency in the digital age, and channel partners are alive to the need to unleash its full potential. 

Indeed, Westcon-Comstor’s recent Bridging the Gap research report found that 97% of channel partners see data as a vital tool as they transition to recurring revenue models based on software, services and subscriptions.

The cloud marketplace environment is significant here, because by analysing AWS Marketplace transactions, partners can identify trends and tailor their offerings to meet specific customer needs.

This data-driven approach enables partners to anticipate demand, optimise their inventory, and enhance customer satisfaction.

Growth catalyst 

Rather than viewing the rise and rise of AWS Marketplace as a threat, channel partners have a golden opportunity to capitalise on it and accelerate their own growth.

Looking ahead, I believe it’s vital that cloud marketplaces are viewed as a catalyst for channel growth and innovation.

By embracing this mindset, the channel can not only thrive in the era of cloud marketplaces but also play a pivotal role in shaping the future.