AWS Marketplace: Game, Set and Match?

a board of a Monopoly game | The AWS marketplace monopoly: Win or Lose?

Hyperscaler marketplaces are consolidating spends for end-user businesses, so what role do partners play in this gameplan?


Cloud marketplaces have seen exponential growth in recent years, fast becoming the first choice for many customers buying software, applications and services. Currently driving this momentum are the global hyperscalers, which have positioned their marketplaces as a core component of their go-to-market strategies.

Amazon Web Services (AWS) is no different. Billions of dollars’ worth of software licenses are sold through the AWS Marketplace annually. AWS Marketplace connects customers with more than 3,500 independent software vendors (ISVs) and 1,300 registered consulting partners alongside more than 3,000 professional services products. When it comes to strategic growth, AWS marketplace is the jewel in the hyperscaler’s crown – the winning monopoly holding.

Customers are excited about the ability to consolidate all of their SaaS vendor relationshipsTyler-Carlson, Salesforce or infrastructure vendor relationships under one umbrella of spend – Tyler Carlson, Salesforce

“There’s been immense excitement; this path of procuring technology through hyperscaler cloud marketplaces [has] taken off in the last couple of years. You see the success of companies like Snowflake, Palo Alto Networks and CrowdStrike that are doing a lot of business through marketplaces, but there are also customers excited about the ability to consolidate all of their SaaS vendor relationships or infrastructure vendor relationships under one umbrella of spend,” explains Tyler Carlson, VP, business development and strategic partnerships, Salesforce.

AWS is adamant that partnering and co-selling is a critical component of its marketplace model. But it could be argued that those partners face both competitive threats alongside opportunities. In theory, customers could buy directly from AWS, bypassing partners. So where does that leave consultants and system integrators who reap healthy profits from advising customers on their tech purchases?

Collect wins when you pass go-to-market

At the recent AWS re:Invent customer and partner event in Las Vegas, AWS announced it was expanding its Marketplace ecosystem with new agreements with the likes of Salesforce and ServiceNow.

“Launching on the AWS Marketplace is really for us about a new channel to market,” explains Carlson. “The Salesforce products were in a direct sales organization primarily. By making our products available on the AWS Marketplace, we can tap into AWS’ network of customers that have committed spend with AWS and [are] able to use that to purchase Salesforce products.”

If you look at the AWS partner program, the way that it’s structured is based on aPeter Bryant, Canalys profitability framework based around solving customer problems, rather than just getting as much resell done as possible – Peter Bryant, Canalys

Arguably, these types of agreements could be viewed as a precursor to customers being able to configure and buy SaaS services directly – which could have significant implications for AWS’ partners. But that view doesn’t account for the increasingly important role that partners play in this go-to-market model.

“If you look at the AWS partner program, the way that it’s structured is based on a profitability framework based around solving customer problems, rather than just getting as much resell done as possible,” says Peter Bryant, research analyst at Canalys.

“For every dollar of AWS infrastructure that exists, there is $6.40 hypothetically that can be attached as services revenue. GSIs and SIs are the most likely to be able on their own to achieve the majority of that $6.40 without any external support.

“They can go in and make your digital transformation strategy, but then it can also work with ServiceNow or Salesforce to implement that and design specific customer-centric solutions rather than just getting something off the shelf.”


AWS-enabled teamwork with partners

There are a lot of partners who have been really successful… From our perspective, we wantChris Casey, AWS to make sure that we’re building for all different partner types within the AWS Marketplace as that vehicle – Chris Casey, AWS

Chris Casey, director and general manager, industry technology partnerships, AWS, unsurprisingly doesn’t agree that cloud marketplaces pose a threat to partners.

“There are a lot of partners who have been really successful… Whether that’s through distributors or channel partners and systems integrators and GSIs. From our perspective, we want to make sure that we’re building for all different partner types within the AWS Marketplace as that vehicle to make sure those transactions are as streamlined and efficient as possible.”

The fact is that all three hyperscalers are actively investing in enabling vendors on their marketplaces to sell through and with partners. AWS has led with models such as Channel Partner Private Offers (CPPO), which allow vendors selling on the marketplace to extend discounts to their partners. At AWS re:Invent, AWS announced a reduction in fees for private offers for partners selling solutions on the online marketplace.

“The reduction of the tiering is to encourage larger deals; it’s all designed to help that co-selling piece,” explains Bryant. “When you look at the way GSIs operate, the point of difference they have is being able to build these bespoke solutions. Having marketplace structures that facilitate their selling and co-innovation to create those bespoke solutions are clearly important to that.”


Offering a choice of tech real estate

Increased transparency will lead to better information for Amazon to serve their customers;Nishita Henry, Deloitte on pricing, what folks are gravitating towards, the combination of products [purchased] to create the solutions they need – Nishita Henry, Deloitte

Far from being worried about the threat of customers potentially going it alone, Nishita Henry, global chief commercial officer (CCO) for Deloitte’s AWS relationship, shares her excitement about the AWS Marketplace. Indeed, the firm recently signed agreements in the US and Australia to be Marketplace partners.

Alongside streamlining procurement and creating faster sales cycles, Henry said customers appreciate that any purchases of Salesforce, ServiceNow or any other third-party software vendor counts against their AWS committed spend. The ability of enterprise customers to “burn down” their upfront committed cloud spend with the hyperscalers using marketplace purchases is a huge driver of growth.

“It’s a double win,” she says, also noting that the AWS Marketplace allows “better data and flexibility to understand who’s buying what, how, where, when”.

“The increased transparency will lead to better information for Amazon to serve their customers. Better information on pricing, better information on what folks are gravitating towards, better information on the combination of products clients are purchasing to create the solutions they need.”

It represents a big opportunity for SIs and GSIs to enhance the technology with their servicesBob Breitel, IBM offerings and help clients solve critical business challenges – Bob Breitel, IBM

Elsewhere, Bob Breitel, global managing director, IBM AWS Partnership, comments that AWS Marketplace “represents a big opportunity for SIs and GSIs to enhance the technology with their services offerings and help clients solve critical business challenges.”

He explains: “We see many clients interested in cloud marketplaces to help them draw down against their cloud commitments and streamline their purchasing. Marketplaces are also a great way for IBM to reach new clients. We will continue to offer clients a choice to buy on marketplaces or through their traditional buying routes.”

Breitel says that “a thriving ecosystem is critical in helping our clients realize its potential with speed, scale and in a responsible manner. Systems integrators and consultants will play an important role in its adoption.”


Customers still need partners’ skills and know-how

On the potential threat to the business from AWS Marketplace, Deloitte’s Henry maintains that Deloitte’s value is its depth of knowledge on a client’s business, industry and sector, and its ability to bring a set of best practices around the use of technology.

“I actually think this is wonderful for organizations like ours because it helps streamline procurement processes for the tech while still being able to spend the time and energy figuring out the right services that are needed to get the tech to work for them,” she says.

Henry has hit the nail on the head regarding partners’ concerns they will be dropped by customers from the cloud marketplace purchasing process. Partners bring value that is still in great demand from customers.

That’s not least because most enterprise deals involve complex sales processes and negotiations, often with multiple partners. And as more complex technologies become available on marketplaces, customers are seeking expert partners to help them discover, procure, deploy and manage these technologies.

Therefore, the professional services skills of partners like Deloitte remain critical, as does their ability to support customers throughout technology lifecycles.

“It allows solutions to be pre-configured and sold on the marketplace, but that solution will never be a 100 percent fit for any client,” says Henry. “The solution still needs to be customized; it still needs to understand the nuances of their business. It still needs to interact with the data in their organization that oftentimes isn’t ready for that solution. So, there is an enormous amount of work still to be done there. And what this allows is the focus on getting it right, versus trying to procure software.”

SIs to hold more cards for customers

Moving forward, for Canalys’ Bryant, cloud marketplaces give SIs the opportunity to effectively take up more essential offerings, running more of the happenings of the marketplace monopoly game.

“Oh, you need this specific business problem solving? Let us bring everything together and package it in a solution, create that private offer and we’ll click buy for you,” Bryant reenacts.

He adds that there are also upselling opportunities for further consulting and managed services. SIs can then introduce solutions from third parties like Salesforce and ServiceNow, coordinating the process and running it through their own practices.

“It’s a great opportunity for them to control that narrative, which is why that advisory piece is so important, because it sets the digital transformation strategy as a whole. You can get very specific in terms of the solutions that you’re able to sell to those end customers and as long as the customer sees the value in that, there’s no threat to [the partner’s] business.”

The fact is that a third of marketplace transactions will involve partners by 2025, with AWS Marketplace already seeing 30 percent of marketplace transactions involving their partners. While the concept of cloud marketplaces may seem counterintuitive to partners, their services will continue to be in demand – and they can unlock significant new revenue streams – as long as they continue to provide value to customers.