Tackle gets its expertise working with more than 400 software companies to help them sell their software through Cloud Marketplaces such as AWS Marketplace, Google Cloud Platform Marketplace, and Microsoft Commercial Marketplace. This gives us unique visibility into how buyers think, and what we’ve seen is buyers flocking to purchase their software through these Cloud Marketplaces and sellers generating significant percentages of their overall revenue through these Cloud Partnerships.
We know some of that has to do with rapidly changing buyer preferences for digital buying experiences and flexible payment options (and some of this evolution is a result of maturing Marketplaces as well), but we’re also seeing a lot of buyer movement that we believe will only increase in the future.
Let’s dive into the three reasons why there’s such an uptick in Marketplace purchasing.
Buyers shift to the Marketplaces
There’s no denying it: today’s buyers are rapidly “rapidly shifting their focus to the Marketplaces for software procurement. In fact, Tackle’s State of Cloud Marketplaces 2021 report found that 43% of buyers say their top reason for purchasing through a Cloud Marketplace is to leverage committed cloud spend and that’s a 115% increase from last year.
Buyers are looking to be more efficient (more on that later), while also taking advantage of the volume-based discounts offered by the Cloud Providers. Software procurement can now be integrated into their (growing) cloud budget. This aggregation of spend to a single (or very few) providers is driving huge savings for buyers.
The second piece of the equation is that cloud is no longer just a concern for IT teams. Historically, the cloud budget was firmly in the court of IT, but Cloud (and the related Cloud budget) is now a top priority for companies. Because of this “democratization” of cloud budgets, new categories of buyers across an organization – from finance to sales and marketing – can (and will) make purchases through Marketplace. In fact, 58% of respondents in our 2021 State of Cloud Marketplaces Report with roles in sales, marketing, and operations said they had made software purchases through a Cloud Marketplace in the last year, compared to only 38% with those roles on our 2020 survey.
The line between what is a “software budget” and what is a “cloud budget” is becoming blurred.
CFOs, CEOs, and other C-suite stakeholders now have an interest in deciding where to spend technology dollars, and they’re all-in on cloud spending. The line between what is a “software budget” and what is a “cloud budget” is becoming blurred – and that is working in Software providers favor.
Bottom line: The combination of increased cloud spend and C-suite support is bringing new buyers with increased budgets aimed at making the most of cloud options.
Today, purchasing software is a painful process. You have to involve a bunch of people at your company, from those who are actually going to use the software to procurement, sourcing, legal, security (the new heavyweight champion for slowing deals down) and vendor management. That’s a lot of hands-on-deck just to purchase some software. Getting that initial software deal done, with a new vendor, can be even worse (enterprise buying cycles are typically no less than 6 months – under the very best of circumstances).
Sourcing software through an existing relationship with a Cloud Provider where you’re already spending money can speed up the process immensely. AWS, Google Cloud, and Microsoft all have Marketplaces where you can purchase software and add it to your existing monthly bill. Buyers are taking advantage of the speed at which Cloud Marketplace deals are done because they already have an established path to purchase. Notably, 42% of those surveyed in our State of Cloud Marketplaces Report indicated that “accelerate time to value” was a top reason to buy through Cloud Marketplaces..
We see many organizations leaning into doing their first deals through the established relationships they already have with Cloud Providers, and purchasing through Cloud Marketplaces has proven to be an effective strategy for getting deals done more efficiently.
Reduce the Load on Vendor Management/Legal/Procurement
Buyers are exploring ways to transform their businesses and get closer to their customers through digital experiences. What does it take to make that happen? It takes people and it takes software. Where will that software run? New software workloads are most likely to run in the cloud. At the same time, companies have to reduce vendor overhead. Everyone wants to do business with fewer vendors.
Buying through a Cloud Marketplace enables you to get the software that you need, while reducing the number of vendors you manage, as you would if you were buying these solutions one at a time.
As a buyer, you can source multiple software products on a single bill, so you’re not remitting payment to all those different providers. Some 36% of the respondents in Tackle’s State of Cloud Marketplaces Report note that simplifying the procurement process is a major reason for making software purchases through Cloud Marketplaces. It lightens the load on vendor management, procurement, sourcing – and, in some cases, legal as well.
These are the three key factors represent a perfect storm for vendors looking to sell their software with less friction and more upside than they otherwise could selling via alternative channels. We see Marketplace transactions gaining in popularity every day – a trend that will only increase over time. In fact, over the past few years, Tackle’s customers have processed more than $1B in transactions through the Cloud MPs. We expect to see Marketplace selling rapidly mature as more buyers and sellers become familiar with the opportunities presented and the superior buying experience offered via this strategic channel.
If you’re thinking about Marketplace as a strategy and want to dive deeper into how you can initiate this channel to strategically source your software purchases or if you’re looking for a way to jumpstart your Cloud revenue, reach out to us at firstname.lastname@example.org or join our weekly Cloud Marketplace Office Hours where we’ll be answering all your questions on Marketplace.