Marketplace transactions are gaining in popularity. We break down the three reasons why this uptick is taking place.
Tackle works with over 140 software companies today to help them sell their software through the cloud marketplaces like AWS Marketplace, Microsoft Azure Marketplace, and Google Cloud Platform Marketplace. Working with so many different software companies, we see a lot of deals happening, which gives us visibility into how buyers are thinking today, including their purchase patterns. We’ve seen buyers flocking to purchase their software through the Cloud Marketplaces and some of that has to do with the rapidly changing environment that we’re dealing with right now as businesses figure out how to operate in these unprecedented times. Although, to be fair, some of these processes have been evolving over the past few years as Marketplaces have matured. Let’s dive into the three reasons we believe we’re seeing such an uptick in Marketplace purchasing:
Expediting First Deals
In order to get a deal done today and to actually buy the software you want to buy, it’s a painful process. You have to involve a bunch of people at your company, from the people that are actually going to use the software, to procurement, and sourcing, and legal, and vendor management. That’s a lot of hands-on deck to just purchase some software. Getting that initial software deal done, with a new vendor, can be painful and take a long time (Enterprise buying cycles are typically no less than 6 months).
One way to speed that up is to source software through an existing relationship with a Cloud Provider where you’re already spending money today. AWS, Azure and GCP, all have Marketplaces where you can purchase software and make that part of your existing bill which you’re already paying every month. That’s a faster way to get those first deals done and it’s easier to use that already created, well-worn path. We see many organizations leaning into doing their first deals through the established relationships they already have with Cloud Providers.
Reducing the Load on Vendor Management/Legal/Procurement
When we talk to buyers of software, these organizations are talking about transforming their businesses and getting closer to their customers through digital experiences. What does it take to fuel that? It takes people, and it takes software. At the same time, companies have the remit to reduce vendor overhead. Everyone wants to do business with fewer vendors. Buying through a Cloud Marketplace allows you to get the software that you need, while reducing the number of vendors you manage, as you would if you were going and buying these solutions one at a time.
You can source multiple software products on a single bill, so you’re not remitting payment to all those different providers. It lightens the load on vendor management, procurement, sourcing…and, in some cases, legal as well. This has been another key driver of software purchases going through these Marketplaces.
Take Advantage of Committed Spend to Make Software Purchases Easier
Take a look at your software spend today. What do you spend? What are you buying? From whom? And then what are you looking to add? What’re the new purchases this year? Once you take a look at that to go and talk with your Cloud Provider and say, “We’re going to spend $20, $30, $40, $50, $100, $200 million dollars with you over the next three years. Let’s take a look at my software spend. How much of that might I be able to source through your Marketplace?” And then commit to that spend, and really benefit in terms of getting greater overall discounts with those Cloud Providers because you’re able to commit more.
We see that motion, again and again - both on the front end when contracts are being created, on the back end and during these contracts as they’re getting consumed over time. We’re talking to buyers, and a lot of software companies, and hearing that it’s easier to get a deal done to buy the software you want to buy through your Cloud Provider, because you have committed spend already dedicated there, and you need to burn it down.
These are the three key reasons that we see Marketplace transactions gaining in popularity today. A trend that will only increase over time, and will continue to see Marketplace selling as an excellent way for buyers to buy, and for sellers to sell. 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, reach out to us at email@example.com or join our weekly Cloud Marketplace Office Hours where we’ll be answering all your questions on Marketplace.Back to the Blog