It’s no secret there’s a lot going on in the world today. I’m using words and phrases like “geopolitical” and “macroeconomic environment” like I’m still in my sophomore year at Penn State (and that was a loooong time ago).
The news is, well, dark — or at the very least cloudy — everywhere we turn. None of us have heard the word “layoffs” in quite a while and now we hear it every day. Budgets are tightening or being cut. Headcount and growth planning are scaling back. Scrutiny is occurring where, weeks ago, there was no scrutiny at all — just unbridled enthusiasm, free capital, and funding from the heavens. However, we saw something similar not too long ago and I think it taught many of us a lesson that is now giving the team at Tackle quite a bit of comfort — despite uncertain times ahead.
So what was the lesson?
What 2020 taught us about cloud spend
Flash back to the Spring of 2020. Talk about fear and uncertainty. No one knew what the future held, how long lockdowns would last, or when our kids would be allowed to return to school. For those of you with physical offices, you wondered when you’d be going back. For a few months there, companies really freaked out. Spending halted. Hiring halted. The party line became: “No new purchases!” “No new vendors!” “No new ANYTHING!” except for productivity tools, security tools and other things that would help us work in new ways and do so as securely and as seamlessly as possible. COVID knocked all of us for a loop.
But we saw some interesting patterns in the software world: cloud spend didn’t just continue, it increased almost unabated. The march to the cloud equaled efficiency, scalability, freedom from physical constraints, and, most importantly for software vendors of ALL types, another way to win deals and gain access to budgets.
Today, we are seeing much of the same thing. I recently spoke with a prospect (a CRO at a growing software company — let’s call him Tim) who told me the reason he’d reached out to Tackle was because he was on a call with a large financial institution that was very interested in buying his company’s software but the only budget they had was “Cloud Budget.” The prospect literally said, “Making this purchase would be so much easier if I could buy you on my AWS bill.” Turns out we’d talked to Tim about 6 months ago and he was waiting for a signal from his buyers that they want to buy via the Cloud Marketplaces.
Well, here it was.
Tim’s prospect told him that the only significant cash available was cash being spent on cloud-related expenditures.
Enter the Cloud Marketplaces.
Cloud Marketplaces are key
If you’re unfamiliar with Cloud Marketplaces (such as AWS, Google Cloud, Microsoft), these are veritable virtual shopping malls of software, available to purchase, if you are a customer of the Cloud Provider.
Better yet, the cost of the third-party software being purchased through one of these Marketplaces ends up landing on the buyer’s cloud bill. In fact, one of the key value propositions for buyers who purchase software through Marketplaces is the ability to land new software on a pre-existing bill.
This can greatly reduce time spent in Vendor Management, Procurement, and Legal (full disclosure: I said “can.” Sometimes all of those things still take more time than you’d like). The other benefit? Your buyer can burn down the spend they had committed to the Cloud Provider by purchasing third-party software through the Marketplace. According to Tackle’s 2021 State of Cloud Marketplaces Report, 43% of buyers say their top reason for purchasing through Marketplace is taking advantage of their committed spend with Cloud Providers.
But why is that important?
The services Cloud Providers offer are critical and the spend dedicated to them is growing, even in a down economy.
What we learned during COVID was that it made a TON of sense to get as close to your buyer’s wallet as possible, if you’re a software provider. And where was their wallet parked? With AWS, Google Cloud, and Microsoft. These Cloud Providers have become utilities. The services they provide are critical and the spend dedicated to them is growing, even in a down economy. Gartner estimates public cloud spend will hit nearly $400B in the next year, a 20% increase over 2021. So, if I, as a buyer, can commit to spending MORE with the Cloud Provider, guess what?:
- I get discounts on the stuff I was already going to buy anyway.
- I can source the renewal of software I already use through the Cloud Provider’s Marketplace, allowing me to agree to spend even more and improve my discounts even further.
- I’m also consolidating my vendors and my payments. I pay AWS, then AWS pays my software vendor. That’s a lot fewer bills for me to pay and a lot less overhead (read: efficiency).
And, according to our State of Cloud Marketplace Report, 83% of buyers said they are likely or extremely likely to purchase through the Marketplace in the future.
So now, more than ever, is the time to explore selling your software via the Cloud Marketplaces. It doesn’t matter if you sell Marketing Automation tools, Security tools, App Dev tools, or Business Productivity tools. Your buyers are there. Meet them where their budget lives.
Read More: 3 Reasons Buyers are Flocking to Cloud Marketplaces
How sellers leverage Cloud Marketplace
Another not-so-hidden perk to leveraging Cloud Marketplaces is the ability to tap into their sales teams and extend your reach. The sales teams at the Cloud Providers get paid when your software sells, so there is a strong incentive for them to co-sell with software companies that have innovative, interesting, differentiating offerings.
Read More: Co-selling 101 for Startups: Stand Out in a Crowded Field
But it’s not as easy as “show up and they will sell for you.” There are myriad programs to leverage, qualifications, preconditions, and, of course, enablement tracks that are necessary to exploit this opportunity to the fullest. But the best, smartest, most efficient software companies are working this flywheel of a system to some pretty incredible results. I’d also argue the best and most successful companies are leveraging the Tackle Platform and our knowledgeable teams to help propel them to success quickly, with the lowest amount of overhead possible.
Learn More: Get Ready to Master the Cloud Marketplaces With Tackle as Your Guide
Are we in a recession? How long will this downturn last? Should I be scaling back or doubling down? There’s a ton of uncertainty around, but the one thing we know for sure is: You can’t save your way to greatness. You can make smart financial decisions that will help ensure you don’t frivolously burn precious dollars, but you’ve got to generate revenue as cost-effectively as you can, which, in the world of Cloud Marketplaces, is the name of the game.
To see how Tackle can help you get listed and scale your Cloud Marketplace revenue, schedule a demo.