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The rise of the hyperscaler clouds (e.g. Amazon Web Services, Microsoft Azure, Google Cloud Platform) has changed how many organisations work. In addition to providing a basic platform for organisations to install and run their own applications, these platforms have created a whole new environment of third-party services with online marketplaces, that can be accessed by customers directly from within the cloud platform itself.

The way that such offers are made has also changed; gone are the days where the service owner had to do all their own marketing via the ‘dead-tree’ press, direct marketing, or events. Instead, each of the hyperscalers have introduced their own online marketplaces, where those offering services can sign up and fight their battles directly against one another in the cloud.

Such marketplaces are growing rapidly and give end-users a means of accessing services (hardware and software) in a way that makes a growing amount of sense to them. When it comes to software services, the majority are easy to commission, with many of them offering free trials. They come with standard contractual agreements, making life easier for those who do not want to wade through reams of legalese and back-and-forth of “can we change this?”

Most are simple plug-ins allowing customers to turn the functionality on – and then turn it off again if it ceases to meet their needs. As with most cloud services, these services can be expanded and contracted, with more users being added or removed as the customer’s needs change. Billing is often carried out via existing invoicing held with the hyperscaler itself – again, simplifying how an organisation deals with its IT spend.

Cloud marketplaces growing in popularity

Indeed, Quocirca research carried out in early 2021 shows that 76 percent of respondents have used a cloud marketplace to buy technology solutions (such as PCs, tablets, app services). The research notes that smaller organisations are the ones more likely to have made a switch to cloud marketplaces, avoiding the need for individual contract negotiations and other costly complexities.

AWS and Microsoft Azure are leading the charge to capture as much of the online marketplace opportunity as they can. Rather than just provide a basic portal and search capability, the two hyperscaler companies offer much more rounded services to those wanting to place their offerings into the cloud.

For example, Microsoft offers an additional service beyond its basic Azure Marketplace and provides the capacity for business services to be packaged and offered alongside software offerings. An MSP that provides consultancy services can use Azure Marketplace as an environment to make specific offers to prospects that are then dealt with via Azure when it comes to usage monitoring and billing. AWS has a similar offering with its Professional Services capability under AWS Marketplace.

Each hyperscaler is also creating its own portfolio of marketing tools to help those providing services on the platform – many of which are free or heavily discounted for those using co-branding within their marketing efforts.

What does this mean to MSPs?

First of all, the hyperscalers are showing how a massively resourced platform can provide the flexibility an MSP needs. Private clouds (or physical data centres) will struggle to be economically competitive with such massive platforms. Also, the hyperscalers have geography on their side; by using regional configurations and routing, data storage can be more easily managed to comply with the different legal requirements of each region.

Next, the hyperscalers already have a massive customer base. Cloud is no longer a matter of ‘if,’ but ‘when’ for the vast majority of organisations. Indeed, most are just arguing over the speed at which they move more workloads over to the cloud soon. As such, those customers are there and waiting – they just need a nudge in the right direction.

MSPs should tread carefully in online marketplaces

As more MSPs move their offerings to hyperscalers and then make them available on the online marketplaces, user choice becomes confusing. When faced with 300 different ‘solutions’ for customer relationship management, enterprise resource planning, or other areas of need, service differentiation will be as necessary as it is now. MSPs will still need to cut through the noise level and make sure that what differentiates them can be easily identified, which may bring us back to the need for direct marketing.

MSPs must also juggle the needs of the customer with the needs of the MSP. Is a free test cost-effective if a lot of customers do jump ship after the first few days or weeks? Are there ways of making the free test stickier so that fewer leave? How can the MSP create a contract that fits most organisations needs, and lets selling in the marketplace move forward with minimum human interruption while maintaining some form of a personal touch? Does tying a customer into a minimum period of time for the service work in many cases (quarterly, yearly), or is a rolling monthly subscription profitable enough?

It is still early days for the cloud marketplaces, but usage has grown quickly and the hyperscalers are responding with new functions and services to those offering capabilities via the marketplace. For the MSP, it is becoming apparent that cloud marketplaces cannot be ignored.

Photo: Thomas Holt / Shutterstock

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Clive Longbottom

Posted by Clive Longbottom

Clive Longbottom is a UK-based independent commentator on the impact of technology on organizations and was a co-founder and service director at Quocirca. He has also been an ITC industry analyst for more than 20 years.

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