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Cloud marketplaces have emerged as a conduit for selling professional services, giving service providers new ways to package offerings that customers can purchase conveniently.
While selling services on public cloud platforms is a relatively recent development, IT services firms already see potential to expand their sales reach and boost revenue. Some channel companies have balked at providing services online, citing the need to customize deliverables for clients. However, marketplaces now enable private arrangements between services buyers and sellers, making bespoke offerings possible.
But there's a catch. Even though registering to sell professional services on a marketplace can take just a few minutes, service providers must still endeavor to make their online offers attractive, relevant and visible to buyers, industry executives said. Companies may also need to adjust sales, service delivery and financial practices as they pursue business in cloud marketplaces.
Ramping up marketplace sales
Presidio, an IT services and solutions provider based in New York, began posting a few service offerings on AWS Marketplace after Amazon opened its market to professional services in December 2020. Presidio's current services roster spans disaster recovery, machine learning and VMware Cloud on AWS.
"[AWS Marketplace] gives us a great platform to share with our customers what our capabilities are," said Chris Cagnazzi, senior vice president and general manager of the cloud solutions group at Presidio. "We have gotten new customers from it, new logos. It's a whole different route to market for us."
Lemongrass, an Atlanta-based MSP that provides SAP on AWS services, also offers services on the AWS Marketplace. The company launched its marketplace effort with a software focus, creating offers around its ISV partners, said Ben Lingwood, the company's chief innovation officer and global alliances executive.
"It's ramping up, leading with software reselling," Lingwood said. "Professional services will, we believe, be a fast maturing area over the next 18 months."
Larsen & Toubro Infotech (LTI), a technology consulting company based in Mumbai, India, provides professional services across the AWS, Microsoft Azure and Google Cloud marketplaces. The company's offerings, which support cloud and digital transformation, include planning, assessments, implementation, deployment, support, managed services and training.
LTI's postings on Azure Marketplace, for example, include a cloud feasibility assessment called RapidAdopt and a developer productivity impact analysis called Canvas Insights. As of late June 2021, 2,296 publishers like LTI had consulting services offers posted on Azure Marketplace and AppSource, according to Microsoft.
LTI's marketplace business represents a new direction for the company, according to Siva Surendira, the global head of LTI's cloud practice.
"In the past, most of our enterprise-grade customers preferred a much more direct approach to their IT procurement needs," he said. "However, in recent years, we have seen a significant inflow toward cloud marketplaces -- and we are responding with a structure and resources to match the demand."
Companies that pursue marketplace sales may be on to something. Ninety percent of cloud professionals working at enterprises said they would consider buying third-party products or services through a cloud marketplace, according to a survey conducted by Sinequa, an enterprise search platform company based in Paris. In addition, 93% of the respondents said the AWS, Azure and Google marketplaces made those vendors' cloud platforms more attractive. Sinequa polled 250 cloud professionals in the U.S., United Kingdom and France for its study.
As the top three reasons for using cloud marketplaces, respondents cited convenience, the ability to try new products and services, and a wider range of choices, according to Sinequa.
"Marketplaces have become more popular in the last few years," said Aruna Mathuranayagam, vice president and operating unit CTO at Leidos, an IT and engineering services company based in Reston, Va. She noted 17% of the projected $13 trillion in B2B spend will take place in marketplaces by 2023, citing Forrester Research data. Leidos is just getting started in this form of selling, providing a SaaS healthcare offering on the AWS Marketplace.
A launchpad for services
Partners view cloud marketplaces as a good way to provide quick-start services, assessments or proofs of concept that pave the way for larger projects.
Presidio, for instance, created a Disaster Recovery RightStart service to sell on the AWS Marketplace. The service lets customers tap best practices from Presidio and AWS and also includes the AWS CloudEndure DR service, Cagnazzi said. Another Presidio offering, Machine Learning in a Box, helps clients build a machine learning model for data insights and predictive decision-making. The company's VMware Cloud on AWS Lifecycle Services, meanwhile, begins with a workshop on the technology and then progresses to additional phases: assessment, pilot, design and deploy, and scale and optimize.
Software vendor marketplaces offer services, products
SaaS and PaaS companies running cloud marketplaces cultivate professional services and bespoke partner offerings. Here's a sample:
Salesforce. The SaaS provider launched Consultants on AppExchange in 2019, providing a venue for partners to list their services and verified customer reviews. Since that debut, more than 2,000 consulting partners have posted a listing on AppExchange, a company spokeswoman said. Salesforce displays a partner's Navigator distinctions, which reflect a partner's deployable expertise.
SAP. The ERP and business software company sells professional services and consulting on its SAP Store. A company spokeswoman said those services are primarily from SAP.
ServiceNow. In 2020, the digital workflow provider unveiled its ServiceNow Partner Industry Solutions marketplace. Partners sell 'solutions, not professional services' on the market, a spokeswoman said. Partner offerings focus on the industry-specific workflow and digital transformation needs of joint customers.
Professional services projects sold on the marketplace provide a launchpad to larger projects, Cagnazzi noted.
"A lot of these projects start out as a proof of concept," Cagnazzi said. "These are all lead-ins to a larger opportunity."
Winning large projects often stem from a partner's ability to create custom offers through a cloud marketplace. AWS Marketplace initially let ISVs create private offers that feature custom pricing and end-user license agreements. But AWS has extended that capability to service providers through its Consulting Partner Private Offers (CPPO) program. Through CPPO, professional services providers can create bespoke offerings with client-specific pricing and statements of work.
Lemongrass predominately uses AWS Marketplace for proofs of concept and business case propositions but has begun to pursue CPPO offerings, Lingwood said.
"We have now broken the ice and are using the private marketplace for our first customer Operate contract," he said. The company's Operate service provides ongoing management and support for customers who have completed an SAP on AWS migration.
The private marketplace's ability to provide monthly variable billing presents an advantage, Lingwood added. CPPO also instills confidence among customers who can rely on AWS to manage the invoicing and billing process through its automated workflow. Finally, the private offers drive deeper "cloudiness" into services traditionally delivered through a multiyear, fixed-contract model, he noted.
"I see this as a real growth area in the future," he added, noting customers view CPPO as a cleaner, more flexible commercial model. "[While] the functionality in this space is more mature in software versus services, we are seeing customer preference toward CPPO."
Chris CagnazziSenior vice president and general manager of cloud solutions group, Presidio
In addition, the private offers let Lemongrass work directly with its vendor partners at scale, without having to rely on complex, local VAR agreements. Lemongrass uses an array of third-party tools, from antivirus to threat detection, he explained. Providing tools under a CPPO helps Lemongrass tap its established vendor relationships to consolidate purchasing power and obtain higher discounts, which are extended to customers.
Presidio, meanwhile, used the AWS private offers program to formulate a $3.8 million professional services project for a healthcare technology client, Cagnazzi said. The regulatory reporting offering includes a data hub built on AWS' Redshift cloud data warehouse, data analytics, data security, application support and continuous improvement services.
Such projects represent a fairly small slice of Presidio's $3 billion-plus annual revenue, Cagnazzi noted. However, he sees AWS Marketplace sales growing over the next 12 months to become a $150 million part of the company.
"It is becoming a more and more important component of our business," he said.
Tips for selling professional services
Companies have had limited experience selling professional services in the cloud, but a few ground rules for marketplace-based business have emerged.
Prospective customers will skip over offerings that are too general, said Chris Grusz, director of business development at AWS Marketplace, where more than 500 companies have registered to offer services. Partners should create prescriptive offerings that complement other AWS services or marketplace items rather than list a rate card for generic services, he said.
"You don't want to have an open-ended offer," he noted.
Marketplaces currently feature services such as training classes and assessments -- offerings that are more easily bound with regard to labor, time and cost, noted Brendan Walsh, senior vice president of partner relations at 1901 Group, an MSP and wholly owned subsidiary of Leidos.
"The marketplaces are going to continue to rapidly grow and see more fixed priced, well-bounded services," Walsh said.
Get the word out
Companies selling services should train their sales leads to talk about marketplace propositions, he said. Press releases can also raise awareness.
"It's invisible unless you promote it," Lingwood said, noting potential customers don't necessarily associate professional services with AWS Marketplace.
Partners should look for co-selling opportunities with marketplaces and ask cloud platform providers to "endorse a solution for exposure and brand recognition," LTI's Surendira added.
Differentiate the offer
Partners new to selling consulting services in cloud marketplaces should "help customers understand their value-add and differentiation," said Justin Holzwarth, senior business program manager for Microsoft's Commercial Marketplace, which began offering consulting services in 2017.
Holzwarth also suggested providing customer success stories and a profile of customers who would most benefit from their service. The latter could focus on industry, segment and geography, for example. In addition, adding visuals, videos and customer-facing downloads can generate customer interest, he said.
Explore licensing and discount programs
Surendira suggested marketplace sellers investigate enterprise license agreements and enterprise discount programs (EDPs).
With EDPs, customers can receive discounts when they commit to a specific amount of cloud spending over a period of time. In the case of an AWS EDP, the customer's third-party product and service purchases in the AWS Marketplace count toward the spending commitment. The third-party angle motivates some customers to pursue private offers.
"[Customers] can retire a portion of their commitment ... with professional services and with software and licensing," Cagnazzi said. "They get a little bit of an extra bang for their buck."
Don't forget the back office
Partners selling professional services should pay attention to back-office details. For example, they should contact customers to determine what language they need to see on their AWS invoice. "[Client responses] will dictate how you build and word your marketplace offerings so the customer-required data appears on the AWS invoice," Lingwood said.
Service providers should also rigorously train their internal finance teams. The cloud marketplace process is "quite radically different from traditional back-office finance management," Lingwood noted.
Prepare to collaborate
Marketplace sellers will need to team up as offerings span cloud platforms, third-party software tools and professional services.
"Partners posting in the marketplace ... will have to work more collaboratively to make sure all the pieces align well to make this holistic solution," Mathuranayagam said.
As a result, channel partner ecosystems will likely play an increasingly important role in the cloud.