The cloud marketplace is turning software procurement on its head, and at Softcat, we’re proud to offer a dedicated resource to support customers in this space. The marketplace model can help organisations achieve total procurement transformation, but only if used correctly.
So, what do you need to know about cloud marketplaces, what are the benefits and pitfalls to avoid, and how can we help you leverage it in the right way?
What is cloud marketplace?
A cloud marketplace is a centralised online platform designed for organisations to browse, discover, trial, and purchase new cloud computing products from different Independent Software Vendors (ISVs). These marketplaces sell a wide range of offerings, including:
- Software as a Service (SaaS)
- Infrastructure as a Service (IaaS)
- Platform as a Service (PaaS)
- and other cloud-related resources.
The marketplace also offers organisations the option for services and solutions purchased to have flexible, multi-year payment schedules, as well as consumption-based billing models.
The largest providers in the cloud marketplace space are Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP). ISVs, such as CrowdStrike, Lacework, Trend Micro and Druva are generating more revenue through cloud marketplaces as they explore new avenues to meet customer needs. 44% of sellers expect to transact more than 10% of their revenue through this channel in the next year, with sales expected to be as high as $15 billion by the end of 2023. Canalys also predicts that global sales of third- party vendor software and services through cloud marketplaces will hit $50 billion by 2025.
What are the benefits of using a cloud marketplace?
The cloud marketplace is a fast, convenient, and streamlined way of procuring software. It’s growing in response to an increase in customers wanting everything ‘as a service’.
Today, most organisations prefer to be buyers rather than builders, purchasing off-the-shelf solutions and products that they can personalise. Using a marketplace can save time and money in sourcing and implementing cloud solutions, helping to move business forward.
Marketplace models also help facilitate non-IT teams buying IT. They’re an accessible and user-friendly way of procuring technology outside of procurement within line of business budgets. As a result of this, IT teams are now directly managing less of an organisation's SaaS (just 23% of the portfolio on average), whilst other teams are managing more – a survey by Zylo highlights this change in ownership of SaaS.
Customers who already have cloud commitments from the main providers like AWS andAzure, can unlock a cost consolidation benefit and discounts on their SaaS procurement, with many ISVs promoting exclusive offers on the marketplace. Softcat can unlock further discounts for customers through our channel and ISV relationships.
The marketplace can also provide easy access to existing cloud budgets without the need to go through lengthy sign-off processes with procurement teams. Plus, from a management perspective, billing can be consolidated into one invoice. Other benefits include having the chance to try out services for free before committing to a purchase and being able to scale up or down usage as needed – helping both large and small organisations get the most out of their cloud investment.
What are the pitfalls of using a cloud marketplace?
As a modern way of procuring software, it’s clear there are many benefits of using a cloud marketplace - but it isn’t a silver bullet for procurement or cost-saving. And it may not be the right or best option for your organisation, depending on your needs.
The concept of the cloud marketplace is relatively new, so there is the potential for the wrong people using these platforms to make purchases. Governance is key and organisations need the right policies in place to control costs and avoid a shadow IT problem. According to Zylo’s SaaS Management Index Report, 63% of software spend is procured by business lines outside of IT – this is where shadow IT becomes a problem: SaaS becomes potentially hard to manage and organisations may end up with multiple types of different software, all providing the same solution. This could open organisations up to security risks and more often than not, it means the appropriate checks aren’t being carried out when new software is installed or downloaded.
Some organisations may find that a private cloud marketplace is preferable. The governance from private marketplaces can bring comfort to customers who prefer to have greater control of their SaaS spend. For customers and organisations who’d like to take advantage of these benefits, Softcat can help to leverage and unlock the capabilities private cloud marketplaces offer.
How can Softcat help?
By 2025, at least 30% of marketplace transactions will be delivered via channel partners on behalf of customers - Canalys.
Just like shopping on Amazon, thousands of products are available to purchase via cloud marketplaces, and this amount of choice can be overwhelming. If you’re thinking of modernising the way you source and purchase cloud software, reach out to a trusted advisor, like Softcat, who can make sure you choose the right solutions for your objectives, IT environment and budget.
As a value-added reseller, we have a vast amount of expertise, covering cyber security, digital workspace and hybrid infrastructure amongst other key areas. We can access exclusive discounts based on our high-volume partnerships with vendors, providing you with preferential pricing.
Customers can also benefit from our expert-led marketplace strategy workshops on software spend and a personalised list of recommendations to ensure you’re picking the right tech for the right reasons.
If you plan to or are currently reviewing your cloud spend, we’re here to advise you on the best technologies and procurement route, whether that’s through a distributor, marketplace or direct from the vendor. Please contact firstname.lastname@example.org if you’d like to find out more.