Analysts seem clear that a significant shift in the channel will be wrought by the rise of vendor marketplaces.
Forrester predicts that in the US alone, 17 per cent of B2B IT spend will be through marketplaces by 2023. The revenues generated in this way in the US recently surpassed the $1tn mark.
So what's the partner view? What's the key advice on standing out to end users, and should distributors view them as a threat?
CPI finds out how partners should best navigate multi-vendor incursions into the channel, and how to make the trend an opportunity for new revenue streams.
A tale of two worlds
The main message from partners is that marketplaces are a tale of two worlds.
The founder of Microsoft partner New Signature, Dan Scarfe, said there's a big difference between how the trend will affect ISVs compared with system integrators.
"There are two separate worlds really," he said.
"For ISVs and software-as-a-service providers, I think it will have a profound impact, because they will become more and more commoditised and people will just expect to be able to buy them through marketplaces.
"It will come to a point where if you're not selling through that marketplace, and your competitor is, there will be a far higher chance of your potential customer stumbling across one of your competitors than you. So from a product standpoint and an ISV standpoint, they make a huge amount of sense and I think it will have a big impact.
"In the systems integration world, I don't think the impact will be quite as profound.
"For us now it's all about discoverability and showing some examples of some of the things that we could do for a potential customer. But the number of customers that would actually buy that pre-cut, pre-determined bundle of services is zero right now.
"We're called system integrators for a reason: because every customer is different. And to get to this pre-canned view of what an engagement might look like is difficult.
"But it's great as a sales and marketing tool to at least get the customer to understand the way you think and the way you structure things, even if you don't ultimately end up buying through marketplaces. And the opportunity is that we now have access to hundreds of thousands, even millions of potential customers that we might not had access to before."
‘There's no point trying to resist this': How partners can stand out
The EMEA GM of pubic cloud MSP Cloudreach, Chris Bunch, stressed that fighting the rise of marketplaces would be bad for business.
"My message is that when Amazon, Microsoft, and Google are really investing in an area, then your best route to success and profitability as a partner at any point in the ecosystem is to embrace that and work out how you can add value surrounding it, rather than trying to compete against them, which would be a poor decision," he said.
New Signature's Scarfe added that partners should consider how they can be innovative with pricing models to stand out.
"How can you make it a really low barrier of entry for people to consume your widget, or whatever else you're selling? In order to do that, you've got to drive a huge amount of automation as part of your software stack, because the whole point of the marketplaces is that they're automated.
"You can't be in a situation where you have to spin up some big manual process for you to actually deploy that environment for that customer; you're never really going to get the best effects of the marketplace that way.
"In which case consider free trials or a lower price until you have that automation."
Efficiency or the personal touch?
Despite the boons of efficiency and speed, or of vendors managing your billing, Scarfe suggests that for some end users the personal relationships they've built with channel partners will still be a strong draw.
"It's always the perennial challenge with vendors. Obviously, you've got a bunch of relationships that you have with people, on a one-to-one basis, and then you've got this marketplace, which has this automated self-service provision.
"And now, there's always going to be a slight schism between those two worlds. Ultimately, you need to try to guide people more and more to the self-service, but there will be those who naturally fall back to those personal relationships to a certain extent."
Will distribution become 'obsolete'?
Cloudreach's Chris Bunch has suggested that the inexorable rise of partially automated marketplaces may make partners question the need for traditional distributors.
"I think there are people who are a little bit concerned, probably those who are in distribution, as they start to look a little obsolete and dated in a world where the question is: would you rather work with traditional distribution partner X or Amazon, Microsoft, Google? And the answer is almost certainly going to be one of the latter," he said.
"So generally, the distribution channel is probably a bit of a dead model for digital services. Certainly there is still the need to distribute bits of physical hardware around, but from just a pure software licensing model perspective, I'm not sure it makes a lot of sense anymore."
However, like New Signature's Scarfe, the notion that trust built up through personal relationships in the channel will always have a part to play, is backed by Nuvias' new CEO.
Simon England said he's unconcerned that some are questioning whether marketplaces will make distributors obsolete.
"I've heard people call distribution obsolete before. When distributors started selling software as well as hardware, there were some who said the same then," he said.
"We're very used to adapting to changes in the market and continuing to find more value to offer… Every customer is different and there's real value in tailoring what is needed to each customer. And that's what we can bring, and always have.
"You look at the market now - vendors are moving away from point product answers to platforms, towards integrated solutions trying to address an aggregate threat landscape.
"Our partners earn the right to have a stickier, proactive relationship with customers, and we help support and enable our partners in this."
How are vendors enticing partners?
AWS has claimed it's learning from partner feedback, and has made its marketplace more channel-friendly.
In October last year, it introduced a new selling model. Called Consulting Partner Private Offers, it allows AWS Marketplace ISVs to authorise channel partners to sell on their behalf.
First unveiled in the US in October last year, it was also introduced in the UK in April and in the rest of Europe at the start of the year.
AWS' VP of marketplace, Dave McCann, claims that, as a result, he has seen the giant's partners "grow increasingly confident" in using its marketplace to deliver software to end users.
"Our new capability called Consulting Partner Private Offers actually lets the channel partner participate in both the value chain and work with their top software suppliers," he said.
McCann's key advice on standing out to end-user buyers is, unsurprisingly, to start now so that end users will soon see "proof of success".
"From a reseller point of view, a customer wants to be confident that the project is going to succeed," he said.
"They need to have proof that they've worked with somebody, they understand how things work, that they have the skills.
"And clearly you have to tell the customer this is going to be a good experience, so they really need to have proof that they are trained, and that they've done it once or twice.
"Those who have already signed up and are working with us are already up front."
Last month, Microsoft also bolstered its marketplace proposition.
The vendor announced that AppSource and Azure Marketplace will now support transaction capabilities for SaaS solutions.
In a blog post, Microsoft said the move was driven by the rapid growth of cloud and customer demands for a more efficient, streamlined buying process.
Its corporate VP of cloud and AI, Charlotte Yarkoni, said the goal was to create a "one-stop experience for customers looking for a cloud-based solution".
Microsoft's director of partner cloud services, James Chadwick, told CPI this week that the channel should respond to the rise of marketplaces by remembering that they're not just for applications.
"Resellers and solution delivery partners can also list service offerings such as proof of concepts, assessment workshops, and migration and deployment packages to demonstrate their breadth of offering and expertise to customers," he explained.
He claimed that Microsoft Azure Marketplace can also improve customer engagement and drive marketing activity.
"Additionally, users can take advantage of consulting with a technical expert, or getting support for testing a marketplace-specific solution to really nurture future sales."
Chadwick's top tip for partners echoes New Signature's advice; that to stand out and do well, consider offering free trials.
"It's free to list and ensures you're showing up to customers that are ready to buy," he said.
"If you offer an application, explore the option of providing a trial. We see a fantastic conversion rate from trial to purchase so it's another important step towards increasing sales. Finally, make sure customers are enabled to transact and procure through the marketplace; you could be unlocking a great new revenue stream for your business."
We've reached the tipping point
However, marketplaces have been around for years. Many partners have been able to grow without the need for signing on. So why now? Why are the analysts forecasting such a significant exponential rise in IT spend running through them?
"I think we've probably reached a tipping point of partners signing up. They have needed to reach this kind of critical mass to make them fully relevant," Bunch said.
"They've also ramped up the level of sophistication through adding new elements, which drags in extra vendors, and then makes the proposition more interesting.
"I think a lot of people probably felt that we could all drag our heels a little bit, as you see with any new innovation. Some were questioning whether [marketplaces] will happen, or maybe that it would take a few years. Well, those few years have passed now; this is happening, and it's happening now."
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