Cloud Marketplaces as a Strategic Route to Market

As the digital transformation wave continues to reshape the business landscape, software companies are increasingly turning to Cloud Marketplaces as a strategic route to market. According to Tackle.io’s 2023 State of Cloud Go-To-Market (GTM) Report, the shift towards Cloud Marketplaces is not just a trend but a significant evolution in how software is bought and sold. This blog will delve into the key findings and insights from the report, highlighting the transformative impact of Cloud Marketplaces and co-selling on the software industry.

The Rise of Cloud Marketplaces

Cloud Marketplaces are rapidly becoming the preferred platform for software transactions, with sales through these channels exceeding $15 billion in 2023. The momentum is such that the report projects this figure to skyrocket to $100 billion by 2026. This growth is driven by several factors:

1. Increased Adoption of Cloud Infrastructure: As more businesses move their operations to the cloud, the demand for software that can seamlessly integrate with these infrastructures rises.

2. Leveraging Committed Cloud Spend: Companies are looking to maximize their investments in cloud services, often using their committed cloud spend to purchase software through these marketplaces. An example of such an agreement is the Microsoft Azure Consumption Commitment (MACC) agreement.

3. Strategic Partnerships: The collaboration between Independent Software Vendors (ISVs) and Cloud Providers like Microsoft Azure, AWS, and Google Cloud is creating a robust ecosystem that benefits all parties involved.

The report underscores that Cloud GTM is no longer a tactical or departmental initiative but a strategic, company-wide commitment. This comprehensive approach is essential for driving brand strength, deal-level support, and top-of-funnel growth. As more software companies recognize the value of Cloud Marketplaces, they are integrating these platforms into their broader GTM strategies to maximize their reach and revenue potential.

The Synergy of Marketplaces and Co-Sell

One of the report's core insights is the symbiotic relationship between Cloud Marketplaces and co-selling. Co-sell initiatives, where ISVs and Cloud Providers collaborate to sell solutions, have proven to be highly effective in driving sales and expanding market reach. This partnership model not only enhances the visibility of ISV solutions but also provides buyers with a seamless purchasing experience, leveraging the trusted relationships and infrastructure of Cloud Providers.

Key statistics from the report illustrate the effectiveness of this model:

- Faster Deal Cycles: ISVs engaging in co-sell activities report a 50% reduction in the time it takes to close deals.

- Higher Win Rates: These companies see a 35% increase in their win rates compared to those not leveraging co-sell initiatives.

- Larger Deal Sizes: On average, deal sizes are 2.5 times larger for ISVs that participate in co-selling.

These advantages are particularly crucial in the current economic climate, where efficiency and cost-effectiveness are paramount.

Overcoming Challenges in Cloud GTM

Despite the promising opportunities, executing a Cloud GTM strategy at scale presents several challenges. The report highlights common hurdles such as sales productivity, operational efficiency, and meeting revenue commitments. These challenges are exacerbated by the not too long ago economic downturn, which has led to budget cuts, layoffs, and a more cautious approach to software spending moving forward.

However, the report also provides a roadmap for overcoming these obstacles. Advancing cloud partnerships is identified as a key business driver, with nearly two-thirds (64%) of respondents prioritizing this strategy. By fostering strong relationships with Cloud Providers and leveraging their resources, ISVs can navigate the complexities of Cloud GTM more effectively.

The Strategic Importance of Cloud GTM

The report emphasizes that Cloud GTM success is a journey, not a destination. It requires a long-term, strategic approach that involves collaboration across various functions within an organization, including sales, marketing, product, and alliances. Breaking down silos and fostering a culture of partnership and innovation are critical to building a sustainable Cloud GTM strategy.

Looking ahead, the report predicts that Cloud GTM will become one of the most efficient revenue channels for software companies. Finance leaders are expected to recognize its value, and the incentives for ISVs to engage in cloud partnerships will continue to grow. As buyer preferences evolve, there will be increasing demand for solutions that integrate multiple products and services, driving further innovation in the channel.

Key predictions from the report include:

- Rapid Growth in Cloud Marketplace Transactions: With a projected annual growth rate of 35%, Cloud Marketplaces are set to become the dominant platform for software sales.

- Increased Spending on Cloud Solutions: By 2025, it's estimated that over 50% of all enterprise software purchases will be made through Cloud Marketplaces.

- Expansion of Co-Sell Programs: More ISVs are expected to participate in co-sell programs, with the number of co-sell deals anticipated to triple over the next three years.

Key Learnings and Predictions

The 2023 report identifies several key learnings and predictions that provide valuable guidance for software companies navigating the Cloud GTM landscape:

1. Revenue Transformation through Marketplaces: Cloud Marketplaces are not just a sales channel but a transformative platform for revenue generation. They offer a dynamic and global appeal, making them central to modern GTM strategies.

2. Strategic Collaboration: Co-sell initiatives and cloud partnerships are vital for success. These collaborative efforts enable ISVs to leverage the strengths of Cloud Providers and deliver enhanced value to customers.

3. Efficiency and Innovation: In the face of economic challenges, efficiency and innovation are more important than ever. Companies must focus on delivering value to customers while continuously exploring new ways to optimize their GTM strategies.

4. Long-Term Commitment: Cloud GTM is a strategic, long-term commitment that requires alignment across the entire organization. Success depends on the ability to adapt and evolve in response to changing market dynamics.

5. Market Evolution: The report predicts continued growth and evolution in the Cloud Marketplace ecosystem. As software companies become more adept at leveraging these platforms, the overall market is expected to expand significantly.

 

The 2023 State of Cloud Go-To-Market Report from Tackle.io offers a comprehensive overview of the current landscape and future trends in software sales through Cloud Marketplaces. The insights and data presented in the report highlight the transformative potential of these platforms and the strategic importance of Cloud GTM.

For software companies, embracing Cloud Marketplaces and co-sell initiatives is not just an option but a necessity for staying competitive and driving growth. By prioritizing cloud partnerships, fostering innovation, and committing to a long-term Cloud GTM strategy, ISVs can unlock new opportunities and navigate the complexities of the modern software market.

As we move forward, the lessons from this report will be invaluable for software companies looking to thrive in the evolving digital landscape. The future of software sales is in the cloud, and those who lean into this transformation will be well-positioned to succeed.

By partnering up with us as 4Sight, you’ll have access to our Microsoft SureStep Ambassador team who will guide you through a robust Cloud GTM journey. Feel free to reach out to us at This email address is being protected from spambots. You need JavaScript enabled to view it. for a one-on-one session to explore the future of software sales.