Cloud marketplaces have experienced growth in popularity along with the explosion in the use of cloud applications and are now a key route to market – but there is still plenty of scope for development.
Cloud computing has grown massively in the UK in recent years, with the 2022 cloud market size in the UK is estimated at £41 billion, according to figures from AAG. The market is expected to grow by another £18 billion by 2024.
Alongside this, cloud marketplaces have also grown in popularity in the UK in recent years. “End users are embracing the subscription-based model for their solutions, seeking enhanced efficiency, reduced risk, and a sharper focus on business growth,” says Phylip Morgan, chief channel officer at Pax8 UK.
“The subscription-based approach has witnessed a remarkable surge in popularity, with a recent study conducted by Zuora revealing a staggering 437% growth in subscription business revenue over nearly a decade. This rise can be attributed to customers’ affinity for convenience and the desire for novel experiences, where the burden of decision-making is alleviated with each purchase.
“There is also a trend towards marketplaces generally in technology, due to their rising popularity in the B2C space. Companies now expect this same, seamless experience when they do business commerce akin to the consumer world. Successful cloud marketplaces will be determined by the level of user experience they deliver.”
There are numerous reasons why end users are using cloud marketplaces, Phylip adds. This includes the ease of discovery of new products and solutions and to compare solutions and find the best fit for a particular business need. “There is also dedicated account management, allowing MSPs to stay informed on important information with a key point of contact who is readily available to speak about new products, services and wider growth opportunities,” he adds. “There is also simplified procurement, with a single point of contact for billing and support, flexibility to add or remove services as business needs change and cost savings through competitive pricing.”
Tailored solutions
Nick Bannister, vice president sales for Arrow’s enterprise computing solutions business in the UK and Ireland, adds that marketplaces are widely recognised across the industry as a key route to market. “Many of the leading hyperscalers have established platforms as the percentage of business done through them continues to grow substantially,” he says.
Nick adds that customers’ buying habits have changed. “There is demand for the same click to buy purchasing experience as our personal shopping habits where possible,” he says.
“From a channel partner perspective, a marketplace allows tailored solutions to be built to service end-users’ specific requirements. This SaaS model allows automation of workflows, provisioning, billing, support and such like. This can also be replicated with different customers allowing for economies of scale.
“In addition, purchasing via a marketplace allows the end customer to gain access to the API economy, where they can consume technology in a simple and straightforward fashion.”
Easy access
Cloud marketplaces are also relatively easy for resellers and customers to get involved in. “Arrow can assist channel partners in understanding the power of the marketplace,” Nick says. “Training support and guidance is an important facet of cloud consumption via a marketplace. It is an essential part of Arrow’s offer. We have created two distinct programs that cover onboarding and ongoing engagement with channel partners.
“Part of the value Arrow can add to partners is in the ‘as a service’ solutions (aaS) which are available through ArrowSphere. These allow them to be consumed as a managed service offering to end customers, for example, our Arrow Cloud Backup solution utilises leading technologies available through our marketplace. “
Paul Vogt, director, channel programs and strategies at Loftware, agrees adds that they are easy to get into. “In our experience It’s remarkably easy, because once the software is up there, it has to have gone through the testing and the setup, so that when I download software from the marketplace, all the APIs are already set up,” he says.
That said, it should be noted that cloud marketplace adoption has not been universal, with some sectors lagging, says Paul. “Some businesses in the supply chain have been a bit slower to adopt,” he says. “They’ll have their CRM in the cloud, but they’re not yet ready to put their production, packaging or core warehouse data into the cloud.
“It starts with the end user – some haven’t been quick to adopt cloud technology and still prefer to purchase in an old-fashioned way of purchase order, bank transfer subscribing through licence keys, this sort of thing. That’s why some in the channel has been slow is because their customers haven’t demanded it.
“Plus, an awful lot of businesses in the channel are not big companies and it’s quite hard for them to shift their own systems and practises. But as we see it, it’s not going to be long until they do – probably within the next three to five years.”
Continued development
Indeed, it is expected that there will be continued innovation and development in the cloud marketplace industry in the coming years. “Some of the areas where we expect to see significant development include improved integration with other business systems, more sophisticated analytics and reporting capabilities and increased automation of procurement and management processes,” says Phylip.
“While the growth of AI will also likely help to streamline operations, Pax8 believes that building strong human to human relationships is vital for the future of cloud marketplaces. Being able to offer additional value to the MSP, such as providing networking opportunities or education masterclasses, enables distributors to become integral to their partners to help them grow their business in a highly competitive world.
“As businesses continue to adopt cloud-based computing, the convenience, cost-effectiveness and flexibility of cloud marketplaces will become even more appealing. At Pax8 we believe that cloud marketplaces will become an increasingly important part of the cloud computing ecosystem and may eventually become the industry standard for cloud service procurement and management.
“Distributors must adapt to change and look to find new and innovative ways to cater to evolving customer demands. With the traditional method of purchasing products and services becoming outdated, the implementation of consolidated billing and dedicated account managers is just the beginning.
“Altogether, the channel must strive to push boundaries and provide maximum value for its partners and customers to generate long-term business success. We believe the best marketplaces are driven by community.”
