IT and Business Insights for SMB Solution Providers

Choosing Cloud Marketplaces

Big-time distributors or small-scale specialists for your customers’ SaaS or hosted solutions? Here’s your guide. By James E. Gaskin

When you want to buy something, you first search online. When your customers want to buy something, they also go “to the cloud” for products and services. Working well with cloud marketplaces may mean the difference between losing sales and greatly increasing your services revenue. And maybe the “right” cloud marketplace is a white-label website catalog with your name at the top.

“Cloud marketplaces are a good idea,” says Anurag Agrawal, CEO at Techaisle LLC, an SMB-focused market research firm. “Resellers should start to make use of them, but they should be aware that they won’t take off immediately.”

It is early on the marketplace adoption curve, says Agrawal, but the trend looks strongly positive. People have a common reference point: Amazon. “Everyone, business or consumer, is used to the Amazon one-click buying experience,” explains Agrawal. “It is difficult for other marketplaces to provide that level of coverage and support.”

When he started his research, Agrawal was surprised to find out who uses cloud marketplaces the most: midmarket companies. “Enterprises have the resources they need,” he says, “but midmarket firms are on a fast track and need development and integration support. Small businesses are letting resellers and ISVs do the work for them.”

And that means smart resellers approach some cloud marketplace sales as loss leaders, not sources of huge revenues, says Jeff Kaplan, managing director at THINKstrategies Inc., a cloud and managed services consultancy. “When you go to the Dreamforce conference put on by Salesforce, the biggest players in the front of the exhibit hall are all professional services companies making big profits by pulling together all the piece parts from cloud marketplaces.” To Kaplan, the path to profits remains the same. “The old VAR model from the on-premise world can play an even greater role in cloud services.”

After all, customers need someone to get plug-and-play applications from different vendors and many different cloud marketplaces to play nicely with each other. Someone needs to whittle down that complexity, says Kaplan. “You may have to hire programmers, or partner with a developer group.”

“The good news is that the cloud adds a layer of complexity on top of the mess that exists on-premise,” continues Kaplan. “In truth, the cloud is not simplifying everything, and value add remains the only true path to success.”

That describes Dwight Snow, CEO of Awkman Consulting Inc., located in Sherwood, Ark., just north of Little Rock. He started consulting back in 2000, mostly in the Unix and Linux space. He works regularly with SaaSMAX, a cloud portal that acts as a matchmaking service between developers, resellers, and customers rather than a typical marketplace. “Selling cloud applications is more like selling a service,” says Snow. “You’re more of a consultant, figuring out what companies need.”

For one international marketing company, Snow worked through SaaSMAX to find a webinar platform. For other customers, he replaced old phone systems with a hosted VoIP offering from Broadview Networks Inc., a Rye Brook, N.Y., vendor he found through SaaSMAX.

“SaaSMAX doesn’t pay you,” adds Snow. “[Software vendors] often just pay a referral fee and they invoice the customer directly. Sometimes I move to a direct relationship with a SaaS company I find there, like I have with BroadView.”

Choose Carefully
“[Cloud marketplaces] are an important ingredient in the go-to-market strategies for tech channel companies,” says Kaplan. “And some of the big players like AWS recognized that they can’t do it all, can’t reach all sections of the market, until they build a reseller channel.” These marketplaces attract both end users and resellers interested in integration, says Kaplan. “This is in stark contrast to the feeling six or seven years ago when some analysts predicted the channel would be bypassed [by customers] and wither away,” he notes.

Each cloud service has a target market, so make sure you also serve that target market and can live within that ecosystem. “Most of the popular cloud marketplaces, like Amazon, Cisco, Oracle, and IBM, mostly revolve around their own proprietary platforms,” says Agrawal of Techaisle. “Customers have to commit to that platform. For instance, if you focus on CenturyLink, you’re dependent on CenturyLink for products. Or they may not integrate as well with applications from other places.” Just as big box stores have more merchandise than specialty stores, name brands and distributors have more selection in their cloud marketplaces.

Also consider the service details. Is support provided by the marketplace or vendor? What are the support hours? Do they handle software license provisioning? Are transactions quick, easy, and reliable? Do they have what you need to cover the full scope of your practice?

“Look at the marketplace Match.com” that brings people together, advises Snow of Awkman Consulting. “Figure out what you’re looking for, what kind of opportunities they provide, and the details of linking up with them. And make sure you can coordinate and facilitate delivery, installation, and management for your customers.”

[For a sampling of cloud marketplaces, go to page 2.]

About the Author

James E. Gaskin is a freelance writer and former reseller based in Mesquite, Texas. He writes frequently for The ChannelPro Network.