$500B Cloud Commits Forecast & Award-Winning Marketplace Tactics
Hi, it's Roman and welcome back to the Partner Insight newsletter!
This week, we'll dive into some staggering numbers that continue to reshape the tech ecosystem. With customer cloud commitments set to hit $500 billion in the next 18 months, we'll explore how this milestone will transform enterprise software procurement and what it means for your GTM strategy.
I'll also share key insights on navigating cloud marketplaces from Mike Marzano of Contentsquare, Microsoft's Marketplace Partner of the Year for 2024, and one of our Cloud GTM Leader Course mentors.
Finally, we'll examine how Amazon's e-commerce playbook is informing the future of cloud marketplaces and take a look at Oracle's surprising surge in cloud growth and commitments.
If you find these insights valuable, please share this free newsletter with your network. And if there are topics you'd like us to explore in future editions, just hit reply - I'd love to hear your thoughts.
Now, let's dive into the data that's shaping the future of cloud partnerships.
Customer Cloud Commitments to Hit $500Bn in 18 Months: Brace for Impact
Customer cloud commitments of AWS, Azure, and GCP are set to reach 💰 $500Bn (half a trillion dollars!) in the next 18 months according to our estimates.
But this isn't even the full story.
If we take into account all Microsoft Cloud commits (not just Azure, which we conservatively put at ~50% of MSFT Cloud total), the collective client backlog across hyperscalers already was $504Bn last quarter!
Let's break it down.
AWS, Azure and Google Cloud commits to reach $500Bn by 2026
Cloud commit backlog is growing alongside the revenue that hyperscalers recognize. These are signed customer obligations that can also be used to buy 3rd party SaaS on cloud marketplaces.
Commits growth is lumpy (see graph), but the trend is clear - big 3 commits are growing at low 20% YoY ($65-70Bn).
Last 12 month growth across big 3:
Q2’23: $304.6Bn
Q2’24: $369.9Bn
Assuming this holds, customer commitments will reach $500Bn by early 2026, or in ~18 months (the graph shows model/timeline variations).
If we add Microsoft's full Cloud commits ($269Bn), including all MSFT product suite, not just Microsoft Azure, the last quarter commit across the big 3 is already $504.4Bn.
What's behind this massive number?
Gen AI has triggered a new wave of cloud migration, modernization, and data operations, as enterprises race to leverage AI potential.
Hyperscalers lead this AI revolution with their partnerships and deep investments in foundation models, AI infrastructure, and tools.
$500 Bn in commits will create a quantum leap for marketplaces
Using cloud marketplaces is already normalized across enterprises. Even top companies like Salesforce claim that their top 3 out of 10 deals last quarter were through AWS marketplace.
Given that cloud commits will grow ~2X from 2023 to 2026, marketplace transactions will multiply too.
AI meet marketplaces
Marketplaces are already a top 3 GTM channel for 47% of software companies.
Verticalized AI apps and industry-specific solutions will be both powered by AI/ML through hyperscalers and distributed to enterprises via their marketplaces.
Hyperscaler co-sell will remain essential to winning major SaaS and AI deals.
Partners, from SIs to services, are adjusting to this (sometimes uncomfortable but critical) trend, where marketplaces are essential to reach customers/budgets.
Marketplaces will become the default purchasing model for complex projects, with 50% of their revenue to be driven by partners (Canalys).
For Alliance leaders this data should be a wake-up call
Cloud commits represent future spending that's already locked in.
If you're not tapping into these massive pools via marketplace GTM, you're leaving money on the table and missing the future growth.
Insights from Cloud GTM Course Mentors
I'm thrilled to welcome Mike Marzano, Head of Global Cloud Alliances at Contentsquare, as one of the outstanding mentors in our Cloud GTM Leader Course. Under Mike's leadership, Contentsquare has just been awarded the prestigious 2024 Marketplace Partner of the Year award from Microsoft.
Mike’s top Cloud GTM insights: Focus on marketplace impact as success metric, “make weight” to get cloud attention and map processes to implement change management.
Mike Marzano leads global cloud alliances for the Experience Intelligence Platform, Contentsquare, relying on his superpowers of Co-Sell & Marketplace.
Over the past two years, he has been instrumental in accelerating Contentsquare's cloud co-sell programs with AWS and Microsoft, successfully scaling marketplace billed revenue from zero to over $30 million.
With nearly 20 years of experience in enterprise SaaS, Mike exemplifies the principles of creativity and collaboration, always with the end goal delivering outstanding customer outcomes.
Mike shared what it takes to get traction grow on cloud marketplaces:
Prediction: Cloud marketplaces are set to grow further
The recent moves by several of the Hyperscalers to increase the opportunity to leverage Private Offers with multiple partner offerings attached, show us the potential of these marketplaces will continue to grow.
Customers want to leverage marketplaces - they NEED to optimize their spend while getting maximum value from SaaS and the solutions partners who can help them realize the greatest ROI as quickly as possible.
Marketplace Success Metrics: Use “Impact of cloud partners” on your sales cycles
If you are a SaaS business selling to enterprise marketers, cloud partners are going to fail at delivering pipeline off the starting line.
Success by this mark could take 12-18 months, but focusing on the IMPACT of cloud partners within your sales cycles will help you refine best practices while creating the best outcomes for your commercial teams and customers.
IMPACT is your metric for larger deals, with longer terms and potentially shorter sales cycles.
Co-Selling & Getting Cloud Attention: A great value proposition isn’t enough, you need to “make weight.”
Focus on how you “make weight,” because a great solution and value proposition is not enough.
You need to show the hyperscalers that your solution is not just great at delivering value to their customers, but you have the pipeline, a history of success and you are willing to put numbers on the board to prove it.
Change Management: Map current and future state and find dominos that will drive others
Any person tasked with change management will tell you (or show you by the deep stress lines etched in their forehead), that trying to implement a major change to the way people work is hard.
You need to really map this out, understand the existing norms, build out a realistic timeline, a domino effect and set realistic expectations.
💡 Learn more about Cloud GTM Leader Course:
Want to see the future of cloud marketplaces? Look at Amazon's past.
While explaining Amazon's Leadership Principles, CEO Andy Jassy shared the story of building their marketplace for 3rd party sellers.
He revealed how they "failed miserably" at first, but eventually found the key to turn it into an engine that now drives a staggering 65% of all units sold by Amazon.
What started at Amazon as a contentious internal debate has now become a blueprint for the trajectory of marketplaces
Initially met with resistance, the 3rd party marketplace idea faced concerns about upsetting existing relationships and maintaining customer experience.
But Amazon ultimately sided with it, believing it would give customers what they wanted most: broader selection and lower prices.
However, the path to success wasn't straightforward. Amazon's first several attempts failed.
The turning point? A simple but game-changing decision: integrating third-party selections onto the same pages as Amazon's first-party offerings.
This "aha" moment transformed their business, with marketplace items now accounting for 2/3 units sold by Amazon.
Same Playbook to Grow Cloud Marketplaces 10X?
Fast forward to today, and we're seeing the same story unfold in cloud marketplaces.
Amazon Web Services (AWS), now a $105B annual run rate business, is applying the same playbook to software.
With Andy Jassy at the helm of Amazon, after leading AWS for 18 years, it's clear this strategy is top of mind.
Current estimates place AWS marketplace sales in the high single-digit billions.
But if it follows the same trajectory as Amazon's e-commerce, where 2/3 of products sold come from 3rd party sellers, we could see a remarkable 📍 10X expansion of the AWS marketplace in the coming years.
Power of Marketplaces
This shift isn't just about revenue.
Marketplaces are powerful generators of network effects, particularly for customers leveraging cloud commits.
The stakes are high. Not only hyperscaler revenue continues to rapidly grow, but their customer backlog is also growing at an impressive >20% YoY.
Across the big 3, cloud commits are projected to reach a staggering $500B in just 18 months (see my previous post).
All three hyperscalers - AWS, Microsoft Azure, and Google Cloud - aim to make their marketplaces the primary online distribution channel for both first-party and third-party solutions (Ofcom).
So, as you navigate the cloud that is now massively accelerated by AI, take a cue from Amazon's playbook.
Embrace the marketplace mindset, and you'll be well-positioned to ride the wave of transformation.
The question is, how are you adapting your partnerships to align with this shift?
Oracle's 80% Cloud Commits Surge: The Next Top Hyperscaler?
Nothing shows the power of 📊 multi-cloud and partnerships better than Oracle cloud 21% growth. CEO highlights “Cloud Services became Oracle’s largest business… RPO [customer commits] was up 53% from last year to a record $99 billion.” Let’s break it down.
Oracle was seen as a legacy player in cloud, but its latest results demonstrate a shrewd strategy that quickly redefines its position.
Cloud growth is 21-25%
Oracle reported 21% YoY cloud revenue growth, reaching $5.6Bn in Q1FY25.
More tellingly, the company is guiding for 23-25% cloud growth next quarter – a signal of acceleration. But these numbers only tell part of the story.
Cloud Commits are up 80%
Oracle's Remaining Performance Obligations (RPO) – all signed contracts indicating future revenue – are up 53%.
The cloud portion of these commits is growing at an incredible >80%. Oracle’s CEO, Safra Catz, highlighted that even the seasonal dip in commits they saw in the previous 5 years didn’t occur this quarter.
“We signed several large deals this past quarter, resulting in a sequential increase in RPO compared to the decline that we typically see.”
Oracle’s cloud commits are now nearly 75% of all RPO, putting them at ~$74Bn.
This in the same ballpark as a top 3 cloud hyperscalers, Google Cloud, which had $78.8Bn in commits last quarter (AWS is at $156.6Bn).
Will we call them Big 4 soon?
But what’s behind this? A key driver is Oracle's multi-cloud partnerships.
It's a strategy that leverages Oracle's core strengths while expanding its reach.
By making its database technology available across all top clouds, Oracle is positioning itself as a critical infrastructure provider, regardless of where workloads ultimately reside.
Larry Ellison, Oracle's Chairman, bets big on it:
“Our recently signed AWS contract was a milestone in the MultiCloud Era. Soon customers will be able use the latest Oracle database technology from within every Hyperscaler's cloud.”
"We believe our cloud partnerships with AWS and Microsoft and Google will turbocharge the growth of our database business for years to come."
To achieve this, they had to overcome significant tech hurdles. Ellison revealed,
"We had to find a way to actually make the best versions of our database… available in other people's clouds. And what we're able to do is basically get OCI small enough that we could embed an OCI data center within Microsoft Azure or an OCI data center within Google or AWS...."
Demand proves the strategy works
"Demand is still outstripping supply," Catz admitted. It's an enviable position for any cloud provider. The company is literally doubling down on infrastructure investments, with plans to double CapEx in FY25.
Oracle's strategy is a lesson on how to leverage core strengths, embrace coopetition and focus on customer needs.
Celebrating 1Y in Cloud GTM Leader Course
120+ alumni from industry leaders like GitLab, Citrix, and IDC. 40+ incredible expert speakers and mentors. In just one year Cloud GTM Leader course has become the go-to program to unlock cloud marketplace growth.
Here is how it’s transforming alliance leader careers.
Recently Jay McBain from Canalys recognized it as a Top Education and Training Program for Channel and Partnership professionals.
What made the course so impactful?
We asked our alums, and here's what they said:
"The highlight was the curation of the speakers and how they organized the information, they were clear and didactic."
"Meeting the plethora of expertise that have been at the very forefront of Cloud Marketplaces."
From VPs of Partners of the Year to alliance leaders with decades of cloud GTM experience, 40+ outstanding expert speakers delivered unique insights in our course sessions.
Rolf Heimes, Jonathan Kingsepp, Brian Laing, Mike Marzano, Rick Buijserd, Darren Sharpe, Subhash Jawahrani, Kate Kwiatkowski, Abhijit Madhugiri, Alex Balcanquall the list goes on.
But it wasn't just the caliber of the speakers that made the difference.
It was the "Structured and Methodical approach to unbundle the complex process of partner enablement/Cloud GTM/Cloud Marketplaces."
Our alums highlighted the "open discussion with peers from different business functions and companies covering SaaS, Cybersecurity and Hyperscalers." They loved the "tactical elements and the measurement tools to measure progress."
"People with real experience sharing the how - how did they win, how did they fail, how did they tackle challenge x or y”
We just launched Cohort 7, but you can join the waitlist to secure your seat in Cohort 8 in November.
If you find these insights valuable, please share this newsletter with your network - it’s free.
And if there are topics you'd like us to explore in future editions, just hit reply - I'd love to hear your thoughts.