Cloud marketplaces are increasingly becoming a moneymaking sales channel for software-as-a-service companies as buyers turn to the medium to reap benefits like an efficient procurement process.
An April Clazar report found that 62% software-as-a-service (SaaS) companies bring in net-new revenue through cloud marketplaces. More than one-fifth (22%) revealed they are generating over 20% of their revenue from the medium.
The report surveyed more than 100 “emerging and established software companies.”
The force behind the shift. Clazar co-founder and CEO Trunal Bhanse told IT Brew that part of the momentum for B2B software companies to sell on cloud marketplaces comes from the incentives offered by cloud providers to sellers on their platforms.
“All the three big hyperscalers are very incentivized to have this be the default motion in the next decade of buying and selling, because it aligns extremely well with their own consumption goals,” he said.
Bhanse added that a shift in buyer behavior has also allowed software companies to see greater success when selling through the marketplace.
“Customers want faster procurement,” Bhanse said. “They want to burn down their cloud budgets and they trust the cloud marketplaces they already use.”
The future is the marketplace? Bhanse predicts that B2B software companies will begin to follow the playbook of top cloud marketplace performers. But is the future of the cloud just becoming a selling point for SaaS tools?
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Brooke Cunningham, CMO at LogicMonitor, told IT Brew that while the company does leverage cloud marketplaces to tap new customers, it is not its only route to market, nor its largest. She noted that the marketplace is a key part of how the company thinks about reaching new and existing customers, but remained skeptical of the channel becoming a sole method to reach enterprise customers within the industry.
“Based on the buying behaviors and dynamics seen in the market, no, I don’t believe that we are going to see that the marketplaces and the cloud providers are going to be the only route to market,” Cunningham said. “In fact, we’re seeing trends in the opposite direction.”
Shannon Mason, chief strategy officer at Tempo Software, told IT Brew that the marketplace is a “core component” of its route-to-market strategy. However, she said diversification remains a priority for Tempo because of how market dynamics can impact where revenue is coming from.
“Keep diversification at the front of your mind, because that’s just a smart business strategy, but keep your finger on the pulse of what’s changing from your business,” Mason said.