Strategy & Best Practices

5 Reasons You Should Be Launching Your Cloud Service Marketplace in 2012

By Nat Robinson / February 28, 2012

It’s hard to miss the growing prevalence of cloud computing as traditional software companies are either shifting to the cloud, or being overtaken by it. For SMBs, the ubiquity of cloud service offerings has become impossible to ignore, and more tempting than ever due to low cost and ease of use. The chance to strengthen your customer relationships by adopting a Cloud Service Marketplace strategy--before your competitors do--is both lucrative and attainable. Here’s why.

#1 Adoption of Cloud Services is Accelerating

Vendors of SaaS (Software-as-a-Service) are continuing to see their offerings take business away from on-premise software companies. Across the industry, analysts unanimously agree that cloud service adoption is on the rise:

• Gartner predicts that global SaaS revenue could hit $21.3 billion in 2015, a 113% jump from 2010. ¹
• According to Gatepoint Research 2011, the number of companies who will implement at least four cloud services will double from 17% to 33% over the next two years. ²
• IDC says that SaaS spending is set to grow at a pace six times faster than traditional software, with a CAGR (compound annual growth rate) of approximately 26% by 2014.³

With these top analysts predicting the continuation of aggressive growth on all fronts, 2012 is shaping up to be the year that SMBs make a huge impact on the industry with their purchasing power. Now is the time to ensure you have a strategy in place to to provide the cloud services your customers going to be looking for.

#2 Your SMB Customers Want a Cloud Partner

SMB cloud service adoption is accelerating, and businesses are looking for assistance with the selection, integration and ongoing management of their cloud products. The opportunity to become a trusted source of guidance is presenting itself in the form of Cloud Services Brokerage. As an existing provider, you are in a unique position to provide thought leadership on what services are most appropriate for your customer base, and help them navigate the landscape of cloud services.

According to Gartner, "Many services will be consumed directly, but many--particularly when there's a need to combine and add value to them in unique ways--will be brokered. Cloud Services Brokerages (CSBs) will have an enduring and profound impact on cloud computing and IT services, facilitating how businesses consume IT." ⁴

As a CSB, you’ll be able to provide services beyond just reselling software. Educate yourself on how you can deliver the right solutions for your customers before they start looking elsewhere.

#3 Your Competitors May Already Be in the Cloud

SMBs are beginning to view Cloud Service Marketplaces as a viable if not preferential resource for finding and using business software. Early adopters of the Cloud Services Brokerage strategy are already seeing huge payoffs.

• Appcelerator’s Open Mobile Marketplace provides a community marketplace that allows mobile app developers to connect with over 1.5 million of their peers to monetize their mobile assets.
• Bell Canada’s Business Apps Store connects its 500,000 SMB customers with the right cloud services to run their businesses more smoothly.
• Samsung’s television-based Smart Hub provides its customers with thousands of apps accessible from their remote control.

According to Gartner, by 2014 the CSB landscape will have grown from dozens to hundreds of providers. As the indisputable benefits derived from cloud services encourage SMBs to adopt sooner rather than later, the window of opportunity for you to become the dominant CSB for your customer base is shrinking. If you don’t provide a solution for your business customers, they will be forced to look elsewhere.

#4 Offering New, Innovative Services Increases Revenue and Reduces Churn

Your existing services can be the ideal segue into the creation of a Cloud Service Marketplace. Over the last few years providers have discovered that as additional value-added products are attached to existing services, subscriber churn decreases. Offering cloud services to these same customers not only drives revenue from the services themselves, but it protects existing revenue with those customers.

While many of your existing services may have been commoditized, providing your customers with a branded portal to access and manage their business data significantly strengthens customer relationships. A recent survey showed that 82% of small businesses believe it is important to purchase from a local, trusted provider. Based on this data, you are best positioned to play the role of a CSB for your existing customers because of the trust, awareness and existing business relationship you have with them.

#5 Building a Specialized Network of Apps Takes Time

Cloud Service Marketplaces are platforms for innovation, and are greatly facilitating the expansion of thriving developer communities. This aggressive growth in the landscape of ISVs creating cloud services presents yet another opportunity: by offering specialized cloud services you will be able to penetrate a range of vertical segments within your customers.

By nurturing your relationships with developers and working with them to achieve success, you’ll ensure that your marketplace continues to provide the richest set of apps for SMBs to choose from. These relationships with local developers will allow you to provide highly specialized solutions to your customer’s business problems. Building a mature, customized marketplace is a process. The sooner you start, the sooner you can embrace the developer community and help them expand their reach to customers.

Conclusion

The acceleration of cloud services adoption is creating an immediate opportunity for organizations to emerge as the channel of choice. SMBs will soon find that the complexity of managing multiple cloud services requires the capabilities of a Cloud Service Marketplace.

If you don’t establish your own marketplace your competitors will have unchallenged access your customers as they begin looking for a cloud partner. The time to establish yourself as a thought leader and to lead your customers down the path to cloud services adoption is now. Schedule a demo and find out how AppDirect can help you launch your Cloud Service Marketplace in a matter of weeks, not months or years.

References

_{1 Gartner Inc., "Forecast: Software as a Service, Worldwide, 2010-2015, 1H11 Update" by Sharon A. Mertz, Chad Eschinger, Tom Eid, Chris Pang, Laurie F. Wurster, 22 June 1022
2 Gatepoint and snapLogic, "2011 Application Connection Priorities," August 2011
3 IDC, "Market Analysis Perspective: Worldwide SaaS & Cloud Services, 2011: New Models for Delivering Software" by Robert P. Mahowald, Amy Konary, Connor G. Sullivan, December 2011
4 Gartner Inc., "Key Issues for Cloud Services Brokerages, 2011" by Benoit J. Lheureux, Daryl C. Plummer, 3 November 2010.}