Today, I am honored to kick off our inaugural Marketplace Summit. For the first time, we are welcoming thousands of independent software vendors (ISVs) and Software as a service (SaaS) providers as we broadcast live from Microsoft Studios to share how we are committed to our shared success by helping ISVs maximize the marketplace opportunity.
The mass migration to the cloud since the pandemic is forcing an inflection point where customers are looking to optimize and streamline their investments — this creates an opportunity for SaaS providers and ISVs. Because of this growing demand for SaaS services, we are firmly committed to provide the right resources, tools and support to take advantage of these opportunities. Today, we are thrilled to announce the global public preview of the ISV Success Program. We are excited to offer this personalized support at the solution level and support every ISV to innovate on the Microsoft Cloud and rapidly go-to-market through the commercial marketplace.
Creating scalable growth models for ISVs
Marketplace is at the core of the ISV Success program as we aim to help every ISV not only build on the Microsoft Cloud but go-to-market with Microsoft and sell through the commercial marketplace.
In an uncertain economic environment cloud budgets are durable and still on an upward trajectory. Cloud marketplaces are outpacing cloud growth and are becoming the centralized go-to-market channel of the future. According to Tackle’s 2022 annual State of Cloud Marketplaces report, cloud marketplaces continue to generate more revenue year over year and Bessemer Venture Partners noted that in 2021, marketplace transactions grew an estimated 70% to $4 billion, which is 3x faster growth than the public cloud at large.
With the cloud embedded into every business, there is massive opportunity for any company selling SaaS or cloud-based solutions, but it’s becoming harder and harder for ISVs to differentiate and acquire new customers. Those who embrace the marketplace and are strategically executing a marketplace-first, go-to-market approach are seeing the most cost-effective growth. At Microsoft the marketplace continues to become central to how we connect customers and partners at scale and ISVs of all sizes and maturity find success when they build a cloud-centric, go-to-market strategy.
“Wiz was born in the cloud and our ecosystem is built around the marketplace motion,” says Trish Cagliostro, Head of Worldwide Channels and Alliances at Wiz. “When we work with customers in the marketplace, they usually have cloud consumption commitments through their Microsoft contracts. They can use this to consolidate IT spend and reduce total cost of ownership, which is powerful and gives Wiz the opportunity to have elevated conversations with customers.”
To support every ISV in harnessing the growing cloud opportunity, Microsoft is investing in programs and benefits across the Microsoft commercial marketplace. We are making concrete investments in programs that can benefit all ISVs, regardless of their size, scope or history. Over the past year, the marketplace has matured into a thriving commerce environment. We’ve seen:
- 288% growth in SaaS-billed sales
- 319% increase in customers with consumption commitments buying via marketplace
- 200% increase in private offers sold by Cloud Solution Providers
This momentum continues as customers look to centralize their cloud portfolio through B2B marketplaces to increase efficiency, buy with confidence, and spend smarter. Some of the recent marketplace innovations include:
Enterprise deal making
With 95% of the Fortune 500 using Azure, Microsoft has direct access to enterprise customers and through the marketplace, we can unlock access to these customers. We’ve seen a 164% increase in enterprise sales through the marketplace, and this will continue to grow with our commitment to partner success. Furthermore, Microsoft is unique in that we offer every dollar of cloud spend to count toward a customer’s cloud consumption commitment when they buy an eligible solution. This, paired with our enhancements to private offers and multi-year SaaS functionality, is cutting through procurement red tape and closing 7- and 8- digit deals regularly through the marketplace.
Empowering the ecosystem
Microsoft has always been a partner-focused organization. As customer needs continue to evolve, Microsoft commercial marketplace is empowering our ecosystem of over 400,000 partners around the world to work together at a faster pace, on a larger scale and on their terms. Earlier this year, we announced the general availability of margin sharing. ISV partners can create private offers and extend a margin to scale through partners in the Cloud Solution Provider program. With margin sharing, SaaS providers and ISVs can extend their sales forces and reach new markets.
To further enhance the ability for all partners to work together, we also announced that multi-party partner private offers will soon be entering private preview. This additional functionality will empower any set of partners to come together, create personalized offers with customized payouts, sell directly to Microsoft customers through marketplace and have the sale count toward the customers’ cloud consumption commitment. This will pioneer new opportunities for every partner and we look forward to sharing more details in the coming months.
The value of partnership
Only through co-innovating and jointly going to market can we truly meet customers where they are — and that synergy is the goal of the commercial marketplace. According to IDC, partners that build their own software and services are the most profitable high-growth partner business model. They estimate for every $1 of Microsoft revenue, $10.11 is made for partners that build software — 25% more than the estimates for services-led partners.
From the beginning, Microsoft has been a partner-first company. And as Microsoft’s portfolio has grown, we’ve increased our focus to ensure that our partners can access all of the innovation we create through our research and development investments, as well as to deliver their own services and solutions on top of that innovation.
Today marks an important milestone as we commit to supporting every ISV in their growth with Microsoft with the ISV Success Program and the variety of other tools and resources we outlined to support ISV success. For more details, Anthony Joseph, vice president for Marketplace and ISV Journey, covers the opportunity with the ISV Success Program on the Azure blog channel. We are excited to work side-by-side with the ISV and SaaS community to realize all the potential of building on the Microsoft Cloud and selling through the commercial marketplace.