Exploring the Top Cloud Computing Ecosystems – Michelle Swan, Tercera

This is Textron tv. Hey guys, thanks for the throw. We're here with Michelle Swan, who's a partner for Tera, and they have this interesting list of the top 30 cloud ecosystems that we're gonna dive into and what that might mean for folks in the world of IT and partners and the whole community as we know it.

Michelle, welcome to show. Thank you. It's great to be here.

So walk us through this report a little bit. What were you guys trying to surface and you know, what kind of lead in, what's the background and perhaps what surprised you in here, if anything? Yeah, no, I would love to.

Um, so the TER 30 is one investor's view of, uh, what we consider the top 30 software ecosystems to build a, an IT services firm or practice around. Um, and the reason why that's interesting to us is, um, so we are a growth equity firm that specializes in IT services, uh, specifically those that are in ecosystems, we believe that are, um, kind of the next gen, um, IT stack out there. And so we think these are the 30 ecosystems that are pushing some of the boundaries.

Some of 'em are really big ecosystems, some of 'em are emerging, a little bit more nascent. Um, and there's thousands of software companies out there. Um, and we think that it's helpful to have a little bit of data to decide which ones are the ones to make betts on when it comes to building a channel-based business.

Um, so that's what the TRUSERA 30 is. There's 30 names on the list. Um, and you know, they're some of the biggest names out there like Salesforce, snowflake, Oracle, um, and then some up and comers that that we think are really, um, kind of moving and doing some pretty cool things.

Names like, um, OneStream commerce tools, Databricks, things like that. And I think that brings us to the issue in the day. It feels like early on we had a w s and then Microsoft and Google were kind of the dominant forces in the cloud, but your report kind of surfaces the fact there's a lot more diversity out there and people are building applications on all kinds of things.

So has the cloud kind of evolved or are we, are we reaching some sort of new era Again? I mean, I've been in it for 25 years. Um, and so I feel like there's always ups and downs and there will always be, you know, the, the names that kind of consistently stick around, I will say, you know, names like Microsoft and um, SS A P, those will continue to stay a big part of the IT stack, but there's always gonna be new names out there.

Um, I think the interesting thing is how composable it is becoming. I mean, you, you know, it used to be that you could standardize on a few different platforms, but when you look at all the options out there and how fast companies need to move, um, and how easy it is to almost swap out some of these software vendors, um, with the cloud that I think companies have sometimes dozens, you know, of, of software players out there. Um, and, and, and knowing which ones are going to offer the biggest opportunities for services companies, I think is really important for firms to think about.

Are we seeing any kind of shift in share or, um, influence around this whole movement to cloud native? Because we see folks building out things that are on Kubernetes, serverless computing frameworks. They scale up and down more dynamically than a traditional monolith application.

And are people reconsidering their choices as they make that transition? I think they are. Um, I mean I think even if you just look at, I'll take commerce as a perfect example.

If you look at what's happening in the, the world of composable commerce, a lot of these big monolithic stacks are getting replaced piecemeal. Um, and so some of the companies out there like Commerce Tools, fluent Stripe, you know, they all play a piece of it and um, they're taking share from some of the big, you know, big vendors out there that have these big monolithic stacks that are just hard to move. I think early on, we'll start with the partners, at least the partners, much like the end customer kinda leaned on one particular cloud platform.

They were, we all got certified on a w s we talk about multi-cloud and then we talk about hybrid cloud. Have we arrived there or is the kids safe in the back of the car? Are we there yet?

Um, I think there's always going to be, uh, a need to prioritize what partners you focus on. I would say, um, and it's interesting when you look at, we've made seven investments so far, um, and in our portfolio and most of those companies are specialized in one particular area, whether it's Atlassian or Snowflake or Okta, for example. But I think as, uh, multi-cloud becomes more important, as it becomes more composable, it is really important to start bringing in other partnerships.

And it can't just be that one one partner anymore, but knowing who your primary partner is, I think is still incredibly valuable. Um, but customers are expecting services companies especially to have expertise across more than one. That's just the way it works.

Now We've also seen of course the rise of managed services in the cloud. And it's different in the cloud in the sense that a lot of the times the managed services provided by a cloud service provider and then resold by a partner, sometimes the partner provides that. Is that dynamic changing as we move to a more multi-cloud environment because the customer wants somebody to kind of stitch this all together for 'em?

I, I think so. I mean, I think that, um, if you look at the skill sets that are required too to do that, well, you know, know it's architects become a whole lot more important. Integration becomes a whole lot more important.

The ability to, like you said, stitch all of these different things together to pro provide a more comprehensive view, um, especially in, you know, areas like security for example, where companies they find it really hard to hire, um, some of the security personnel that they need. So they're outsourcing more and more of that and they need partners that that can look across all the different tool sets, not just one. You of course are closer to the partners, but the partners do a lot of business with the traditional IT folks.

What's your advice to IT folks about how to evaluate those partners? Because a lot of them are private, you can't really see what they've got for revenue, so you don't really know how stable they may or may not be, but what's the earth stick? Hmm, that's a great question.

I think probably the biggest thing that a, you know, a customer can look at is how well they know the platform, um, that they're working with. So, you know, is it more of a a generalist out there or are they really specialized in knowing how to take some of these technologies and put them to work inside a very complex business, especially if you're in a big global enterprise. Um, I think the biggest thing too is just, you know, have they done implementations or projects or run initiatives that look like what they're gonna have to do for that client before?

So case studies become a whole lot more important references from partners, references from other customers. Um, I think it's also knowing what fits in your business too. Are you, do you need an Accenture?

Do you need a large partner, um, for some of these things or do you need something that's smaller? What's going on with the cost of managed services these days? And I asked this question because the cloud service providers will provide discounts based on consumption and the partners therefore are trying to figure out how to resell that maybe and figure out what their margin's gonna be.

But then there's a lot of partners who are very aggressive on pricing and maybe too aggressive. So, um, you know, how do I navigate what's going on with services out there in terms of the partners because it gets pretty confusing from the IT side. That is a good question.

I wish I had a a perfect one word answer for that. Um, I think it's like, you know, anything with pricing you just, you have to know what you need. You have to ask lots of questions out there, make your comparisons, um, on things and see what the different options are.

Um, I wish I had a an easier answer for that. Your, your negotiation mileage will vary is basically how it's gonna come there. Exactly.

Um, are we starting to see, um, at least I feel like it's getting easier to build applications in the cloud and I think early on we kind of just lifted and shifted some stuff and it kinda ran optimally sometimes and suboptimally more often than we care to admit. Are we looking at opportunities for partners to go back in and look at those applications and kinda really make them truly cloud native? I think so.

Uh, I mean I think it probably depends on the customer. Um, some people, you know, they're like, this is how we've done it, we just wanna move it to the cloud and that's all we need. And they're not thinking about it strategically, which I mean, things run differently in the cloud and it's an opportunity to do things differently.

Um, so I do, I think some are doing, uh, it better than others and it is interesting the shift to more consumption based, um, which it's a different mindset for a lot of partners and even vendors that are more transactional versus, you know, what's the value I'm gonna provide and how am I gonna help you get more use out of this? Do more things with it. Um, so it is a little bit of a different mindset.

A lot of the partners I know are marketing challenge. They are what I like to refer to as accidental entrepreneurs. Bunch of IT guys started a company and off they will add engineers before they kind of reach out and think about sales enablement.

But what's your best advice to the partners about how to better engage customers? Hmm. Um, don't sound like everybody else.

Uh, that's one. I mean it's amazing. We talked to, I think we've talked to 700 different IT services companies and you would be amazed at how many of them say, we have great people, we do great work, we've got a great culture.

Those three things. Um, and so when everybody's saying the same thing, um, and then the other thing is just invest a little bit in, um, packaging up your expertise in a way that customers actually understand. Stop using the buzzword buzzwords, stop putting everything through chat G P T and just putting, putting out what it spits out.

Um, do the work to figure out what problems your customers actually have. Um, and it's interesting, I feel like a lot of these accidental founders, they have an intuitive, they know what problems they're solving, it's just taking the time and maybe hiring a couple people to figure out how to actually package that up in a way that, um, is appealing to customers and sounds different from everybody else out there. Of course, you cannot walk down the street these days without somebody leaping out to tell you about their great new AI thing.

What ultimately will be the impact of all these AI capabilities to these cloud services and on the partners themselves? I think it's interesting you say that 'cause um, you know, on the RA 30, when we did the report this year, one of the things that we were, um, we did a, a survey of, um, 50 plus IT service executives and asked them how important AI was to their business strategy, who they were working with. When we looked at the vendors across the TER 30, every single one of them had something to say about ai.

Some were completely repositioning themselves as an AI platform, but every single person had some announcement or every single one of the vendors had some announcement. And I think that's super confusing to customers and it's a huge opportunity for partners, um, to really help, um, companies understand what's real, what's not real to, you know, a lot of these vendors that have different AI features as part of the platforms to really help customers understand how to apply those features, um, when they shouldn't apply them and uh, and what the world is gonna look like in a couple years. Um, I think that IT services is probably one of the biggest areas of opportunity, um, when it comes to ai.

A lot of the money's going into the software platforms, but I think it's gonna put a lot of tailwinds behind IT services companies 'cause customers just are gonna need help navigating this crazy craziness. Alright, so we have these ecosystems and they're made up of cloud service providers and the partners and of course the organizations that consume these various services. What's that one thing you've seen so far that kind of just makes you shake your head and go, there's a lot of room for improvement here.

Where would that focus be? We could do better at lots of different things. I think the, when I look at, I'll, I'll take it from a few different angles.

What I think, um, what I think the ISVs could do better in terms of supporting their partners is, is helping them understand where the white space in the platforms are. I would say where are their opportunities where they're not opportunities? I think, um, I mean you look at the a w s ecosystem for example, and there's thousands and thousands of partners out there.

Um, and where is the real opportunity for some of these partners versus just, you know, gonna be like everybody else. So I think that's one area for improvement. I think this whole AI washing is just, that's a huge area for improvement.

It's interesting, we saw it with cloud, right? Back in the day, everybody had something to do with cloud, even if it wasn't. Um, I think we're seeing the same thing with AI and helping customers and partners figure out what's real and what's not real.

Um, what's marketing and uh, and what's real technology. I think that's an area that we could probably do a lot better. All right folks.

Well you heard it here. There's these ecosystems out there and they're large and complex and there's a lot of nuances running through that. But the more you understand about them, the better off you're gonna be.

Hey Michelle, thanks for being on the show. Thanks for having me. Alright, back to you guys in the.