How the Cloud GTM Playbook is Evolving in the Agentic AI era

Hey everyone. Alex Smith here and welcome to techron tv and I am delighted to be joined by DA Vu, managing director of a Google Cloud marketplace. Di thank you for joining the show today.

Yeah, great to be here with you, Alex. So, Dai, we at the Futurum Group did a research study with Google Cloud on the marketplace. We spoke with a ton of your partners, um, earlier on in the year.

And, and we'll get to that in a little, in a little bit. But just to kind of start off, give us a bit of a big picture, you know, for ISVs and channel partners that are new to this, you know, how do you see Google Cloud marketplace, you know, kind of changing the way in which companies ISVs go to market? Yeah, absolutely.

So at the core, uh, cloud marketplaces are fundamentally to change the way ISVs and channel partners go to market by shifting this traditional, like direct sales motion to something that's more digital, online and scalable and also collaborative across the ecosystem. And so, you know, think of it as, you know, the central hub where customers can search, discover, trial, procure, and deploy software. And for partners it's a great opportunity because it streamlines the sales process, it opens up, uh, new revenue streams and fosters deeper collaboration across the ecosystem.

Yeah, and from our side, you know, our research shows that cloud marketplaces are becoming an increasingly major route to market. Um, and in fact, a survey that we conducted at the start of the year, uh, showed that 97% of partners are saying that some of their revenue is tied to marketplace. So, I, I don't know from your perspective, what, what do you see as some of the driving forces behind this growing shift?

Yeah, I think, uh, I like to kind of start with the customer. So, you know, ultimately partners want to sell where buyers are buying, and increasingly that's marketplace. So, you know, a lot of companies are scaling their usage, but I would say, you know, nearly 90, 95% of customers are actively curing marketplace in some form.

Mm-hmm. And, uh, you know, with customers, what they're doing is they're making larger and larger cloud commits and marketplace spend helps de-risk that minimum committed spend. Uh, but once they start going on marketplace, our data shows that once they get a few deals under their belt, they scale their usage considerably.

And, uh, you know, customers love the ability to procure very quickly. They can consolidate some of the billing relationships, uh, they can get the value faster. And they know that a lot of the, uh, platform features around, like things like governance, customization, and access control can really help manage compliance and, uh, software consumption.

So on the flip side, you know, partners, uh, love marketplace because, you know, it's not just another sales channel, but it becomes this really strategic imperative to stay competitive, unlock new revenue streams, and provide the value of sort of like a modern, uh, sort of distribution channel. And, you know, it's, whether it's the partners getting access to that committed cloud spend or accelerating sales cycle time, or just enabling this sort of co-sell motion with Google Cloud, it's really a great opportunity for them to sort of grow, uh, from a strategic standpoint, uh, the overall opportunity. And, you know, so the way I think about it's like a partner that's not leveraging cloud marketplace would be the equivalent of like a retail business who is not leveraging an online store in today's digital economy.

So it's just something you just have to do. Yeah. Absolute necessity.

Um, and you know, you, you, you rattled off some of the, the benefits there. Um, the, I cited the beginning of the conversation. You know, we did a study with Google Cloud and, you know, let me just read off some of the stats that we found, um, in doing this study is b seeing, uh, 112% increase in the average deal size.

Uh, they're also seeing 14% improvement in customer retention. Um, uh, again, for the ISPs and across all partners, um, deals are closing faster, up to 50% in time savings, um, and 70% of partners reporting that multi-year deals are more common through the marketplace. So just, those are some of the key stats that we found.

Um, you've obviously highlighted some of the data points you have at, uh, at Google Cloud, but, you know, how does this all stack up with kind of what you're seeing and hearing every day as you're talking with the partners engaging in the marketplace? Yeah, yeah, absolutely. So first of all, amazing stats.

I love it. Um, very consistent with what partners are telling us in terms of the tangible benefits, but let me touch on a few of those. So, you know, on deal sizes, as you know, private offers has provided that sort of seamless transition for many partners to go from that traditional sales led motion and bringing it online.

And we are consistently seeing, you know, deal sizes, like total contract value of millions and tens of millions of dollars. In fact, we're doing multiple nine-figure deals. So over a hundred million in contract value, uh, over the past year, uh, on faster deal cycle times.

I think this is driven by, you know, standardized agreements, simplified negotiations, and really empowering the customers to procure solution without engaging sort of that lengthy procurement and vendor, uh, review cycle time. So really accelerating time to value for everyone. And then for multi-year deals, you know, we provide, uh, support for up to 10 years upfront, multi-year prepay for five years.

And of course, this pricing flexibility aligns with customers who want to have greater discounts and greater cost predictability that comes with these longer term commitments. And then lastly on the, the retention rates, I think what we're finding is deals that happen on marketplace tend to have better renewal rates and better expansion opportunities because they're kind of deeply integrated into the customer cloud ecosystem and financial commitment. So those opportunities to grow the business is considerably there.

So it's no surprise that partners are shifting more and more of their business through marketplaces. And what we're finding is some of our top partners are driving 50%, 60%, 77% of their business through cloud marketplaces. Yeah.

Incredible multi, multi-dimensional benefits there. Um, something as well that you touched on earlier is the, this notion of cloud commits, the committed spending that exists and the ability for partners to be able to kind of tap into some of that opportunity. Um, and I think, you know, we found that in the study that we did, you know, that was a definitely an important factor.

Um, I also think historically there that was kind of more of a reactive, um, approach to the market, but you know, now we're seeing partners being more proactive here working with, um, you know, Google, FSR, you know, teams to kind of, you know, help, uh, you know, just maximize those opportunities. So, uh, anything you could share around, you know, what you're doing on that side of things and, and how you're helping partners understand the cloud commit landscape and, you know, working kind of in this co-sell tandem motion there. Yeah, absolutely.

So I would say we're doing a number of things. Lemme just highlight a few. So I think one is, you know, we're providing, you know, data and visibility and tooling, uh, incentives, uh, various go-to-market initiatives.

So for example, uh, deal registration. So this, uh, our solution connect platform enable ISVs to register deals and basically enable them to connect with, uh, reps, uh, our cloud reps on a particular opportunity. So this really ensures a very coordinated joint sales efforts.

Uh, and of course our reps have quota attainment, uh, for marketplace transactions. So this creates a very powerful alignment and really encourages them to, uh, engage with ISVs and their products because, uh, you know, they're already incented or motivated to engage with ISVs because, you know, it's a critical part of customer workloads. They can accelerate customer migrations.

And, uh, sometimes it's part of this, uh, you know, this platform consumption capability. Uh, we also provide incentives. Uh, so for example, we have something called the Marketplace Customer Credit Program.

And this gives net new deals to marketplace and customers the equivalent of a 3% first year a CV Google Cloud credit. So this has been very effective to accelerate customers purchasing a specific ISV solution on marketplace for the first time. And then I would say we also are rolling out other tools like propensity to buy tooling.

So this is leveraging our data on customer usage, spending behavior, and effectively partners can give us a list of targeted accounts and we can generate a propensity score. And this enables them to have a much more targeted, uh, uh, efforts in terms of their selling efforts and have higher probability conversion. And then last thing I would say is we're doing a bunch of things around marketing as well.

So there's broad, uh, sort of co-marketing, uh, opportunities, whether it's creating co-branded campaigns and taking advantage of incentive funds to create healthy pipeline or defray costs where they can just leverage best practices and go to market guides to help guide, uh, build and grow that marketplace business. So, uh, so it is, they say it's not just a, you know, listing products, but it's really becoming this proactive sales engine. Mm-hmm.

And we're providing the data and tooling to support them. Yeah. Lots of great programs and tools there.

Um, so now let's talk about the, the channel. Um, mm-hmm. Obviously Google Cloud has a unique channel centric model with its, um, with its marketplace, and especially with the, um, marketplace channel private offer or MCPO program that was launched.

Te tell us a little bit about the thinking of putting channel partners, you know, at the core of your strategy and, you know, what are some of the benefits that you see from this model? Yeah, so, uh, you know, as you know, there's, there's a lot of chatter a few years ago that hey, marketplaces and channel partners, we're gonna be competing channels. But what we're finding is a lot of enterprise deals are, they have complex sales processes, negotiations involve multiple partners, and then as customers scale up their usage or marketplace, they're gonna look to their sell and services partners to help them, uh, you know, discover, procure, and deploy a very broad set of technologies.

And of course, they're gonna leverage the expertise, the sales and services expertise of the partners, um, as they manage through the customer, uh, lifecycle. So I believe, and I think it's validated throughout the industry, is that the channel partners are gonna play a critical role in driving marketplace growth. Um, so customers really demand that.

And so, you know, when we think about the things that we're doing with resellers, it's very consistent with how we have a very open ecosystem. So it's whether customers can choose to work with direct or channel partners of their choice, or determine whether it's a first party or third party service that they want to, uh, uh, uh, procure at the marketplace to address a particular business challenge. And, you know, what we're finding with our, uh, traditional resellers is we're going through a little bit of an evolution.

So, you know, as they embrace and work with cloud marketplace, they're not gonna take their traditional sort of resell fulfillment licensing model and bringing that online, but instead they're going to expand their role and value proposition because, you know, what we're doing is we're streamlining some of the billing and operations so they can focus on more higher value added services, right? Whether it's, uh, bundling services with marketplace solutions or bringing in their own, uh, professional services capability or managing the cloud spending. I think this enables sort of this broader sort of business outcome, uh, and, uh, an impact, uh, working with the broader ecosystem, working with our customers.

Yeah, I, I totally agree, but at the same time, we also sometimes have to be a little realistic, and there are times when the ISV reseller connection is, you know, just not as, uh, as smooth as, uh, we might want it to be. Um, it could be an ISB that doesn't really know how to work with resellers, um, or, or vice versa, a reseller that might not be proficient in a particular ISVs technology. So how, how are you thinking about, you know, kind of managing the potential clashes that, you know, might have kind of in this engagement model when you're kind of really now at the, at the center of this ecosystem?

Yeah. Yeah. I think we're doing a few things.

So I think particularly on a particular deal, I think what we're doing is a bunch of things to enable early engagement in a deal. So, uh, you know, certainly if that engagement happens at the 11th hour where like an ISV is already quoted to the customer, that can cause it some friction. So we're providing some tools, uh, to our partners to enable, you know, telemetry and visibility earlier in the sales cycle.

So the ISVs and reseller can align on things like commercials and they can dev jointly develop the opportunity. We're also, you know, doing some things around robust training and enablement. So like, for example, marketplace, marketplace specific training where both ISVs and resellers can access training that focuses on how to, you know, transact on marketplaces best practices for creating private offers, managing reseller relationships, and navigating the whole entire co-sell programs.

And then what I would also say is there's some other things that we're doing, like standard reseller agreement. So like, for example, if a reseller and ISV haven't worked together, there's an ability to sort of grab standard reseller templates, enable that collaboration and really close deals faster, and it scales in a very efficient way. And of course, there's a bunch of tools that we're providing the ISVs on the platform, whether it's like granular discounting, uh, you know, enabling entitlement transfers or being able to bring their own channel partners from their own channel network in a very, uh, you know, frictionless way.

There's a bunch of tools that we're looking at. Uh, also improving things like enhanced reporting. So imagine, uh, providing granular reports to both the ISV and the reseller for the respective deals, including customer data, reseller, data consumption details, and progress against committed spend.

So I think what we're doing is really create more of a partner centric marketplace. So moving beyond sort of the basic functions of, of, of a storefront, but really enabling that ISV reseller relationship that's not into transaction, but more of a successful collaborative partnership. Yeah.

The under the hood stuff is so critical. Um, now you have a lot of success stories, um, you know, in, in the Google cloud marketplace. I think the one that has got a lot, gotten a lot of our time this year has been Palo Alto Networks.

5 billion in sales through the Google Cloud marketplace. Yeah. Um, what are some of the things that you see, you know, companies like Palo Alto Networks or others doing, you know, to really be successful, uh, in the marketplace?

Yeah, so Palo Alto Network, specifically the way to think about them is it's a very strategic and collaborative approach they've had from, uh, from going back a number of years. It isn't just sort of simply listing their products on marketplace, but really just integrated their, their business sales motion and technology with Google Cloud. So I think, I think it all starts with co-innovation.

So, you know, we have a number of, uh, solution integrations across a number of different areas, and, you know, of course that enables customers to experience solutions that feel very cloud native to their Google Cloud environment. And it really creates a very massive selling point for customers who want a very seamless, non-disruptive security solution. The other thing that they've done is they've leaned in very heavily in terms of, uh, the go to market and partner ecosystem and creating this sort of co-sell motion that's sort of best in class for us.

So they've embraced marketplaces, the sales channel, they have, uh, over 30 listings on the marketplace. They have very comprehensive tech technical documentation and reference architectures to help customers, uh, with seamless deployment. And of course, um, you know, the way to think about this is that, uh, this was sort of a multi-year journey for, for Palo Alto Networks, which was, you know, getting listed on marketplace was, was relatively easy.

But, you know, there is no channel where any partner can just get listed and all of a sudden you get all these deals in pipeline. You had to be very intentional and invest. And, you know, what we're seeing is, uh, you have to view this as a long-term strategic growth opportunity that may take a couple of years to scale.

You know, and what we'll see is, you know, over, over the couple of years partners that are doing it very well, they are doing things like product integration, internal organizational alignment, sales enablement, you know, having the right policies in terms of like pricing and how they comp their reps. They can invest in people, you know, maybe some operational capabilities like a deal desk. And these are the type of things you have to do to get to your first like 10 deals and get that flywheel going, and then ultimately invest at scale where the marketplace ultimately represents 30, 40, 50% of your business.

Yeah. It's like you said a couple times, kinda like anything in life, but it's not just listing on the marketplace in order to, you know, see good results. You, you, you, you need to invest.

Uh, kind of further into that, and you've touched on, um, a lot of the, you know, the good things that you see partners doing there. You know, our research showed things like successful partners at minimum have it dedicated, you know, cloud, uh, deal desk and sales team to kind of help, um, operationalize it. And even things like comp mutual plans to ensure that the sales organizations are are, are bought in.

But, you know, for, for kind of new partners out there, um, what what would be your kind of one, two pieces of advice for a partner that's kind of just getting started or thinking about, um, you know, new into the marketplace and, you know, how do they think about driving kind of long-term success? Yeah, yeah. So again, I would point at the foundation has to be this having a very differentiated offering and a very better together story.

So what is the joint value proposition? Why does your product align well with Google Cloud and how does the marriage between your offering and Google Cloud really provides this great benefits to the end customer? And you know, what seems to go very well, well is if there are strong integrations with our first party services, whether it's like AI and data and analytics and security, uh, you know, this also drives, uh, a big part of that success.

And, uh, you know, you gotta make sure that once you have this better together story, that it becomes very easily and enabled through not only your own sellers, but our, uh, our sellers as well. Mm-hmm. Uh, the other piece that you mentioned is investing in people, processes, uh, marketing, uh, relationships and enablement, because I think what companies do are, you know, they have to modify maybe their systems and processes to align with marketplace.

We mentioned the, um, the, uh, the deal desk. We have to make sure that you evolve and get more of a sales or revenue leader, uh, function. Maybe as you start, it becomes a little bit more of an alliance led, uh, motion, but over time, as you get more success, you get, uh, executive, uh, uh, a sponsorship with the chief revenue officer or the sales leader in the organization as well.

Yeah. And then from a, from a technical, uh, or tactical standpoint, you know, you gotta register deals, uh, and when you register deals, you know, one of the things I recommended as companies get started is you need to establish that track record of success. So, you know, identify like a, a geography, a customer segment or an industry where you had some early success.

And then once you have a couple of wins underneath your belt, you can work with your advocates and sponsors within Google Cloud to, uh, elevate these, these wins, these win wires. And then what what happens is it becomes a little bit of a self-feeding process where you build momentum, you get some differentiation, and you get some wins, and then you can scale, uh, pretty significantly thereafter. Yeah, absolutely.

That internal selling is so critical in a lot for a lot of these, uh, uh, companies like looking to get buy in, like in anything in life. Right. Um, so now, like, kind of forecasting a little bit, um, give us a sneak peek.

What are some of the things that, um, you know, you and your team are thinking about or, or, or working on? Any, anything that you know might wanna highlight that you, is, that you're able to share that might be coming down the road that would benefit some of your ISV and channel partners? Yeah, maybe, maybe I'll just highlight a few things we recently launched.

So, I mean, certainly one thing we launched was, uh, introduce a new variable rev share model. So for eligible partners in their deals, rev share can go as low as one and a half percent for things like renewals or large contract, uh, uh, uh, uh, deal sizes. Uh, we, we also, as I mentioned before, we went general availability with this end customer, uh, incenter program, 3% for the first year, a CV.

So this has been great to unlock and acquire new customers. And then earlier this year we also launched, uh, professional services. Uh, so professional services is a formal solution type on marketplace.

So at first, the ability to cross sell or upsell things like implementation services, training assessments, and managed services. But I think what this does is it creates a nice building block for us to drive more business outcome and solutions for end customers because, uh, you know, between the ability of a sell and services partners to focus on, uh, solutions between like different ISV solutions, multi-vendor private offers, marketplace becomes this potential connective tissue between the different partners who participate in marketplace delivery and value add. So imagine of shifting from simple products and SKUs to more customer outcomes and complete solutions.

And I think marketplace will be a key enabler for that when you think about these multi-vendor private offers. The other area that I would say that we're investing in quite a bit is, um, activating, uh, product-led growth. So PLG.

So, uh, as you can imagine, this is the ability to sort of self-serve. Uh, this was the original promise of marketplace, but what we're finding is that there are a lot of capabilities between personalization and AI that will make this a little bit more real. So we're improving the search experience, we're gonna improve some analytics so that you can drive a campaign directly to a marketplace listing mm-hmm.

And track where they are in the funnel. And then we'll also surface, uh, third party solutions in context across the broader cloud console. Uh, so for example, if you're a Vertex AI developer, ML practitioner, you should be able to see related solutions from our marketplace within your experience.

And then lastly, what I would say is, um, we're gonna do some things to really automate the partner co-selling journey from lead to cash. So some of the things we're doing around like APIs in terms of like deal registration and private offer creation will create some of the automation, uh, that our partners have been asking for. So a lot of great opportunities and a lot of great areas of innovation that we're driving.

Yeah, lots of innovation, both I'd say on the front and back end there, and, uh, and raw expansive of the, of the program. Uh, that's great. That, so look, we're getting close to wrapping up now.

Maybe just a final kind of thought, even looking further out and, you know, the mm-hmm. The theme of, uh, this year in the, in the technology industry really has been, um, obviously ai, but I think even more so agentic ai. Yeah.

And just want to think about, you know, how do you see, you know, marketplaces playing, you know, an important role in a world of agentic ai? Um, you know, you obviously launched a new category this year, so clearly it's something that, uh, that, uh, is, is, uh, important in the, in, in the halls of Google Cloud marketplace. Yeah, yeah.

So, uh, listen, I, I don't need to tell you that the market opportunity for Gentech AI is just massive and, uh, you know, there's a lot of growth. It's, it's really shifting from this reactive, uh, to something that's a little bit more proactive and goal-oriented solutions. And I think because the AI agents can, they can reason, they can plan, they can act autonomously across a, a complex set of tasks.

And I think what we're gonna see is, uh, maybe evolution of AI agents as a solution, right? So certainly AI models and services has been available in cloud marketplaces for some time now, but AI agents represent that next evolution. So, uh, you know, the simple model performs a single task to an agent of software that could perceive an environment, reason, make decisions, and act autonomously creates a tremendous opportunity.

And the reason why I think cloud marketplaces really that go to market and commercialization innovation model is when you think about, um, you know, where's all the innovation gonna happen? It's all gonna be across the ecosystem. So, you know, we might have, you know, 5,000, 10,000 agents on marketplace within a couple of years where, you know, you need to be able to search and discover and look for business outcomes.

You need simplified procurement, you need quality signals around trust and security. You need scalability capabilities and integration. And, you know, I think all these things come to marketplace as that primary solution and route to market for this, for this, for this area.

Now, in the near term, as you mentioned, we launched an AI agent marketplace, uh, in April. And now partners have the ability to not only list and monetize, uh, their agents, but now potentially integrate into agent space. So agent space is our solution for the general business and knowledge worker, where you can basically have, uh, business users not only work with agents that are first party custom agents, but also a rich ecosystem of agents that they might acquire through a marketplace.

So it really creates a great opportunity to extend the reach and drive innovation, uh, with, uh, with, with, with ai undoubtedly. So it's a huge opportunity. Yeah.

Yeah. This space just continues to get more and more exciting. Um, so Dai, thank you so much for, um, you know, hopping on here and talking all, you know, good things, uh, marketplace, um, really, you know, enjoyable conversation.

And I always learn a lot when, uh, when speaking with you on this topic. Um, and to all of our, uh, uh, viewers out there, thank you for taking the time and, uh, have a great rest of the day.