Insights and Predictions for the Channels and GTM Space – Predict 2025

Hello everyone. Alex Smith here with the Futurum Group, and today we're gonna be sharing with you some of our predictions in going into 2025. And I'm specifically gonna be talking about cloud marketplaces and the role that we expect them to have in the technology industry.

In fact, we think cloud marketplaces will become as important as a route to market for the software industry as traditional distribution has been for the hardware industry. And there's really three main reasons why that's the case. The first has to do with marketplace fees, which have been coming down over the past decade.

You go back a number of years when marketplaces first came on the scene and fees were around 20% north of 20%. 5%, uh, depending on marketplace, depending on scenario. And in this price point, they're operating in a similar margin stack to what, uh, traditional distributors would offer for their customers.

So overall, it is becoming a more cost effective route to market. And vendors can bake this fee into their pricing. They can offer their Salesforce comp neutrality, many do, and that, again, makes it overall a more cost effective, uh, route to market, uh, compared to what it was in the past.

So that's driving some momentum. The second factor has to do with cloud commits. And by this we mean, uh, long-term commitments that customers make to spend in the hyperscaler environments.

And increasingly, this part of this c commit can be used on third party software products that exist in the cloud marketplace. So that is an additional way for customers to burn down these long-term commits. And this commit amount continues to grow across the three leading hyperscalers.

That number now stands north of $400 billion. So what you see here effectively is a, a ready made economy for software companies to be able to tap into because they are dollars that have already been committed to spend. And in many cases, if they cannot spend it on their compute needs with the hyperscalers, then they're looking to spend that on their software needs through that same same vehicle.

And the way to tap into that is through these marketplaces. And I think what you'll see now is the next evolution of that where when the hyperscalers are going to discuss their commit contracts, they will not only be talking about the the compute and storage needs that they're providing, but they'll also be talking about the software needs that that customer has to, and saying, why don't you break, bake that into your, uh, commit plans going forward. So I think that will be more tailwind for the cloud marketplaces as well going forward.

And then the final factor has to do with the role of channel partners. And increasingly what you're seeing is that the hyperscaler marketplaces are creating programs and policies and other forms of enablement to allow channel partners to be a part of this overall marketplace engine. Right?

We mentioned earlier that as the overall marketplace fees come down, that leaves more room again in the margin stack for the channel partners to, to be involved as well. In fact, you're seeing now north of a third of all marketplace deals involving some kind of channel partner. Some marketplaces leaning much more heavily into that motion than others.

And this also means that the software vendors themselves can include their traditional partners as part of their overall marketplace strategy so that the partners are not competing with what they wanna do on the marketplace front. So we expect channel partners to play an increasingly important role in marketplaces going forward as well. So again, the three drivers fees coming down, the growth of committed spend and the increasing role of channel partners will all drive cloud marketplaces going forward.

And so a call to action to the vendors out there, uh, that might be watching this is as you were thinking about your, uh, go-to market strategy overall, really consider the, the role and the importance that you place, um, on the hyperscaler marketplaces as well as the role that your traditional partners will play as part of that marketplace, uh, strategy. Because really they will go hand in hand, um, to be one of the fastest growing route to markets, um, collectively for the software industry overall.