Net New Gross Profits From Comarketing With AWS

Evidence and data. Interviewees said comarketing with AWS drove net new pipelines and opportunities. Their organizations used AWS partner creative and messaging and took part in AWS’s comarketing programs leveraging MDF, which enabled them to engage in marketing activities (e.g., digital marketing, events, featured placement in AWS-led campaigns) they otherwise could not have. Interviewees said comarketing and revenue increased as their organizations gained one or more AWS Competencies and signed Strategic Collaboration Agreements.

• Interviewees discussed the marketing activities their organizations were able to engage in because of the partnership. The director of product marketing for a data platform described how their organization is working with AWS and mentioned participating in AWS’s annual learning conference, AWS re:Inforce: “We have joint solution guides that are cobranded. We have done webinars together. We are releasing our first [co-authored] blog. We are running events with AWS guest speakers. We are looking at AWS re:Invent as well. … We did re:Inforce and received a lot of good leads.” The chief sales officer for a data science solution said: “We are doing everything from marketing campaigns with AWS to events and case studies highlighting customer wins together. The CMO and marketing team have dug in heavily, and we have webinar events, physical events, and digital campaigns we are running with AWS. We have been using MDF to support those functions, and we have seen good conversion.”

• Interviewees said their organizations benefit from using the AWS brand and messaging alongside their organization’s brand. The global lead of cloud alliances for a revenue orchestration platform solution said, “We are going to use AWS’s name, image, and likeness [for an event] and say we are built on AWS, and we are an enterprise solution.” Similarly, the vice president of sales for a FinOps solution said, “The AWS name, brand, and recognition goes a long way.”

• Interviewees said comarketing with AWS yielded incremental net new opportunities for their organizations. The global lead of cloud alliances for a revenue orchestration platform solution said, “The ROI that we get on marketing spend is we get about 10 times the pipeline from what we get from MDF investment.” The vice president for a security solution explained, “[As my organization has increased AWS’s involvement with marketing,] it increased our pipeline influence with AWS over close to 150% year to date.” The global alliance director for an integration platform as a service solution said, “The lead funnel is five to seven times where we were last year, commensurate with the number of events.”

• Interviewees also noted how the comarketing benefits grew as they increased their engagement with AWS and their partnerships matured. The vice president of sales for a FinOps solution explained that obtaining new competencies enabled their organization to take part in innovative programs and unlock more MDF: “Joint marketing continues to increase year over year as we not only deepen our partnership, but as we unlock competencies and get brought into different programs. … You unlock additional MDF capabilities.” Similarly, the chief sales officer for a data science solution noted their organization’s comarketing activities increased since securing a Strategic Collaboration Agreement.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite partner:

• By comarketing its software with AWS, the composite partner has 10 net new opportunities in Year 1 that it otherwise would not have gained.

• After the composite partner obtains the AI Competency and Data and Analytics Competency, the number of net new comarketing opportunities grows to 30 in Year 2 (200% growth).

• After the composite partner obtains an AI Strategic Collaboration Agreement, the number of net new comarketing opportunities grows to 58 in Year 3 (93% growth).

• When selling directly and not coselling, the composite partner has a 20% win rate and an average annual contract value (ACV) of $100,000.

• The composite partner’s software gross margin is 72%.

Risks. This revenue stream may vary depending on the following:

• Whether the organization comarkets with AWS.

• The degree to which the organization comarkets with AWS.

• The organization’s maturity and level of engagement with AWS.

• Unique business and deal characteristics.

Results. Forrester calculated three-year total PV gross profits (discounted at 10%) of $1.1 million.

Net New Gross Profits From Coselling With AWS

Evidence and data. Interviewees said coselling with AWS allowed their organizations to win more deals, close deals faster, and increase deal sizes. They explained that their organizations integrated their CRMs with AWS, automated opportunity sharing, engaged in joint account planning, and engaged AWS for deal support from start to finish. They also said their organizations increased sales due to collaborating with AWS sellers, customer trust in AWS, and leveraging customers’ AWS Private Pricing Agreements (PPAs). They also noted value in AWS funding.

• Interviewees said their organizations received opportunities from AWS sellers. The director of product marketing for a data platform said: “AWS can identify opportunities that we can approach jointly or vice versa. … We receive tons of new opportunities and opportunity progressions.” The chief sales officer for a data science solution explained how this benefit grew as their organization’s AWS partnership matured: “The longer game is that through strategic engagement with AWS reps, they start bringing you into more opportunities. You go through phases of maturation as a partner.”

• In terms of the impact of opportunities from AWS sellers, the global alliance director for an integration platform as a service solution said: “It is a small ratio but steadily growing. It hovers between 5% to 10% of the total.” The vice president of sales for a FinOps solution said, “It is 30% of pipeline from an origin perspective.”

• Interviewees also discussed the incremental impact of coselling with AWS and leveraging AWS funding and programs regardless of the source. They said their organizations won more deals by approaching customers alongside AWS. The vice president for a security solution said: “We saw a 1.8 times increase in close rate when we were coselling with AWS. … We did a study recently looking at all stage four opportunities, and we did see a higher conversion rate of about 18% when we were coselling with AWS.”
  
  The vice president of sales for a FinOps solution said their organization achieved a higher win rate on opportunities referred by AWS sellers: “Our win-loss ratio is higher because these leads tend to be warm. These deals have a 10% higher conversion rate.” The chief sales officer for a data science solution said: “We see an accelerated conversion rate in opportunities that are cosold with AWS. It is a 10% to 15% higher conversion rate, and closer to 10%. That is driven by the fact that AWS will have influence in the account that we do not have.”

• Interviewees noted that deals referred by AWS sellers are often larger than usual. For example, the vice president for a security solution said, “When we cosell with AWS, our deal sizes are 40% to 50% larger with longer term length.” The director of product marketing for a data platform said, “When we have AWS in the account with us, we close larger deals and close deals faster because we can address potential deal risks together and proactively.”

• Interviewees also shared specific examples of how coselling with AWS yielded incremental value. The global alliance director for an integration platform as a service solution said: “A $132,000 deal was dead because a privacy, and the customer’s security team told us we could not proceed. Our sellers would have had no idea how to get through a block like that. AWS connected the privacy and security team with an AWS compliance specialist and unblocked the deal that would have been lost.” They added: “A second example was a $100,000 enterprise deal. AWS was able to lock $550,000 through the [customer’s] committed spend with AWS to support the purchase. The deal jumped to $550,000.”

• Joint account planning and increased engagement augmented the impact of coselling together. Interviewees’ organizations connected their CRM systems with AWS to share opportunities and help with planning. The director of product marketing for a data platform said: “Strategic account planning has been helpful for us. We have been successful looking at where we have joint customers and how we are looking to grow with them in aligning our solutions to their business priorities.”

• Interviewees also consistently noted that increased engagement and partnership maturity led to greater coselling outcomes such as increasing funding from obtaining competencies and securing Strategic Collaboration Agreements. The chief sales officer for a data science solution said: “[Funding from AWS] allows us to take that cost off of customers’ plates and allows them to do a proof of concept effectively on our dime, and we see win rates increase because of that. We have just started doing these because of the SCA.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite partner:

• In Year 1, the composite partner has 40 opportunities that it could cosell with AWS. This increases to 118 opportunities in Year 2 and to 230 opportunities in Year 3.

• In Year 1, AWS sellers originate 10% of these opportunities. This increases to 15% in Year 2 and 20% in Year 3.

• In Year 1, the percentage of cosell opportunities approached with AWS is 20% of the potential opportunities together in Year 1. This increases to 40% in Year 2, and 80% in Year 3.

• In Year 1, the composite partner wins 10% more opportunities when coselling with AWS. As the composite gains experience collaborating with AWS, this increases to 11% in Year 2 and 12% in Year 3.

• When coselling with AWS, the composite partner’s average contract value is 20% larger.

• This revenue stream grows year over year as the partnership matures.

Risks. This revenue stream may vary depending on the following:

• Whether the organization cosells with AWS.

• How well the organization’s sellers and AWS sellers collaborate.

• Unique deal and business characteristics.

Results. Forrester calculated three-year total PV gross profits (discounted at 10%) of $3.2 million.

Net New Gross Profits From Transacting Through AWS Marketplace

Evidence and data. Interviewees said AWS Marketplace drove incremental value for their organizations and their customers. They explained that their customers want to transact through AWS Marketplace. A previous Forrester Total Economic Impact study showed that with the AWS Marketplace, a composite organization saves 70% of the time needed for solution discovery and 60% of the time needed for procurement processes while reducing time to market by 30%.⁷ From an ISV perspective, interviewees explained that AWS Marketplace and associated programs and funding resulted in improved win rates, larger deals, faster sales cycles, and improved customer retention.

• Interviewees said their customers wanted to transact through AWS Marketplace, which resulted in incremental impact. The vice president for a security solution said: “Our customers increasingly want AWS Marketplace. We are streamlining the procurement process by leveraging it. Our sales reps are interested in leading with AWS Marketplace as opposed to introducing it later in the sales cycle.” The global alliance director for an integration platform as a service solution said, “Business and procurement love the idea of going through AWS Marketplace.”

• Interviewees explained that deals closed faster and at a better rate with AWS Marketplace. The global alliance director for an integration platform as a service solution said: “We are in the last month of the quarter. Deals that were going to go direct are going to shift and go through AWS Marketplace at the last minute because the customer realizes they do not have to wait for legal approval or procurement reviews because they already signed that marketplace agreement and have standard terms they can fall back on. It happens every quarter.”
  
  The chief sales officer for a data science solution said: “In some cases, we see an accelerated sales cycle. One reason is influence. Another is that customers can transact on AWS Marketplace and potentially burn down committed spend with AWS. [If] we have a customer that is pushing back on budget or the deal is taking too long, we will engage AWS and find a way to tap into their broader engagement or financial structure with the account, and it will dramatically increase the speed and reduce friction to close. Contracting and budget are two of the biggest issues we run into.”

• Interviewees also said the AWS Marketplace Private Offer Promotion Program (MPOPP) helped close deals faster. The vice president for a security solution said: “MPOPP is a marketplace-specific incentive that we leverage to get deals across the finish line closed faster.” The global lead of cloud alliances for a revenue orchestration platform solution said: “The beauty of MPOPP is that you can time-bound those. … It compels a customer to sign and close the deal. When we would offer MPOPP, it allowed us to get those deals to close in the quarter because the customer [would] lose those time-bound incentives.”

• Interviewees noted that using AWS Marketplace also led to larger deals. The chief sales officer for a data science solution said: “From a contracting perspective and a funding perspective — with the combined benefit of potentially accelerated sales cycles, less legal cycles, and access to more budget — we see the potential of 20% or more lift on deal size and speed to close.” Similarly, the global alliance director for an integration platform as a service solution said, “We see 40% larger deals when selling through AWS Marketplace versus direct.” The director of product marketing for a data platform said their organization increased deal sizes by 86% with AWS Marketplace.

• According to the interviewees, AWS Marketplace had a positive impact on retention. The global alliance director for an integration platform as a service solution said, “We have 30% higher net revenue retention when we sell through AWS Marketplace versus direct.” They also noted longer deals: “Eighty-five percent of marketplace contracts are three-plus years compared to only 70% direct.” The global lead of cloud alliances for a revenue orchestration platform solution noted a positive retention impact, saying: “When you close on the AWS Marketplace, the deal becomes part of AWS’s demand plan. … They have a renewals team. We have a 100% renewal rate. I have yet to void a license through the AWS Marketplace.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite partner:

• The composite partner transacts 10% of deals through AWS Marketplace in Year 1. This increases to 20% of deals in Year 2 and 40% in Year 3.

• Of these deals, 95% leverage private offers and 5% leverage self-service.

• The composite partner wins 6% more opportunities when transacting through AWS Marketplace and the average contract value of those deals is 80% larger.⁸

Risks. This revenue stream may vary depending on the following:

• Whether the organization transacts deals through AWS Marketplace.

• The organization’s customers and their preferred procurement methods.

• Unique business and deal characteristics.

Results. Forrester calculated three-year total PV gross profits (discounted at 10%) of $1.0 million.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their partner organizations experienced but could not quantify:

• AWS Competencies benefits. Interviewees said earning AWS AI and Data and Analytics Competencies helped their organizations gain recognition, credibility, and funding, and they explained that it’s valuable having access to AWS experts for support as they build, market, and sell software built on AWS AI and data services. The global alliance director for an integration platform as a service solution said: “The AI Competency has been super helpful this year. … The [list of] benefits is long. We get invited to many more activities, including event participation and sponsorship opportunities. There have been 10 to 15 [in the last six months] just because of our AI Competency. It has been a healthy list of activities and experience from our brand getting upleveled into this new category. … We are going to have massive funding and branding opportunities.”

• AWS Strategic Collaboration Agreements benefits. Interviewees agreed there’s value in having AI Strategic Collaboration Agreements with AWS. While the length and nature of these agreements varied, interviewees described how their organizations received build, market, and sell funding from AWS to support their software powered by AWS AI and data services. The technology partners head for a security solution said: “We have [an AI] Strategic Collaboration Agreement with AWS. We break it out into cobuild, comarket, and cosell. We are getting credits across all three of those vectors through the SCA.”
  
  The global lead of cloud alliances for a revenue orchestration platform solution explained the unique value of having a Strategic Collaboration Agreement with AWS: “The goal is for the ISV to build pipeline and to increase their speed in the market. If we win, they win because as we grow, [a part] of every dollar we bill goes to [AWS].” In summation, the global alliance director for an integration platform as a service solution said, “There is no shortage of opportunities to earn funding.”

• Revenue growth from building on AWS AI and data services. Interviewees affirmed the value of building on AWS and innovating together and shared examples of how their organizations are uniquely driving value by building on AWS services like Bedrock, SageMaker, and Amazon Quick Suite.

  • The global alliance director for an integration platform as a service solution stated their organization closely collaborated with AWS to build a new AI governance solution: “We have deep and rich code development that we are doing with AWS Bedrock and [Amazon Quick Suite]. … Our CEO sat down with the CEO of AWS and shared a mutual vision for where AI is going and how our lineage in integration, automation, and data management could serve as the foundation for AI governance. Our engineers started doing workshops with AWS. [In five months,] we had a minimal viable product. [In eight months,] we launched [our product]. We have a first-mover advantage right now. It will take [other companies] years. What we are doing with AWS is not just marketing.”
  • Similarly, the global lead of cloud alliances for a revenue orchestration platform discussed how their organization is going to be able to co-build a new capability for Amazon Connect integration: “Cobuild is an important maturing step to partnering with AWS. We have customers that have organically integrated to Amazon Connect. This drives stickiness of our mutual services, and we are building out use cases, and we are going to join the Amazon Connect ready program to build an integration of those tools. We are going to build a net new unique capability. AWS cannot offer it and we cannot offer it, but we can offer it together. We will build this, market this, and sell this together.”
    
    The same interviewee elaborated on the value of cobuilding and integrating with Amazon Quick Suite: “We want to build a service where users can stay in [our product] but reference enterprise data across the ecosystem. We cannot build that ourselves. AWS builds the foundational services to reference enterprise data and pulls that natively into our platform and vice versa. AWS builds premier services that ISVs can use. … When we cobuild together, we are creating a product that creates mutual consumption. That is where you get to the holy grail of working with AWS. … If we adopt Amazon Connect and Amazon Quick Suite, AWS sellers are going to have all the motivation in the world to work with us.”
  • Interviewees also discussed the value of building with Bedrock. The vice president of sales for a FinOps solution said: “Amazon Bedrock does a great job of taking an agnostic approach of bring-your-own-model. We have customers who use multiple different LLMs (large language models), including Amazon Nova. Being able to build on top of Bedrock has given us opportunities to help customers get visibility and into their LLM spend and usage, which is a totally new work stream that we have been able to support because of the emergence of AI and Bedrock.” The interviewee also noted that this has a positive impact on and added, “One out of three customers is asking us what level of visibility and allocation we can get to LLMs.”
  • The chief sales officer for a data science solution discussed the value of building with SageMaker and Bedrock and explained how it drives opportunity for their organization. They said: “We are doing a bunch in terms of integration with SageMaker and Amazon Bedrock. Our new product has multiple points of AI integration into it to make a data scientist more productive.” They elaborated that Bedrock is often IT-approved for customers in regulated industries and said that integrating with Bedrock will “help drive adoption in our existing base for this new product, which will make those customers bigger and stickier.” They also said they believe the integration will drive new customer acquisition.
    
    The interviewee summarized the value their organization sees in cobuilding with AWS: “AWS wants you to run on the platform, and they give you benefits to drive the growth of your software. The true unlock comes when your software is this natural extension of their services and there is a better-together story because that really helps with cosell, product innovation, integration, and getting their sales team to include you in their pitch and vice versa. It makes everything easier.”

• Cost savings from building on AWS AI and data services. Interviewees discussed cost savings from building on AWS. The vice president of sales for a FinOps solution said, “The more that you lean into the ecosystem and the series of tools that they have, you start to achieve economies of scales and the benefits of that.” The chief sales officer for a data science solution said: “AWS is competitive. Running fully as a SaaS platform is where you unlock the bigger cost savings. We are working toward a commit contract.”

• Faster and more-informed decision-making due to technical early access and insight. Interviewees said that having early access and insight into AWS’s technical roadmap is valuable as their organizations build and innovate and explained that it enabled their organizations to make more informed decisions faster and build better products. The organizations also have opportunities to share feedback to influence the roadmap. The technology partners head for a security solution said, “Getting early insight into what AWS is building and early insight into the services that it is providing is extremely helpful.”
  
  Similarly, when asked about early access and insights, the vice president of sales for a FinOps solution said: “The value is tremendous. Being able to have that tight-knit, close partnership gives us early access to the roadmap of certain products and services to avoid pitfalls. It also helps us make sure that we are on the mark and being customer-obsessed with the problem statements that we hear to build the solutions that will result in a better experience for customers who use AWS.”

• Improved go-to-market efforts. Interviewees explained that AWS provides their organizations with the necessary support to grow their businesses. The global alliance director for an integration platform as a service solution said, “AWS is by far the most partner-friendly organization I have ever worked with.” The global lead of cloud alliances for a revenue orchestration platform solution said, “There is no comparison to their level of rigor in helping work with their ISVs that are built on AWS.” Additionally, the chief sales officer for a data science solution said: “AWS partners well. It has been easy to work with them.”

Flexibility

The value of flexibility is unique to each partner. There are multiple scenarios in which an ISV partnered with AWS might later realize additional opportunities, including:

• Scalability. Interviewees explained that building on AWS’s AI and data services presents opportunities for their organizations and their customers to agilely scale. From a partner perspective, the director of product marketing for a data platform said: “From the product side, a key source of value is that AWS has helped us to be agile and flexible. We can focus on delivering features and experiences that help solve our customers’ challenges without having to worry about the platform side of things. We know that we can scale up in a way that is profitable for us. That is a big part of the value.”
  
  From a customer scalability perspective, the chief sales officer for a data science solution said: “We do see a big advantage. We have customers who run our software on-premises, and they do not really do it effectively. We have customers who get into trouble, and that gets in the way of unlocking potential. … We actively engage our on-premises customers and try to move them more to a scalable cloud environment. We are promoting AWS and the integrations with SageMaker and Bedrock.”

• Services revenue growth. Interviewees said their organizations and their partners can sell more services (e.g., advisory, deployment, support) by going to market with AWS, which would result in a multiplier effect.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).