Despite pandemic, channel players see businesses grow and ROI increase
Google Cloud channel partners are growing their businesses rapidly and seeing a significant return on the investment they’re making in the cloud service provider, according to a new report commissioned by Google Cloud and written by market research firm IDC.
The Lowdown: The report, released this week, is another indicator that organizations are continuing to look to the cloud as a key part of their larger digital transformation efforts and that the ongoing COVID-19 pandemic is only accelerating their move to the cloud.
The Details: According to the report, titled “How Partners are Winning in the Google Cloud Economy,” the overall IT market is still in growth mode despite the global public health crisis. What’s more, the demand for public cloud infrastructure and the need for such modern technologies as artificial intelligence (AI), security, data analytics, and the Internet of Things (IoT) is growing even faster.
All this spells good news for channel partners that are aligning themselves with public cloud service providers like Google Cloud, Amazon Web Services (AWS), and Microsoft Azure. According to the report, partners’ revenue from Google Cloud-related opportunities will more than triple by 2025. Over the next six years, the accumulation of net-new partner revenue will hit $341 billion.
In addition, the average partner is growing its Google Cloud business 35% year-over-year and one in five is growing at a rate of 75% or more. For every $1 of Google Cloud technology sold this year, partners will get back $5.32, primarily through their own related offerings and services. That number will grow to $7.54 by 2025, IDC said.
Overall, Google Cloud partner revenue is growing faster than that of Google Cloud, and the net margin opportunity of $121 billion through 2025 will be distributed across partner activities, IDC said. IT and cloud services created and sold by partners will represent 52% of partner net margin and 27% of resale.
The analyst firm also said that half of Google Cloud partners are in the “late stage” of their digital maturity efforts and that more than one-third have fully integrated digital technologies into their businesses.
The Impact: Google Cloud is leaning heavily on partners to help fuel its growth. The company has set a goal of 100% partner attach on all customer sales, and the strong margins for partners are strung across a range of activities, from resale and IT services to business services, support for hardware and networking, and add-ons for Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), according to Carolee Gearhart, channel chief for Google Cloud.
Background: Google Cloud has embraced a more aggressive growth strategy – including building out its base of enterprise customers – since Thomas Kurian took over as CEO early last year. The company sits in a distant third place in the fast-growing public cloud space behind AWS and Azure, according to Synergy Research Group, which added that the opportunity is there for public cloud service providers to grow their businesses in the coming year. The analyst firm noted that despite the coronavirus outbreak, spending on cloud infrastructure services passed the $30 billion market in the second quarter, a $7.5 billion jump from the same period last year. Google Cloud’s share of the market grew to 9%, behind AWS (33%) and Azure (18%).
The Buzz: “We have a tremendous opportunity together to help customers across industries and around the world transform their organizations with the cloud,” Gearhart wrote in a blog post. “I’m proud of the amazing work that our partners are doing, and we’re committed to continuing to work closely with partners to expand the Google Cloud economy together.”
“Google Cloud partners are riding the wave of cloud adoption to engage customers across the lifecycle, from cloud assessments and shifting existing workloads to building cloud solutions based on AI/ML to solve industry-specific challenges,” Paul Edwards, director of software channels research for IDC, and Steve White, program vice president of channels and alliances at the analyst firm, wrote in their report. “This engagement model has become a recipe for success for partners with a keen focus on their own services and software in alignment with customer needs and accelerated through the Google Cloud portfolio.”