Marketplaces: the budget you already lost the fight over

I have to start this one with a disclosure. I have never run a marketplace partnership as a vendor. I have built resellers, distributors, OEMs, alliances, and I have sat in standards bodies, but I have never had my product listed in a cloud provider's storefront and tried to make that the way it sells.

What I have done is buy through one, for three years, for a company with a few hundred thousand seats. And from that chair I can tell you what a marketplace is actually for, which is not what the vendor pitch says.

It is not about discovery. Nobody in a job like mine found a vendor by browsing a cloud marketplace. We knew who the vendors were. It is not about convenience, either, although the contracting is faster.

It is about money that has already been spent. Every year I had a committed cloud spend, a number my company had promised the provider, and every year I had lost the internal fight over what that number would be. It was set above me. The marketplace let me buy software I needed with budget that was already gone, and count it toward a commitment that was going to be counted against me either way. That is not a feature. That is the entire value proposition, and any vendor who does not lead with it is describing a website.

So if you are the vendor, here is what the buyer's chair wants you to know. The listing is not the partnership. The partnership is whether the cloud provider's own rep gets paid when a customer buys you through it, because if they do, they will bring you into accounts you cannot reach, and if they do not, your listing is a page nobody visits.

The failure mode is a listing that procurement routes around. It exists. Nobody transacts through it. The vendor reports it as a channel.

One test, and it is the same shape as all the others. How many deals closed through the marketplace this year rather than beside it? Through means the transaction ran on the provider's paper and drew down the customer's commit. Beside means the customer found you elsewhere, signed with you directly, and the listing was a footnote.

I said I would tell you when I was speaking from only one chair. This is that post. If you have built one of these as a vendor and I have it wrong, I want to hear it.

Next Tuesday, the last one: why I pick the type last, and why partnerships is the job I want.

How many of your marketplace deals ran through the listing, and how many just ran past it?

Part 14 of 15 in the Which Partnership series.