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Partners to play ‘pivotal’ role in cloud challenges during 2023

Partners to play ‘pivotal’ role in cloud challenges during 2023

Decisions surrounding cloud to be based on cost savings in the coming year.

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Partners that offer cloud-based services and solutions are anticipated to play a “pivotal” role in the cloud market as it faces “unprecedented” challenges in 2023.

This is according to analyst firm Technology Business Research (TBR), which claimed next year will mark the first time the mature cloud market will be tested.

“Cloud served as an alternative IT cost-savings measure in the wake of the 2008 financial crisis, but it is no longer a small, insignificant portion of the average customer’s IT budget,” the firm said.

“While cloud spending and the overall market opportunity will continue to expand in the coming year, we expect that growth to be altered by the macroeconomic environment.”

As a result, TBR said cloud vendors will go back to basics and focus on both their partner ecosystems and costs to survive.

In particular, the firm claimed that cloud partnerships will underpin expected growth, which is expected to occur at a slower rate compared to the last five years.

“The growth of indirect cloud revenue, through systems integration engagements, cloud-based ISVs [independent software vendor], managed service providers and resellers, will play a pivotal role in the continued expansion of the market,” TBR said.

Essentially, the firm said in its Top 5 Predictions For Cloud and Software in 2023 report that as the total value of software sold through cloud marketplaces grows next year, so too will the need for partners.

TBR said the value of software sold on platforms from vendors’ such as Amazon Web Services (AWS), Microsoft, Google and Salesforce was over $50 billion in 2022 and forecast the figure would grow by 25 per cent in the next year.

“Consumption of resources and services directly from cloud vendors remains a significant portion of the market opportunity, but due to these factors we believe most of the growth in cloud consumption in the form of new SaaS [software-as-a-service] deployments, marketplace ISV title consumption and new projects will involve a partner’s intellectual property or services,” it said.

Meanwhile, decisions surrounding cloud will be based on cost savings in the coming year, which the firm said would be “a reflection of the uncertainty felt by customers and the pullback and spending that will result”.

“The benefits of agility, innovation and business expansion will remain at the core of cloud purchasing decisions, but a thorough evaluation of the cost of cloud versus that of alternative solutions will play more of a role in 2023 than in the preceding years,” TBR said.

“Vendors in the cloud space may face slightly longer sales cycles, additional financial scrutiny and increased negotiation to secure deals. We also expect to see more competition and growth from vendors below the top tier of cloud providers.”

“As more significant workloads have moved to cloud, the need for complementary solutions like data management and security has increased.”

TBR's analysis into the cloud market and the role of partners comes months after it revealed in February that ISV partners were to be increasingly "critical" for SaaS vendors during 2022.


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