Over the past year we’ve seen incredible changes in how people worked, but also how software developers and IT practitioners innovated. Customers are moving their businesses well beyond infrastructure and migrating, in fast forward, toward the next era of their cloud evolution.
Forrester predicts cloud spending to grow at 38% CAGR through 2022, which is 7% higher than originally projected. This accelerating growth in the market, combined with strong partner incentives and benefits, represents a rapidly growing business opportunity for Google Cloud partners.
Google recently commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study to understand the business opportunity for partners that build and scale Google Cloud solutions. Their analysis shows the potential for partners to achieve an 86% return on investment (ROI) – up from 50% in the previous study.
Not only is ROI accelerating, but they also found:
Partners make $5.70 (versus $5.20 in the previous study) in downstream revenues across sell, service, and build revenue streams for every dollar a customer spends on Google Cloud consumption.
Partners included in the study shared that 50% or more of their business comes from existing customers. This tells us once a customer chooses to migrate to the cloud they are investing for the long term.
The practice break-even point is 14 months, a 33% decrease from the previous study.
Gross profit margins increase from 34% in Year 1 to 44% by Year 3.
The study also explored the key factors underpinning this growth in ROI, which included:
Incentives and certifications help partners thrive: According to the Forrester study, “Google’s straightforward incentives program has a significant impact on the practice’s margins and profitability.” Since the last Forrester study in 2019, Google Cloud has streamlined and strengthened our incentives portfolio.
Partners also noted that earning a Specialization allows them to differentiate themselves and opens doors to new business opportunities. Our partners who achieve Specializations and certifications are able to provide the expertise that many customers don’t have in-house and need in order to modernize their infrastructure.
Partners with the most profitable practices span Google Cloud Engagement Models: Sell, Service and Build. Partners are finding success across a variety of Engagement Models and the most successful partners are those building a wide range of professional services to support our technology, as well as those who are developing their own intellectual property on Google Cloud.
Providing services helps partners’ businesses prosper
Forrester concluded that recurring offerings, such as managed services on Google Cloud, provide significant and consistent revenue for our partners. Revenue generated by recurring offerings grew at a 73% CAGR.
Partners are successful when they provide an array of diverse services for customers. And services not only increase the overall deal size but also the profit margin. Additionally, our partners who specialize in a technology solution, such as Kubernetes or DevOps, can provide this expertise as an added service and it helps ensure the success of the project. Forrester noted that revenue from reselling and providing services around Google Cloud represents 76% of total partner revenue.
We see a bright and prosperous future ahead for our partners. Our partners are key to delivering the solutions that customers need to accelerate their journey to the cloud and ultimately help them transform their businesses. To learn more, download and read Forrester’s full TEI study, “The Google Cloud Business Opportunity for Partners,” here. To learn more about Partner Advantage, visit https://cloud.google.com/partners/become-a-partner
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