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Services and IP drive growth in Google Cloud deal value

Services and IP drive growth in Google Cloud deal value

Also saw coud modernisation and application development deal sizes rise up to five times

Credit: Google Cloud

Google Cloud partners that offer professional and managed services have seen average cloud migration deal sizes rise by up to six times, new analysis has found.

Cloud modernisation and application development deal sizes on Google Cloud Platform (GCP) also increased with a range of three to five times since 2016. 

This is according to The Google Cloud Business Opportunity For Partners report by Forrester Research. The report suggests partners are now starting to see higher margins as they progress from selling to providing services and building intellectual property on GCP. 

Partners were able to find multiple opportunities to grow their business further using the platform, the Google-commissioned report claimed, using information from 19 GCP partner interviews. 

Some of these services included strategy business consulting, cloud migration, cloud managed services and data analytics, which the report claimed offer gross profit margins as high as 60 per cent.

Demand for further Google Cloud talent is also increasing, with partners recording an increase of 800 per cent in hiring growth over four years.

The importance of reselling Google products and building software that either enhance of Google Cloud technologies was also emphasised, with the former seeing margins from 10 to 30 per cent and the latter seeing margins up to 60 per cent.

If partners aren't doing so already, tapping into professional and managed services could provide significant business opportunities, as this made up over 70 per cent of the interviewed partners' revenues.

“As cloud migration services increasingly become a commodity and IT spend on data and analytics continues to grow, strong capabilities in data analytics, artificial intelligence, and machine learning will further bolster partners’ value propositions and differentiation in the marketplace,” the report claimed.

“In addition, given that data and analytics proofs of concept and pilot programs are clearly demonstrable, partners have a high likelihood of seeing follow-on project work, increasing share of wallet within accounts.

“These higher-level capabilities ensure partners see annuity revenue streams from repeat business and larger contract values by aligning a partner’s expertise to clients’ business problems.”

Another opportunity found was to expand into a different engagement model.

“It is possible to build highly profitable businesses around each of the three engagement models — Sell, Service, and Build — especially when partners specialise in a particular technology domain,” Forrester noted.

“However, the findings also show that partners with the most profitable Google Cloud practices engage with customers across all three models and that there is strategic value in doing so.”

Lastly, creating custom intellectual property (IP) was determined as an opportunity for Google Cloud partners, particularly as either a service accelerator or a re-saleable asset.

“As a service accelerator, custom IP helps partners accelerate project timelines, bolster engagement profitability, and provide unique value that other providers can’t easily match in a streamlined fashion,” the report claimed.

“Re-salable IP can be packed and resold to customers in a specific industry vertical or line of business, creating high-margin annuity revenue streams for partners. Continued research and development investments in custom IP will continue to be associated with improved profitability and revenue growth for partners.”

The major reasons behind partners actively choosing Google Cloud, according to the report, are the service’s open multi-cloud strategy and its data, analytics and AI capabilities.

“Many of the organisations interviewed for this study also work with other hyperscale cloud solutions,” the report noted. “Several described themselves as cloud-agnostic: They make technology choices based on their customers’ needs and requirements.

“However, when a conversation starts around open source, multi-cloud, or a Google technology like Kubernetes, partners reported that they recommend the Google Cloud Platform for optimal performance, even though these technologies can be deployed on any platform.”

Forrester added that Google partners which develop capabilities to include analytics, artificial intelligence (AI) and machine learning (ML) are leveraging corporate IT budgets that are being allocated for data- and analytics-related tasks.


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