likely’ to purchase this way again,” Mehta explained. Mehta sees two primary forces pushing this trend. “Buyers want to be more efficient with their spend, and the cloud providers are looking to grow the ecosystem of ISVs [independent software vendors] that run atop their platforms,” Mehta said. Tackle.io works closely with major cloud providers, including AWS, Microsoft, GCP and Red Hat. The company recognizes that each of them places an increasing emphasis on cloud purchase commitments and most have a “draw down incentive” against those purchase commitments for procuring ISV solutions through their respective marketplaces. “The mileage may vary ISV to ISV or cloud provider to cloud provider, but that ecosystem has been built to reward customers who consolidate their overall cloud spend,” Mehta explained. “The more software running in cloud environments, the more cloud compute that is spinning and the more revenue they generate. It’s a great big flywheel that can get very powerful once it starts turning.” What’s more, “the creation of cloud spend agreements and related draw down for ISV purchases make marketplace purchasing a highly attractive – and becoming mainstream – way to procure software applications,” Mehta added. “Smart buyers are looking across their software fleet to see what’s available in the cloud marketplaces, and they are using the totality of that spend to sign up for larger cloud spend commitments at more favorable pricing.” According to Mehta, the traditional software procurement process that has been around for decades is a mess, and the way solutions are discovered, trialed, purchased, deployed and operated is changing for the better. “Buyers want to try solutions in their own environments at little to no cost and without much interaction of support from the software vendor,” he said. “ISVs are responding with free trials, product-led growth strategies, consumption-based pricing and other approaches to meeting buyers with tech-touch instead of a high-touch sales process. “It’s easy to see the software procurement process should be transformed as well,” Mehta continued. “Once a solution is identified, why add months of delay in the procurement cycle? This is especially true for enterprise buyers where the procurement process is bogged down with vendor onboarding, credit checks, legal documents, NDAs and data privacy agreements. “There has to be a better way, and that’s where the cloud marketplaces come in,” Mehta said. Another dynamic is how different buying centers are learning to leverage committed cloud spend, he said. “Traditionally, if a department didn’t initially budget for a piece of software, that purchase would likely be delayed or some other purchase would need to be sacrificed. With cloud spend commitments and marketplace purchasing, additional and already allocated budget dollars can be tapped and even applied for helping to ‘draw-down’ on committed cloud infrastructure ‘use-it-or-lose-it’ dollars,” Mehta added. As companies increase their stakes on cloud computing, departmental budgets are shifting toward ownership within enterprise procurement, the Tackle.io report stated. “CFOs also have their eyes set on optimizing the value of cloud budgets and providing their teams with the software they need,” Mehta said. “Once ownership of the cloud budget shifts, CFOs take a heightened interest and work with the procurement team to maximize budget value. In turn, this will eliminate departmental views of spend, thus democratizing access to new buyer types.” While this is happening, IT organizations are going through a major transition from being the gatekeepers and managers of technology operations to becoming well-informed partners in business transformation. “The rapid adoption of DevOps practices is forcing knowledge previously centered around IT, like security policies, to be proliferated across development teams,” Mehta explained. “Similarly, IT historically held the cloud budget and was heavily involved in finding and procuring solutions and even managing software vendor relationships.” However, with the adoption of cloudbased billing models, consumption pricing and pay-as-you-go, organizations’ buying centers have become larger. “The value IT teams deliver in the new world requires a significant pivot from the old world,,” Mehta stated. “IT will need to step up their skills in managing the hybrid, multi-cloud environment, while still protecting the organization and delivering more value more often to the business.” The shift in budget ownership from IT departments to the CFOs is less about approvals and more about becoming more “consolidated and democratized.” “Large enterprises are looking at a cloud commit budget that’s measured in hundreds of millions of dollars,” Mehta stated. “The days of tin-cupping for a budget have turned into the equivalent of a bathtub full of funds, which has really changed the landscape.” Top Reasons Buyers Buy on Cloud Marketplace Leverage committed cloud spend 43% Accelerate time to value 42% Simplify procurement 36% Standardize contracts 32% Fast access to tools 32% Source: Tackle.io Sanjay Mehta, Tackle.io’s chief cloud officer BUYERS SIDE 70 CHANNELV ISION | MARCH - APRIL 2022
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