Channel Investments Helping Drive Spike in Cloud Spending

Cloud spending has been on a tear, especially at the end of 2020, due in no small part to cloud giants Microsoft Azure and Amazon Web Services (AWS) increasing their investments in their respective partner programs.

New data from market research firm Canalys shows spending on cloud infrastructure services accelerated dramatically in the end of 2020. Globally, organizations spent $39.9 billion in cloud services in the fourth quarter, an increase of over $3 billion from Q3 -- the industry's "largest quarterly expansion in dollar terms," according to Canalys.

Cloud market leader AWS accounted for nearly a third of overall cloud spending in Q4, according to Canalys, though No. 2 cloud platform Azure is estimated to have grown by 50 percent year-over-year, catapulting its market share to 20 percent.

Unsurprisingly, Canalys attributed much of the cloud's late-2020 market strength to pandemic-related business adjustments. The global shift to remote-work and remote-learning environments, as well as the huge demand for streaming media and gaming, meant an urgent need for cloud services to support all of those scenarios. Additionally, IT modernization projects that might have been put on hold at the start of the lockdowns began to gather steam again toward the end of the year.

Besides the pandemic, however, Canalys identified another big contributor to the cloud boom: channel partners.

"The technology channel, from global systems integrators and MSPs to resellers and distributors, is playing an increasingly important role in driving cloud growth around the world," according to Canalys.

Technology partners are becoming more important to businesses as many of them navigate their first cloud steps, from assessment to implementation to support. Meanwhile, companies that are already in the cloud will likely need consultation from partners to help them on their 2021 digitization projects.

"As organizations start to consider moving more mission-critical workloads to the cloud, they will look to partners to define the right cloud platforms and strategies, as well as solve the most pressing issues around cost management, security, sovereignty and hybrid IT integration," said Canalys chief analyst Alastair Edwards.

Microsoft "holds the largest share of the indirect channel with Azure," according to Canalys. The company has "focused on driving Azure consumption across all customer segments through annuity sales programs and customer success investments, as well as targeted incentives for its global partner channel." Among its recent partner program improvements, for example, Microsoft launched a new competency for the Azure-based Windows Virtual Desktop, an essential product for supporting remote workers.

AWS and No. 3 cloud provider Google are also taking steps to develop their partner channels. AWS in particular recently announced enhancements to its AWS Partner Network (APN), including more resources for independent software vendors (ISVs), new competencies and a broader partner marketplace. Google, meanwhile, has been focused on "build[ing] a partner network with industry-specific expertise and deep specializations in its priority solutions, such as machine learning, analytics and data management."

Additionally, partners with expertise in multiple platforms are gaining favor as businesses increasingly look to leverage different combinations of the public, private and edge clouds.

"Customer digital transformation projects are highly complex, requiring advanced consulting skills, combining deep technical skills with vertical expertise, which the cloud service providers are relying on partners to provide at scale," Edwards said. "They are also turning to their partners to drive cloud consumption, and deliver full customer lifecycle support."

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.