Why Cloud Marketplaces Are Critical for True Digital Transformation

Integrating cloud marketplaces in your supply chain is no longer optional—it’s essential.

Cloud-based marketplaces speed up the whole procurement chain, and they enhance control, risk management, and governance for businesses.

According to a new Forrester report, software companies selling in AWS Marketplace achieve an average 81% return on investment (ROI), and those buying receive up to 550% ROI.

Today, chief procurement officers (CPOs) at leading enterprises face two principal and universal opposing forces.

On one hand, they must identify and reduce supply-chain risk—a process that takes time, effort, and patience with suppliers. On the other hand, they must move fast to enable innovative spirit and agility.

These two seemingly opposite demands from information technology (IT) staff and business line managers are a common source of anxiety in procurement. Simultaneously meeting these demands is a top challenge for CPOs.

Lengthy contract cycles are a particular source of procurement pain. While most agree that a robust, competitive sourcing process is necessary, in the modern business context, a six-month, source-to-contract process is untenable. Cloud-based marketplaces, however, can reduce this months-long process to a matter of minutes.

Professionals can browse marketplaces that are aligned with their existing IT environment and business’ purchasing guidelines, and select a solution efficiently, with the ability to immediately process the approval request and confirm the acquisition of the digital solution.

The marketplace tracks the entire process and aligns purchase order numbers with existing systems—something procurement professionals deem as essential.

In addition to speedier purchasing and an enhanced purchasing experience, other cloud marketplace benefits are transformative.

For example, TIER Mobility AG used AWS Marketplace to increase its observability, site reliability, and engineering experience. To achieve this, the company used solutions to bundle billing and payment procedures to procure cost-saving software—revolutionizing the sourcing process in the transportation and logistics industries.

Using a cloud marketplace also gives procurement teams increased oversight of the services and solutions being used, and costs being incurred by their employees. This helps companies make informed business decisions and improve governance, allowing them to use policies in a digital environment.

As a result, procurement teams are nimbler, and they can manage greater volumes of purchases. Simultaneously, digital builders and developers can access a rich selection of software, so they can experiment and innovate faster.

AWS customers such as Veolia Deutschland GmbH procured cloud-based software and services quickly, becoming more efficient in the setup and migration from on-premises IT to cloud-based IT.

In another example, the company Software AG achieved a cost reduction of up to 50% by switching its licensing framework and procuring directly from AWS Marketplace to managing its software licensing through an automated process.

In traditional procurement processes, improvements in speed and the procurement experience often mean a proportionate and corresponding reduction in governance, control, and risk management.

In contrast, cloud marketplaces offer speed and an increase in governance, control, and risk management. With marketplaces, CPOs get governance with agility.

For instance, consider the increasingly complex issue of regulatory frameworks. In every industry, controls are amplified to ensure that supply chains comply with legislative requirements, both globally and locally. Every third-party purchase, big or small, introduces risk, and risk is always top of mind for procurement leaders.

Procurement professionals need mechanisms to safely and securely introduce products and services that are preapproved for use, within regulatory constraints. Through a feature called “private marketplaces” in AWS Marketplace, procurement administrators can curate a catalogue of preselected, approved digital services, software, and platforms that teams can freely use.

A private marketplace optimizes a customer’s menu according to the terms set by the administrator, ensuring all accounts comply with the governance and regulatory requirements, and remain within the company’s financial and usage subscription package. This approach is flexible, cost-efficient, and optimized for maximum innovation, and it allows developers to do what needs to be done, without being micromanaged.

The complexity of purchasing software, data, training, and professional services continues to grow. Moreover, employees demand expedience, yet supply chain risk is increasing. While cost optimization remains paramount, managing an increasing volume of purchases, enabling innovation, and reducing time to market are principal drivers for every modern procurement professional.

In fact, today’s procurement leaders are pressured more than ever to go faster, maintain control, and reduce risk. Cloud marketplaces, therefore, are an essential mechanism. Visionary procurement professionals who are first to understand these tools can unlock enormous benefits in the fast-growing digitalized procurement world.

Overall, there is a huge payback, as according to Forrester, large companies can achieve a return on investment from AWS Marketplace of 550% after three years.

Today, AWS Marketplace has over 325,000 active customers who can access over 2,000 independent software vendors and choose from over 12,000 products and services.

By Marta Whitaker, International Director for AWS Marketplace, at Amazon Web Services (AWS).