‘There‘s this tremendous market opportunity for Google Cloud partners,’ says Carolee Gearhart, Google Cloud’s vice president of worldwide channel sales and global SMB sales. ‘That’s really reflected in how the Google-related opportunities are going to increase.’
Google Cloud partners will make an estimated $5.32—predominantly from their own services and software solutions— for each $1 of Google Cloud technology that they sell this year, a new study commissioned by the No. 3 cloud provider says.
That figure, which includes Google Cloud resale margins, will exceed $7.54 by 2025, according to the report by research firm IDC, which based its figures on Google Cloud partners surveyed globally.
“The result of the model is IDC‘s forecast that partner revenue from Google Cloud opportunities will more than triple by 2025,” the IDC report stated. “Over the next six years, the accumulation of net-new partner revenue will reach $341 billion.”
Google Cloud partners make an average margin of 34 percent on their own intellectual property (IP) that includes the services and software that they create and sell in Google Cloud deals, according to the report. An average of 66 percent of Google Cloud partner revenue is generated from their own IP, which can yield as high as 85 percent gross margin on software and 30 percent to 50 percent on professional and managed services.
“In Google Cloud deals specifically, partner IP sold is dominated by IT/business consulting services, cloud software, implementation/integration services, support services and managed services, among others,” the study said. “This is where the value in the multiplier of the Google Cloud relationships makes its impact.”
As a result, Google Cloud partner revenue is growing faster than Google Cloud’s own revenue, which—including sales from Google Cloud Platform (GCP), G Suite productivity tools and other enterprise cloud services—exceeded $3 billion in the second quarter that ended June 30, up 43 percent from the same quarter last year.
Google Cloud in 2018 set a goal of 100 percent partner attachment to its customer deals. The $121 billion net margin opportunity for partners through 2025 will be distributed across their activities, IDC said. IT and IaaS, SaaS and PaaS add-ons created and sold by partners will account for 52 percent of partner net margin, business services will contribute 15 percent, and supporting hardware and networking will kick in 6 percent, according to its report, “Partner Opportunity In A Cloud World: How Partners Are Winning In The Google Cloud Economy,” released this week. Resale margin will comprise 27 percent of the net margin opportunity.
The IDC study blends economic projections for very different types of partners, noted Tony Safoian, CEO of SADA Systems, a Google Cloud Premier Partner. The business models of systems integrators, including global systems integrators (GSIs), differ from those of managed service providers (MSPs) or independent software vendors, he said.
SADA counts itself as an MSP with GSI-level professional services capabilities.
“Our business will grow 100 percent this year, but GCP, specifically, is growing faster,” said Safoian, whose Los Angeles-based company was Google Cloud’s Reseller Partner of the Year in 2019 and 2018.
Google Cloud partners are benefiting from the surge in public cloud adoption, which has been accelerated by the global coronavirus (COVID-19) pandemic and forced the closures of nonessential business and a shift to more employees working from home.
Google Cloud partners surveyed by IDC reported average year-over-year revenue growth of 35 percent for their Google Cloud business, while 20 percent of partners reported revenue growth of 75 percent or more.
Google has a 9 percent share of the cloud infrastructure services market—which includes IaaS, PaaS and hosted private cloud—up from 8 percent in the prior-year quarter, according to a second-quarter report released late last month by Synergy Research Group. That compares with cloud computing leader Amazon Web Services’ 33 percent share and No. 2 Microsoft Azure’s 18 percent share.
Google Cloud has been targeting enterprise customers in six industries and 21 global markets for growth under CEO Thomas Kurian. They include financial services, health care, manufacturing and industrial, the public sector, retail, and media, telecommunications and entertainment, and the territories of North America, Latin America, Europe, the Middle East and Africa, and Asia-Pacific, including India, Japan, Australia and New Zealand.
Seoul-based Bespin Global, a Google Cloud Premier partner and MSP that does resale, managed services and cloud consulting and has proprietary cloud management software, has grown its Google Cloud resale business to $20 million in the last 12 months and expects it to double to $40 million this year—despite its cloud-agnostic operating model, according to the IDC report.
“The partner’s success relies on a focus on GCP—landing customers with GCP and expanding its footprint with cloud services and software,” the report stated.
Carolee Gearhart, vice president of worldwide channel sales and global SMB sales at Google Cloud, sees one key message from the IDC study.
“There‘s this tremendous market opportunity for Google Cloud partners,” Gearhart said. “That’s really reflected in how the Google-related opportunities are going to increase. There is this really big TAM [total addressable market] out there. What we have seen is the incredible pull that Google has around innovation and transformation. The Google Cloud partners that we’ve got are really growing at a healthy clip. And, more importantly, the top performers are growing dramatically faster.”