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Partnerships business models. Why delivering customer outcome solutions is 3X💰 more profitable

If you’re in #partnerships, you may be asked to “Show me the money” more often today. Small fee on an occasional resell/referral are nice, but for 💰 you need to get closer to delivering customer outcome solutions. The closer you get, the higher value.

📈 Partnerships have several business models, but the rule of thumb is that conversations around business outcome solutions are entirely different from conversations about reducing IT cost, for example.

The buyer is willing to spend more on a solution that increases their top line. Also, the buyer of business outcome solutions is usually no longer the IT department,

but often the line of business (LOB) buyer, i.e. specific department or business unit.

The spend of LOB on tech solutions is growing 📍 2-3X faster than that of the IT department.

Here is AWS profitability benchmarks that you may find helpful:

💳 Resell

Margins: X% (single digits)

Differentiation vs other partners: low.

Partner simply resells AWS services.

🛠️ Partner Value Added Services

Margins: 1X-2X% (high teens to 20s)

Partners add their services on top of native AWS services =>

Higher differentiation vs other partners + additional value to the customer experience.

E.g. a migration consulting/service, like SoftServe, who offers a in-house platform for enterprises built on top of AWS, that includes AWS services and 3rd party software to run client applications.

✔️ Managed Services

Margins: 30 to 40%.

MSPs deliver high value for IT customers, as the latter can forgo upfront CapEx and don't need to build that capability on their own.

Range from basic IT operations management to performance monitoring and backup recovery, to completely running a customer's entire infrastructure like Cloudhesive (AWS partner).

🤝 Co-sell

Margins: ~ 26%

Any product with its own IP that partners sell together with AWS. Hyperscalers want to go to market with SaaS products that extend their TAM and with solutions they can sell together.

💎 Business outcome solutions

Margins: 60%+

Here partners are delivering end-to-end business outcome solutions that directly impact customers' top line. Highest value that they can bring to customers.

Examples: real time in-store retail analytics; or predictive maintenance of a factory.

👍 Follow for more insights

Partner Insight

Sources: Amazon Web Services (AWS), my edits.


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