Although cloud marketplaces are arguably still in a nascent stage, they are poised to transform the software supply chain.

Purchasing SaaS offerings from marketplaces continues to grow in popularity. According to Forrester, as SaaS adoption grows, many executives find themselves dealing with SaaS sprawl- which can result in excessive costs, redundant functionality, and increased security and compliance risk due to improper vetting. SaaS marketplaces offer a way to address these issues while still supporting business-led purchasing.

Focusing on the AWS Marketplace, Cisco is right in the middle of making its software available. Today, for example, Cisco offers 17 products on this marketplace, and the list is growing. These products span applications, security, and networking and include products such as AppDynamics, Cisco Adaptive Security Virtual Appliance, Cisco Meraki vMX (BYOL), Cisco Cloud Services Router 1000V, and Cisco vEdge Cloud Router (BYOL).

But why do I say the software supply chain is transforming itself? Let me share a few thoughts ...

The traditional enterprise software procurement process

Let's look at Cisco. Over the past 30 years, if a large customer or channel partner wanted to procure a Cisco product-including hardware, software, and services-it would use Cisco's own commerce engine, the Cisco Commerce Workspace (CCW). The vast majority of Cisco's US$50 billion in revenue from last year, for example, came through CCW. Most other enterprises that weren't born in the cloud have conducted the majority of their commerce through a similar vehicle during the past few decades.

It's important to note that CCW is completely integrated operationally and managed by Cisco. For example, if a server with attached support is purchased through the CCW, the server's serial number is used to locate the level of support purchased if the customer requires it. Cisco has built a tremendous number of processes as well as oversight and channel programs based on bookings and transactions stored in the CCW data warehouse and commerce engine.

Cloud marketplaces drive procurement transformation

As enterprises migrate to the cloud, they are also buying more and more of the software they need to run their operations through their cloud providers' marketplaces-attracted by the seamless simplicity of the process.

You can conduct your research on these marketplaces; they offer a wealth of content to help you find what you need, such as architectural blogs and diagrams.

Once you think you know what you want, simply click and subscribe-often with a free trial period included. You can also instantly deploy the software you have purchased, realizing an immediate return on your investment. You also get consolidated billing: Cloud marketplaces offer subscription management across an entire vendor portfolio purchased through them.

Cloud consumption commitments drive further change

In addition to convenience, cloud providers offer an additional motivation to buy software through their marketplaces in the form of programs that provide discounts in exchange for consumption commitments. The AWS program is called EDP (Enterprise Discount Program), but many cloud providers have similar programs. Microsoft Azure, for example, offers the Microsoft Azure Commit to Consume (MACC) program, which allows customer spend through the Azure Marketplace to count against their Azure Enterprise Agreements (EAs). The size of the discount scales with the committed annual spend and term length. In the case of the AWS EDP, this committed spend applies to the consumption of AWS services and software purchased through the AWS marketplace.

Discount programs are a key driver of the cloud marketplace-based transformation of the software supply chain. These programs incentivize companies to direct their employees-from IT to DevOps to lines of businesses-to purchase the software they need to run the business through their cloud provider marketplaces.

The direct result is that market leaders such as Cisco have been expanding their product portfolio on cloud provider marketplaces. An example: AppDynamics is a popular application on the AWS Marketplace. Another example: ThousandEyes, Cisco's recent acquisition which provides single-pane-of-glass visibility into the networks and services that comprise the application user experience, recently became available on the AWS marketplace.

Note, by the way, that the combination of AppDynamics and ThousandEyes delivers complementary customer value. AppDynamics provides visibility into application performance, and ThousandEyes provides visibility into how network activity impacts application performance.

Channel partners are feeling the transformation

Given the competitive landscape we all operate in, seizing on new and emerging routes to market is an imperative for Cisco and our partners. Of course, Cisco is an extremely partner-friendly company, with the vast majority of our business sold through our 60,000+ partners.  What happens, then, to channel partners if our customers can purchase software from a cloud marketplace, essentially bypassing them?

Fortunately, cloud marketplaces such as AWS offer a number of programs to help channel partners sell AWS services and ISV software procured through them, along with channel partner value-added services.

In addition, Cisco provides a number of vehicles to help its partners transform their businesses beyond simply reselling Cisco products. Through Cisco DevNet, for example, we are helping partners leverage our APIs to build their software practices by adding value to our market-leading portfolio of products. In addition, Cisco is helping partners transform their practices by providing more services that align with the customer lifecycle, from cradle to grave.

We've only just begun

With all this said, end-to-end software supply chain transformation is still in its early stages. For one thing, the need to migrate enterprise-built software products to cloud provider marketplaces continues. And established companies such as Cisco must continue to mature how-or if-they connect their commerce engines, data warehouses, and marketing programs to  cloud provider marketplaces.

The ultimate objective of our efforts is to expand the choice of software customers can deploy simply and seamlessly to help them run their businesses better-while also enabling our partners to continue to incorporate value-added services into solutions that help our mutual customers meet their business outcome objectives.

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