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Pavel Pragin, the CEO of the cloud consulting firm ClearScale, recalls when Terry Wise, the former head of Amazon Web Service’s channel partnerships, abruptly left the role in 2019 after 11 years with the cloud giant.
“I had a relationship with him, and then one day, he wasn’t there anymore,” Pragin told Insider. “That kind of stuff happens all the time.”
Despite ClearScale’s status as a “premier” AWS consulting partner, when such execs leave or are reshuffled, Pragin feels that his 200-person company has to “do a lot of work to stay on the radar,” he said.
Those relationships are everything for smaller firms like ClearScale, which, like the hundreds of other certified AWS consulting partners, are in a mutually beneficial relationship with the cloud giant.
Amazon passes them sales leads and helps them with their marketing, while they focus on the technical work of moving customers to Amazon’s cloud platform — a task analysts say is often better handled by those types of firms. Other firms in the AWS Partner Network, or APN, which has over 100,000 independent partners, build software on top of its cloud infrastructure.
Partner programs were pioneered by early IT giants like Microsoft and Dell and adopted by Amazon almost 10 years ago to help it win and support cloud customers. These programs have been a key strategy in building AWS into a cloud giant.
But as AWS has grown into a massive business, on track to generate $59 billion in revenue, changes have come to its partners.
ClearScale and six other AWS consulting partners told Insider that Amazon has become “harder to work with” as it’s grown. They said it’s tougher to stand out among the swelling ranks of Amazon’s cloud partners, especially as AWS goes after larger customers.
An AWS spokesperson said in an emailed statement to Insider: “The reason so many partners, from startups, to medium-sized businesses, to enterprises, are choosing AWS is because we continue to invest in helping them build differentiated and specialized AWS capabilities and solutions — no matter their size.” You can read Amazon’s full statement below.
From being asked to generate sales leads for AWS’s internal sales teams to competing for special funding programs, consulting partners told Insider it’s becoming harder to build a business on Amazon’s cloud unless they have the cash, manpower, and sheer will to fight for the cloud giant’s attention.
“It’s hard to get their attention sometimes and hard to get them to focus,” Brian Klingbeil, chief strategy officer of the 2,000-person AWS services partner Ensono, said.
While these partners largely see such changes as a natural consequence of AWS maturing, some are still worried about getting squeezed out.
A relationship with AWS “took time to develop in the early years, and it’s still strong, but it’s also now in a context of there’s a lot more partners out there,” said Doug Schneider, the CEO of the early AWS partner 2nd Watch, which has about 250 employees.
And while AWS counts professional-services heavyweights like Accenture and Deloitte as major partners, many in its ecosystem are small consulting firms that rely on Amazon to keep the lights on. But to engage with AWS “on a meaningful level” these days, a partner simply can’t be tiny, like a 30-person company with a single salesperson, Pragin said.
“It’s like a mouse and an elephant trying to go on a date,” he said. “It’s not possible.”
“We continue to evolve the APN based on feedback from partners and innovate our programs to help partners of all sizes to thrive and grow their businesses with AWS,” Amazon’s statement said.
The requirement that partners bring sales leads to AWS (meaning help AWS find new customers to join its cloud) is perhaps the most significant sign of how dynamics within Amazon’s ecosystem have shifted — with the balance of power firmly on Amazon’s side, partners said.
ClearScale’s Pragin, whose firm began working with Amazon in 2011, said AWS used to tell partners just to “do the work” and the deals would come.
Many smaller services partners didn’t have sales teams back then. When AWS closed a big deal, the cloud giant would commonly send in one of its trusted, select partners to do the heavy lifting of moving the customer to the cloud, the partners said.
“For us, these relationships are one of, ‘What access can we provide the hyperscalers? What access and referrals can they make back to us?'” said Eric Kaplan, the chief technology officer of the AWS services partner Ahead, which has about 1,000 employees.
Eric Dynowski, the chief solutions officer of the 140-employee partner Deft, agreed. “In the early days, especially for other partnerships and competencies, it wasn’t too difficult to get recognized as a partner,” he said.
That structure worked well, with Amazon grateful for the help and too few partners in the program for them to have meaningful competition between one another. “But that’s over now,” Pragin said, “and everybody has to earn their keep.”
Now, partners are measured, ranked, and reviewed based on the number of sales leads they bring to AWS, they told Insider. That puts the burden on small partners to quickly hire and train a sales organization, or risk falling below the threshold to stay in the partner program.
“If you look at the leading partners now, the ones that are growing and doing well, they all have sales teams that are significant for their size,” Pragin said.
Amazon’s quest for cloud growth has increased friction with its partners in other ways, too: AWS puts such an emphasis on sales leads that partners sometimes compete against Amazon’s own salespeople, who have quotas and goals of their own.
The AWS sales team has been accused of stealing deals and customer information from partners including 2nd Watch, Insider previously reported. Tension between parties involved eventually led to the creation of “rules of engagement” last year, Insider also reported, which aim to put guardrails on how Amazon salespeople use “partner originated” opportunities.
Partners said that even with all the obstacles and frustrations that come with working with AWS, the business they could earn from being part of its network is well worth it.
“I think AWS does provide a really fruitful environment for those willing to bet on AWS,” Eran Gil, the CEO of the 300-person AWS consulting partner AllCloud, said.
While many AWS services partners increasingly also work with Microsoft Azure and Google Cloud, those who spoke with Insider said their respective Amazon practices still bring in the lion’s share of their revenue.
Schneider said 2nd Watch recently started working with Microsoft and Google, but AWS still accounted for over two-thirds of its business and would likely remain its primary source of revenue.
Gil said 65% of AllCloud’s business was from AWS, with the rest from the software giant Salesforce. It went “all in” on AWS after finding it could make more money with AWS than Google Cloud, Gil said.
“Like with every smaller-scale organization, once one becomes a really big growth driver and then the other is a slower growth driver, the business leans into one or the other one direction,” he said.
Even so, partners told Insider, they have to hustle to reap the real benefits of the partnership. For example, Amazon offers as many as 40 funding programs (which essentially subsidize certain cloud services) to help partners grow, but only partners who reach certain revenue goals get access to “bigger and bigger funding pots, and then marketing dollars and sometimes technical expertise and account teams,” said Ensono’s Klingbeil.
Indeed, partners say that Amazon reserves access to many of its funding programs — as well as other kinds of sales and marketing support — for firms that achieve the distinction of becoming “advanced” or “premier” consulting partners, which in large part requires they already have a roster of customers, and that they meet requirements for certifications and competencies in select areas of the AWS platform.
“When you do get competencies, that’s the gold standard,” Elena Shorb, the Amazon alliance manager at the AWS partner Mission, said. The 100-person company would be “severely hamstrung” if it hadn’t earned the AWS migration competency, Shorb said.
Ultimately, those partners said, the demands Amazon places on its small but fierce consulting partners are manageable, but AWS faces an increasing burden to show these partners that their efforts are worthwhile.
The company needs to incentivize partners to “go through these processes and spend the time and effort to train and implement, and build references,” Kaplan said, adding: “And if it doesn’t differentiate your business in some fashion, I would question the partner program in and of itself.”
“AWS has a vibrant and growing global community of over 100,000 partners, adding 50 new companies to the AWS Partner Network (APN) each day. The reason so many partners, from startups, to medium-sized businesses, to enterprises, are choosing AWS is because we continue to invest in helping them build differentiated and specialized AWS capabilities and solutions – no matter their size.
This has led us to have strong partnerships, across industries and around the globe, with companies large and small like Accenture, Deloitte, Lemongrass, Logicworks, Onica, Slalom, and Velocity. We continue to evolve the APN based on feedback from partners and innovate our programs to help partners of all sizes to thrive and grow their businesses with AWS.”
A leading-edge research firm focused on digital transformation.