Cloud Co-sell for ISVs - Creating a "Better Together" story

Introduction

My name is Brian Kane and I have worked in the partner organizations of three Cloud Service Providers (CSPs), including Microsoft, AWS, and Google Cloud, and have contributed to hundreds of Independent Software Vendor (ISV) partnerships, ranging from startups to Fortune 100 ISVs.  I am frequently contacted by ISVs who are looking to get the most out of their cloud provider partnership and don’t know where to start.  In the spirit of helping as many partners as I can (according to Canalys there are over 160,000 ISVs), I will share best practices, frameworks, and opinions around how ISV partners can maximize their cloud provider partnerships.  I will provide generalized guidance which applies to all cloud provider partnerships.

I will provide both theory and practical actions (including templates whenever possible) that individual co-sell practitioners (e.g., Alliance Directors) can leverage in their day-to-day work.  I am creating this content in the spirit of open source - to help the overall ISV community be successful when co-selling with CSPs.

Background: Most customers are just starting their cloud journey

According to The Economist, 80% of workloads are still running on-premises.  Despite the incredible growth and scale cloud providers have collectively achieved, most customers are still early in their journey to cloud.

Cloud service providers (CSPs) work backwards from where customers are in their cloud journey and deliver the value customers need now.  For most customers, this means building cloud foundations / landing zones and early migration waves.  Most customers I’ve engaged with over the past three years have adopted a “migrate and then modernize” approach, where the primary OKRs are the number of virtual machines migrated to the cloud and de-commissioned data centers. 

Background: Each category of ISVs requires a different approach

The ISVs with the greatest natural gravity for co-selling are ISVs in “migration adjacent” categories.  When a customer first moves to the cloud, there are typically around 10 core solution categories the customer will need to invest into, with at least 2-3 net new ISV solutions per category.  This results in about 25 ISV solutions needed to support the customer’s landing zone and initial cloud maturity development.  Top “migration adjacent” categories include security, networking, storage, databases, DevOps, cloud infrastructure, and operating systems.

Additionally, there are non “migration adjacent” categories that customers are prioritizing, especially data & analytics and AI/ML. Customers are no longer solely focused on moving virtual machines, particularly with the change in the economic environment.  CEOs and CFOs are prioritizing areas of outsized value creation, which is where data & analytics and AI/ML have emerged as top areas of focus and investment.  ISVs in these categories provide customers with transformative value - allowing the customer to better understand their customers, deliver more personalized products and services, drive operational efficiency, and create competitive differentiation. 

Line-of-business (LoB) and industry vertical ISVs are equally important, however are more challenging from a co-selling perspective.  I’ll go deep into both in a future post.  ISVs in these categories can still achieve success in their CSP co-selling, however a different mental model and a modified set of tactics are needed. 

Core challenges of LoB ISV-CSP co-sell include:

• Lack of decision maker alignment: increasingly LoB ISV purchases are made by LoB leaders with minimal IT involvement.  By contrast, most CSP sellers engage primarily with CTO/CIO/CISO decision makers.
• Longer, more complex sales cycles: Many LoB solutions have 12-36 months sales cycles, which makes it challenging to drive CSP seller engagement.
• Seller alignment challenges: clarifying the value each field team will provide to each other and aligning on “who will do what” is a challenge.

Background: CSP account teams aren’t experts on your solution

A common misconception of ISVs is that CSP sellers will start selling the ISV’s solution once the ISV’s marketplace listing is published.  Co-selling doesn’t involve the CSP selling your solution on your behalf - it’s a joint motion where the CSP will support your opportunity (including sourcing opportunities to you).  In this co-selling framework, your seller is the primary opportunity owner and drives the opportunity to launch.  The CSP seller and customer engineer provides you account intelligence, stakeholder introductions, technical assistance, procurement assistance, and general support.

It’s important to understand the dynamics of being a CSP seller or customer engineer.  CSP account teams are generally aligned to a group of customers (ranging from an individual customer to potentially 30-50+ customers) within a given geographic territory.  CSP sellers in more broad terms can be divided into “spending customers” (customers with a minimum monthly spend and likely a commit agreement) and “non-spenders” (greenfield customers with little to no monthly spend).  Going back to 80% of workloads being on-premises, many customers are still “non spenders” across all cloud providers.

CSP account teams are focused on driving consumption of first party native services - like compute, storage, database, AI/ML, etc.  This is a different model than traditional ISV selling, which focuses on licenses, renewals, and churn.  CSP sellers focus on activities which align to where their customer is in their cloud migration, which can be early (technical assessments, establishing a cloud landing zone), growth (initial migration waves, early modernization), or mature (digital transformation).  This requires CSP account teams to sell over a hundred native services in addition to many more micro-services.  Additionally they are engaged with a range of partners helping with migration delivery, service, and support.  They are also chartered with specific goals around first party products, specific workload types, and professional services.  Partner co-selling is an additional layer of activities, compounded by the high volumes of ISV co-sell requests they receive (particularly for strategic customers).

Always assume the following about CSP sellers and customer engineers:

1. They want to support ISV partners and are incentivised to do so.  
2. They are busy and have many competing opportunities and priorities.  They prioritize what’s going to deliver the most impact to their customer.
3. They are protective of the trust they’ve built with the customer and want evidence you’ve solved the same problem with other customers similar to theirs.  
4. They are unfamiliar with your solution and have limited knowledge of the solution category you compete in.
5. They don’t understand how your solution impacts a customer’s journey to the cloud.
6. They want you to provide specific asks on how they can help you.
7. Once they’ve successfully supported a joint account engagement with you, they know what to listen for (triggers), understand your high level pitch, and are willing to bring you into their other accounts.  Until then, their willingness to support leads and unqualified opportunities is limited. 

The importance of creating a “better together” story

The foundation of co-selling is a clear, concise and compelling message around what your solution is, what problem it solves for the customer, and how it uniquely impacts a customer’s journey to the cloud.  This message is best when developed at a solution-level, working backwards from a specific customer profile.  ISVs with multiple solutions (e.g., larger ISVs with 25+ solutions) or solutions with multiple use cases should develop multiple “better together” stories.

“Better together” stories are not generic product marketing positioning or solution category level messages (which all players within a given ISV category share).  When you co-sell you need to sell twice - first to the CSP seller and then to the customer.  A strong “better together” story helps you sell to the CSP seller, in addition to helping you refine your customer positioning.  

Start by creating a “better together” story for one solution for one specific customer profile to maximize focus and relevance.  The best “better together” stories come from actual customer success, which reverse account mapping helps you capture.  Reverse account mapping is when you interview multiple customers who are both a customer of you and the CSP.  Here is how to do it!

Step 1: Joint customer identification

Identify 5-10 customers of yours who are also active customers of the CSP (e.g., they have already migrated to the cloud and are actively running workloads in the cloud).  If you don’t know, ask the customer.

Tip: focus the customer selection against a common target customer profile to maintain our focus on relevance.

Step 2: Conduct customer interviews

Schedule a 30 minute call with the core user of your solution and purchase decision maker (if they are different) and ask them the following questions:

1. User persona: Who are the core users of [the ISV solution]? 
2. Purchase decision maker: Who was the decision maker(s) for [the ISV solution]?  
3. Customer problem solved: What problem(s) does [the ISV solution] solve for you?  
4. Triggers / events: Were there specific events or triggers which made [the ISV solution] needed?
5. Impact to cloud journey: How did [the ISV solution] impact your journey to the cloud generally and [CSP] specifically?  Were there specific cloud-related use cases you leveraged [the ISV solution] for?
6. CSP services influenced: What are the [CSP] services that are impacted (e.g., direct and influenced consumption) by [ISV solution]?
7. Differentiation: What does [the ISV solution] do that alternative solutions don’t do?  Sometimes small / subtle differences make a big difference in establishing competitive differentiation. 

See this Google Sheets for a template you can use to conduct reverse account mapping interviews. 

Instructions:

1. Make a copy of the Google Sheets (it's read only)
2. Fill out the second tab (“reverse account mapping”) during your joint-customer interviews.  As appropriate, add your own questions as well.
3. Continue interviewing customers until the majority of answers are repetitive with prior interviews (which is the best signal you’ve reached the point of diminishing returns).
4. Summarize your findings as inputs into your “better together” story. 

Step 3: Create your “better together” story

In the same Google Sheets document, I have built a text generating “better together” story tab (tab 3) which will generate a “better together” story for you using inputs you've generated from the reverse account mapping activity, in addition to a few other pieces of information. 

Formula for a “better together” story:

The output of the Google Sheet, powered by your input (below) and some nifty formulas is a one paragraph “better together” story you can leverage in your GTM efforts (slides, email outreach, talk tracks).

The inputs required are the following: 

• ISV solution: name of the specific ISV solution
• User persona: core users at the customer of your ISV solution
• Decision maker: primary customer decision maker(s) of the ISV solution
• Customer profile: description of target customer profile for your ISV solution
• Customer problem solved: problem your ISV solution solves / core use case(s)
• CSP name: name of specific cloud service provider you are co-selling with
• Customer references: names of customers (which align with the target customer profile) who are publicly referenceable 
• Impact of solution on customer's journey to the cloud: how your solution benefits a customer's journey to the cloud (be as specific as possible - small/subtle competitive differences have a big impact)
• CSP services ISV solution is built on: CSP services your solution is built on (hint: ask your partner engineer if unsure)
• CSP services influenced: CSP services your solution influence in the customer tenant (hint: ask your partner engineer if unsure)
• CSP services drag: for every $1 of your service sold, $x of additional CSP services are consumed (hint: ask your partner engineer if unsure)
• Deal cycle: typical deal cycle range (with average deal cycle)
• Deal size (annualized): typical deal size (per year)
• Customers decision maker: primary customer purchase decision maker(s) of the ISV solution
• Marketplace availability: Is the solution available on the CSP's marketplace? Yes or no.

Note: if you don't have some of this information, that's OK. Edit down as required, noting that all the information above strengthens your "better together" story

Conclusion

Successful ISV co-sell starts with a well-crafted “better together” story.  With CSPs, your focus should be on relevance and quality versus quantity.  Narrowing your focus to a smaller set of solutions, geographies, and customer profiles is the most effective approach.  In the next article, we will review how to build on this foundation with highly targeted sales plays, account mapping, and field enablement.

Continue reading with Part 2: Account Mapping Best Practices!