AWS Partner Profitability Framework: Deepen and Diversify Your Offerings

“AWS Transforms the Partner Experience” is a blog series on updates to AWS Marketplace, AWS Partner Central, and programs.

By Priya Bains, Head of Partner Brand and Content Strategy – AWS

The AWS Partner Profitability Framework is an intuitive and reliable way to maximize business value with the AWS Partner Network (APN).

In 2012, we launched the APN with a few hundred Partners. Today, AWS customers can choose offerings from more than 140,000+ Partners from over 200 countries and territories. Partners continue to be an integral part of HAQM Web Services (AWS), empowering customers to grow their business by leveraging the scale, security, and flexibility of the cloud.

Partners have shared that as they evolve to better support their customers, they want a more predictable return on investment (ROI) building solutions, specializations, and relationships with AWS and other AWS Partners. The Partner Profitability Framework is a response to this evolution.

Canalys research highlights that AWS Partners that achieve profitable growth are those that have deeper AWS engagement, and offer a breadth of services and support. From reselling to offering services and technology solutions, data shows that different business models generate different levels of profitability.

The AWS Partner Profitability Framework optimizes the Partner journey to broaden the value and deepen expertise across these various business models—driving greater growth and profitability.

Partner Ecosystem Multiplier: The AWS Opportunity, a Canalys Study

According to Canalys, for every dollar of AWS revenue, Partners across the globe generated a multiple based on their activities, cloud maturity, and business models.

Whether reselling, offering services, technology solutions or a combination of these, Partners with a full stack of professional services and the most diversified offerings can achieve a $6.40 multiplier per $1 AWS sold. Services include advisory, design, procurement, building, adopting, and managing.

Figure 1 – Partners with a breadth of offerings can achieve a $6.40 multiplier. 

The study also explored the key factors underpinning this multiplier, including:

• 61% of the multiplier is gained in the first year of the initial project. Partners that develop new opportunities with the same customer fuel greater growth with their AWS business.
• 60% revenue is generated at the front end of the customer lifecycle during advise, design, and build motions.
• 79% of Partners interviewed indicated that customers increased cloud consumption after the first year of an initial project.
• 30-40% gross profit margins are generated by managed services recurring revenue opportunities.
• Breadth of Partner services and AWS portfolio available to customers is key to AWS Partner growth. The most successful Partners are those that have wide-ranging relationships across the broader Partner network.
• The biggest barrier to achieving full multiplier is not having gained sufficient cloud maturity.

Figure 2 – Multiplier by service category.

Different Business Models Generate Different Profitability

Profitability varies based on business models, activities, and cloud maturity. Partners can move across the profitability framework by deepening their expertise and also grow their business by diversifying their offerings.

The framework guides Partners to the right resources to grow profitability across all business models—from resell, services, managed services, and technology solutions to business outcome solutions. Partners can deliver more impact to customers and boost earning potential by moving across and up the Partner Profitability Framework (Figure 3), and collaborating with other Partners. The more differentiated your solutions and capabilities, the greater customer value and increased profit potential.

For example, straight resell of AWS’ native services may yield single digit margins. But by adding their own services to the AWS services, Partners can differentiate themselves and add more value to the customer experience—yielding higher margins.

Managed services, in particular, yields even higher margins in the 30-40% range, setting the foundation to offer technology solutions. According to IDC, 90% of organizations will face IT skills shortages by 2026, resulting in $5.5 trillion in delays, quality issues, and revenue losses. This creates an unprecedented opportunity for Partners who can effectively fill this capability gap. This isn’t just about managing infrastructure, Managed Service Providers (MSPs) are becoming true extensions of their customers’ IT organizations.

Once you’re comfortable being an MSP, you may start to develop your own proprietary technology solutions that will further differentiate your offering and move you higher up the profitability ladder. The largest returns come to Partners who are delivering business outcomes to customers, as these solutions affect a customer’s top line and are usually tied to their main revenue stream.

Figure 3 – AWS Partner Profitability Framework.

Business Outcome Solutions Drive Maximum Growth

As a Partner moves across or up the Profitability Framework to deliver business outcomes, AWS supports their evolution with programs, tools, benefits, enablement, and experts to build their capabilities and offerings, drive go-to-market (GTM) activity, and sell solutions.

For example, starting from the build stage, the AWS SaaS Factory Program is a strategic accelerator for Partners in the early stages who want to build, migrate, or optimize software-as-a-service solutions on AWS.

As a Partner looks into developing their GTM capabilities, they can achieve specializations (AWS Competency, Service Delivery, Service Ready, Managed Service Provider) to differentiate their expertise to customers, leverage Marketing Development Funds (MDFs) to co-fund joint marketing activities and also market their business outcomes.

AWS’ team of sales experts support Partners with sell and co-sell activities. Programs like AWS ISV Accelerate incentivize AWS sellers to co-sell joint solutions with Partners. Partners can leverage AWS Marketplace to sell their offerings to customers, expand reach, and accelerate deal closure. Additionally, the AWS Solution Provider Program (SPP) and AWS Distribution Program offer discounts and incentives to help Partners grow and drive greater profitability.

Next Steps

Customer obsession is central to everything we do at AWS—and it starts with Partner success. That’s why we give our AWS Partners the best-in-class programs, incentives, and tools to deliver greater customer value.

Whether you’re a small, medium, or large enterprise, a startup, or a public sector organization, the AWS Partner Profitability Framework powers your growth at every stage.

Explore AWS Partner programs, AWS Specializations, incentives, and more to drive engagement with customers and AWS Sellers.