Have you dabbled with IT infrastructure in AWS? Have you been through the process of AWS partnership? Does being an AWS partner add value? Amazon seeks partners that helps drive its business, goals, and value.
Today, we’re talking to Justin Brodley, the vice president of Cloud engineering at Ellie Mae. He has been through the AWS partnership process and shares his thoughts about it. He encourages you to find the right partner for your business!
Some of the highlights of the show include:
Different levels and types of AWS partnerships
Shakedown vs. opportunity method for new leads; lead generation expectations
Amazon’s improvements eroding business models
Partners trying to pivot, but not exclusive to AWS
Whether to invest in multi-Cloud
Amazon can’t scale its sales team to handle everybody; views partner program as an extension of its salesforce
Your company is important and you’re spending a lot of money, but Amazon may not care about you; partner market fills that gap and makes you feel important
Corporate prisoner’s dilemma: Your tech company offers something that Amazon doesn’t; but what about when Amazon does offer it?
Competitors’ horizontal move to become more diversified
Amazon expects partners to offer products and services that it cannot offer yet
If partners fail, Amazon decides to do it and do it better
Is Amazon’s best interest geared toward its partners or you and your customers?
Amazon needs to give incentives and support partners
Full Episode Transcript:
Corey: Hello and welcome to Screaming In The Cloud with your host, cloud economist Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming In The Cloud.
This week’s episode of Screaming In The Cloud is generously sponsored by DigitalOcean. I’m going to argue that every cloud platform out there biases for different things. Some bias for having every feature you could possibly want offered as an added service at varying degrees of maturity. Others bias for, “Hey, there’s some money to be made in the cloud space. Can you give us some of it?”
DigitalOcean biases for neither. To me, they optimize for simplicity. I told some friends of mine who are avid DigitalOcean supporters about why they’re using it for various things, and they all said more or less the same thing. Other offerings have a bunch of shenanigans, root access, and IP addresses. DigitalOcean makes it all simple. “In 60 seconds, you have root access to a Linux box with an IP.” That’s a direct quote albeit with profanity about other providers taken out.
DigitalOcean also offers fixed-price offerings. You always know what you’re going to wind up paying this month, so you don’t wind up having a minor heart issue when the bill comes in. Their services are also understandable, without spending three months going to cloud school. You don’t have to worry about going very deep to understand what you’re doing. Its click button or making API call, and you receive a cloud resource.
They also include very understandable monitoring and alerting. Lastly, they’re not exactly what I would call small-time. Over 150,000 businesses are using them today. Go ahead and give them a try. Visit do.co/screaming and they’ll give you a free $100 credit to try that. That’s do.co/screaming. Thanks again to DigitalOcean for their support in Screaming In The Cloud.
Hello and welcome to Screaming In the Cloud. I’m Corey Quinn. Joining me now is Justin Brodley. Welcome to the show, Justin.
Justin: Hi and thanks for having me.
Corey: Always a pleasure. You’ve been dabbling in IT infrastructure for a while now, coming up on 20 some odd years at this point, last I checked. A lot of that has been with AWS in a variety of different ways. Today, you’re effectively leading the public cloud transition at Ellie Mae but before this, you worked at a large premiere AWS Managed Services provider. Is that correct?
Justin: That’s correct.
Corey: Wonderful. You’ve been through the process of AWS partnerships?
Justin: Yes, and it is a process.
Corey: With my consulting business as an independent, I looked into it about a year or so ago to see if this is something that is going to add value. At the time, I didn’t really see where it was coming from.
Let’s take a step back. What is an AWS Partner?
Justin: There’s several different AWS partner levels and types. Typically, when you’re talking about a partner for Amazon, the common ones are what they call Lift-And-Shift Partners. This partner is really around bringing you to the cloud as fast as possible in the most simple way possible to the cloud to get that revenue going for AWS.
Amazon sees a partner like that as an on-ramp to their cloud and really helps drive their business and their goals. There’s a close alignment between their sales team and the partner and also the customer to make sure that that is a symbiotic relationship that has value for Amazon.
Corey: Okay. When it comes to AWS partnerships, I keep seeing different notices. There’s a part of my gathering the news for last week in AWS about different companies obtaining a competency level in certain areas in Amazon. I’ve always read the, “We have found this company to be competent.” It sounds like a middling performance review but I get the sense it needs something different.
Justin: Right. Basically, Amazon, knowing that the partnership market is bigger than just Lift-And-Shift and there’s a desire for they want people to be doing things like machine learning and they want them to be focusing on mobile and IoT. They want them to have vertical strategies as well, like I’m really into Fintech or I’m really into healthcare and HIPAA compliance.
Basically, if you’re a partner, you have established a partner relationship with AWS, and you reached a certain level or threshold either in your either committed spend or your influence spend, you basically then can apply for these competencies. Some competencies are simple as go to this assessment, it might be a self-assessment, it may be a third-party assessment, and basically, show us how you’re doing these things and show us customers where you have been successful at these competencies. If you meet those criteria, then you get to move forward and become that particular competency in your profile.
Corey: What types of different partners are there?
Justin: I can mention relationship partners out there. There’s the Fintech Specialty Competency now focusing on financial technology. The company that I was at where we demand services was a mobile IoT partner and Alexa partner, really focusing on that niche and really how do we implement API Gateway and Lambda to support mobile applications and IoT use cases. Those are typically very focused and targeted on those verticals.
Really, that way a salesperson AWS can say, “Hi mister customer. You’re really interested in mobile. Let me connect you with the right partner who has that mobile competency who can tell you all the amazing Amazon services that we have in mobile. I can actually help you do something with those services.”
Corey: Does that model generally tend to play out? Or is it one of those areas where it’s the carrot-and-the-stick? The carrot being they offer to drop new clients into your lap, and the stick very often being, “Oh, unless you’re a partner, we’ll recommend other partners in your place to all of your customers.” How much of it is shakedown and how much of it opportunity for new leads?
Justin: I don’t think Amazon is at the level of maturity yet where they can really adopt the competency model that makes sense. Typically, a customer will come in, they’ll be a new prospect to Amazon, they’ll get partnered with a relationship partner, and that relationship partner will then take on and it will be considered the prime partner for that account. That company is going to do what they’re going to do to get them to the cloud.
Then when you start talking about, “Okay, now I want to do mobile or I want to do something different, IoT. If that partner has the competency or has at least passed the bar to meet with the competency, then maybe they take that work on. But typically, Amazon won’t bring in a new partner if there’s an established partner in place.
The lead gen, if you’re like a Lift-And-Shift and it’s really about that [...] I think it’s there, I think if you’re looking at something like, “I want to be a mobile partner, I really want to focus on something very specific, very niched, I don’t think you’ll get the lead generation that you really expect from a partner program.
Corey: Okay, and that’s probably fair. I admit I’m a little harsh on Amazon from time to time, but on the other side of it… A few months ago was my first reinvent. Walking the expo hall was fascinating because they didn’t open the expo hall until after a bunch of announcements have been made. To some extent, we walk around between different booths and notice a number of different companies that it didn’t sound like they had a business model anymore given some of the changes and enhancements that AWS had released.
For instance, if you’re the company that winds up doing bill analytics and the Cost Explorer API comes out, they start to make dashboards that give you custom views, and they charge a penny for API call, suddenly having a company that charges a few percent of your AWS bill in order to do that exact same thing no longer has the strong value proposition they did a week ago.
Not to pick on people in the costing space, there are companies out there that do all kinds of neat tricks around Amazon feature shortcomings that eventually get fixed. That’s the general trend line of all of Amazon’s services. Over time they get better. At what point does Amazon’s improvement erode the business model of it’s partners?
Justin: Well, Apple famously started this trend with sherlocking, several of [...]. They killed Sherlock which was a pretty lead search engine for the Mac at the time when they came out with their own Spotlight service at WWC 10 years ago. That’s been a pretty common thing and that’s really where the adage, “Be careful when you build your product at someone else’s platform.” Some platforms are more apt for that and other, for replacement and for being moved out of the market.
forced.com for example—as a platform—is difficult to be successful because sales personnel sees all this data that you’re collecting on their platform and they can say, “Wow, that’s a really interesting market to us. We can go build that same feature set into our service cloud or our sales cloud product.”
It’s the same risk you have with Amazon. Amazon will always get better. They’ll always continue to innovate. They’ll be adding new features. Really the question is the partner, can they get ahead of that and be more innovative and more quick to adopt things, or can they do it in a way that’s better and more efficient? I think the cloud health providers and all the different people in that space, they’re in the cost management, they’ve all gone basically multi cloud and that’s their strategy. It’s like, “Well yes, you can get that great cost management tool from Amazon’s API but you’re on multi cloud now. You need a way to see all of that in one single unified dashboard.”
That’s typically where you’re seeing partners trying to pivot. But then that also puts them in a bad situation from the partner program perspective because now they’re not exclusive to AWS, and they potentially could be considered as hostile to AWS because they can now recommend use Azure for this model that’s cheaper than using AWS services. It’s an interesting choice and I think it’s an area that the partner market has to mature enough to understand that. They’re building a product in someone else’s platform and that is going to be a risk.
When I was at Mobiquity before this, we’re building a managed service business for mobile where we want to turn your mobile backend on our AWS system and bill you and all that. This is the same time that Rackspace was basically going through its downward spiral before they were brought by a private equity.
I was convinced that Amazon was just going to pick up Rackspace. If Amazon picked up Rackspace, they are going to be seen as destroy the MSP market because Rackspace has thousands of people who are specialized, they can train them in AWS.
Their pillar customer service pitch is all really value-added. As a customer-partner going into that market trying to say, “How do we get competitive,” it’s a lot of fear that you’ll going to bring on saying, “Is this market going to be destroyed either from Amazon getting really serious by professional services, which they really need to do and haven’t done a lot yet, or is it going to be another big player which [...] just consolidate the market?
Corey: Well, there’s always going to be an opportunity for companies to expand upon the business that AWS is providing for them. I feel like past a certain point that almost becomes a point of being the lowest common denominator.
For example, as Amazon gets better at delivering professional services themselves, the needs of third parties to start acting in that capacity start to diminish. As multi cloud becomes something that acts as a differentiator for these partners to start tying things together, you see companies at certain points of scale not investing heavily in multi cloud because that closes off pathways to higher-level services. How do you see that eventually playing out?
Justin: Yeah, it’s interesting. Even if you look at other companies that have been really successful partner, companies like Microsoft, SAP, etc., they typically have their own professional services organizations as well, but they also have a large number of partners. Typically, what you see is that the Microsofts of the world, they’re going for the big Fortune 500 companies who can pay them $350-$400 an hour rates and things like that.
Then you have the smaller middle market space that’s really going to dominated by these partners even with Amazon gets professional services in line. It’s really going to be a cost question. As small and mid-market partners are going to be able to much more cost-effective to accompany who’s in that space than to leveraging Amazon’s native services or Amazon’s native people. That’s where you’re going to see that differentiation happen. But right now the partner market doesn’t really have any competition from Amazon that’s at any level that’s serious. Typically you’re seeing partners crossing the entire gambit from high-end Fortune 500 all the way down to ‘I have a shop with 10 people who want to get onto AWS,’ and that really depends on what they’re trying to and what they’re focusing on.
Corey: While that makes sense to some extent from my perspective in a particular vertical where you have expertise that reaches into a market Amazon isn’t familiar with, such as large finance company or federal contracting where they don’t have the expertise industry-wide to bring the bear on it, I feel that resonates a bit more than it does in the smaller, or I guess, private enterprise companies that look like Amazon did at various points of its own growth.
To some extent, it almost feels like when you reach out to Amazon as a small company dipping your toes into it, and get handed to a partner, that’s almost signal to some extent of a, “Go away kid you bother me.” Whereas if you’re an interesting household company, does that still happen in the partnership context or does Amazon keep that for itself?
Justin: Amazon can’t scale their sales team to the levels to be able to handle everybody. For them, they do see the partner network as an extension of their sales force and their ability to engage in more places than they’re able to do with their own sales team. You’re going to see them continue to support that model because for Amazon to go higher 10,000 sales people who can specialize in AWS and really targeting this market is going to be difficult for them.
You will continue to see partners take a dominant place especially in smaller companies and higher on the OG-AWS for forums and the Slack channel and all that. You see people coming all the time and talk about, “Hey, I don’t have an Amazon rep. Who do I go to for this help?” We’re always telling them, “Go get a support contract,” or “Get a partner in place who can help you, who gives you a voice.” This is a challenge where you end up in a situation where you’re spending a lot of money in your perspective, maybe $10,000 or $20,000 a month, but to Amazon you’re just a drop in the bucket.
You as a company feel like your important but Amazon doesn’t care about you, that’s where the partner market can really come in and fill that gap and make you feel important as a $20,000 spending customer. That’s really where Amazon has continue to drive their partners to be that person and to be that role, and I think that’s where the partner market has to mature and really understand what their place is going to be in that space.
Corey: The other side of it thought is if you take a look at the technology partners, for example, there are entire companies whose sole offerings is that they build VPNs between various regions. That went well for a while and now you have Amazon coming out with Inter-Region Peering of VPCs, which I always called a cross-region before that was a fun little head fake.
If your entire company has a partnership with Amazon, then your company itself is built around the idea of offering a thing that Amazon doesn’t and suddenly they do, that’s got to be something that keeps somebody’s company up at night. If it feels a bit like a corporate prisoner’s dilemma.
Justin: For sure, and I think this is the question of if your value-add to Amazon is going to continue to build up infrastructure pipes and really, the core primitives that Amazon really specializes in, you’re going to be at risk. It’s only a matter of time until AWS gets the scale or cracks the code on how they can do something in a much more simplified way that makes sense for their model.
I think if you are looking at I want to be able to connect to a single direct-connect gateway and then be able to hit multiple regions, that was great because you have every three or four years of runaway where you’re able to provide that service and Amazon wasn’t.
But now, after reinvent, Amazon’s in that market and Amazon’s going to come after that space aggressively because their cost is going to be way less than yours. A company like that, potentially this is going to be the end of the road for them. They have to take that real estate, or they you need to pivot and say, “How do we become better and more interesting?” That goes into, now they pivot into health cost management and saying, “Look, we have a better way of understanding where your traffic comes from and how to analyze your traffic and give security pieces that Amazon can’t provide you with their PPC gateway or direct link gateway.
That’s where their pivot place is going to be, they’re trying to sell their value prop. It is a risk and I think that’s why a lot of these partners have to start diversifying in big ways. You’re seeing that in the cost management space. Cost management companies are now moving into security management space and competing with companies like Evident or Dome9. You’re just seeing that horizontal move by the partners to become more diversified so that is Amazon does come after their business space that they have that flexibility to be able to continue to maintain their customer base and revenue models.
Corey: Right and to be very clear I’m not blaming Amazon for these things. Getting something like Inter-Region VPC Peering out the door is an incredibly difficult technical challenge and I wouldn’t want them to rush something like that out because the story of, “Yes you can securely send data between multiple regions, except when it breaks. Yeah, don’t look too closely at that.” It’s a terrible story. I’m also not advocating that they don’t release things. “Well, we have this awesome that makes everyone’s lives easier, but it would upset some of our partners so we’re not going to go ahead and release that to the world.” That just feels like it doesn’t work. Protectionist approach is to maintaining partner relationships is non-viable for a variety of reasons.
I’m not blaming Amazon for any of the decisions they’ve made. It’s just that delicate and sometimes painful experience if you’re on the smaller side of that partnership agreement.
Justin: For sure. But you also see Amazon, they had a reliance on partners to do that right. Like cross-region VPC peering and the cost of a transit VPC led by the Ciscos of the world to be able to do. They ask them to do it. They said, “Look, we’re not going to be in this space for a while. We want you to build products that customers want to solve this problem because it’s a problem we recognize is there.” They’re asking the partner market to help them and then the partner market just didn’t deliver. There’s still not a viable solution for transit VPC in my opinion. San Francisco is not really fully baked. It’s not quite where it needs to be. Amazon’s probably come into that space and fix it because they see that they try to get the partners to help and the partners failed.
That’s the side of it too where Amazon does want partners to help bridge those gaps sometimes and I think if the partner was doing a really great job and there was no need for Amazon to get into that space, they would deprioritize fixing that problem. But customers keep asking for it because there’s not a good solution and I think Amazon makes the choice, says, “Yeah we know we have partners in that space but no one’s happy with the partner so let’s do it ourselves and do it better.
Corey: Absolutely and this one might be a little bit on the contentious side. For those just joining the show, I spend my days solving one problem. I fix the horrifying AWS bill and that takes a variety of different forms but when I look into the Amazon partnership program, one of the things that I saw that concerned me was what tier of partner you are in addition to having certain certification requirements which isn’t that big of a deal, is it’s predicated upon spend that you wind up influencing within AWS.
That’s an interesting proxy but it also felt to me, at least in the cost control space, to some extent it put me at a different alignment than my customers. There’s always the question to some extent when their partnership agreements come into play, “Okay, what this consultant is suggesting to me is that because of a partnership agreement where they’re trying to boost revenue or is this what’s actually in my best interest?”
By not having a partnership piece to worry about on my side—I first keep my business model much more straightforward and simple from my perspective—but I also don’t have even the appearance of a conflict of interest. Once you get past the one person from the home office handling these things, do you find that that concern tends to grow or tends to go away, or does it persist?
Justin: That’s interesting because, especially in the case of cost-management is focused, integrity is really important. Amazon wants to spend more money but more money in the right way versus wasting money on things that you see two instances that are underutilized.
As a customer, you don’t necessarily know how a partner gets paid. Partners typically don’t get direct money from AWS. It’s interesting because it looks, from the surface, to be very interesting integrity problem. On the other side of it is it’s kind of productive but I almost think Amazon should be trying to get partners in the space. It should become a competency around cost optimization and really driving the savings.
This is an area Amazon struggles with. If you have a sales rep that’s been there for more than two or three years, they’ll talk about the story of the sales rep who inherited a $10 million account and 12 months later it was zero. They just didn’t have the lock-in, they didn’t have the ability to using the commodity services on AWS.
It’s interesting because you could see where AWS would want a partner to be able to come in and say, “Well, yeah you’re spending $2 million but your not using API Gateway, you’re not using Lambda, you’re not using these services that really can save you a lot of money and really are the modern way to do things.” That’s not how they typically position their partners and that’s an interesting challenge and how do we focus on that.
It’s a problem I think that they have to solve. When you look at these partnerships and if they’re premier partner or not premier partner, this is all about how much spend they’ve either influenced or they directly doing with AWS. That’s hard if you measure only on influence and how much you’re spending.
Corey: Right and there’s also the idea of when you partner with someone, you generally don’t want to stab them in the back. That’s always been my approach to these things. There have been engagements where I have advised companies to pull projects and resources out of AWS and put them into GCP and in some cases, to build a datacenter for some workloads and post them there. From an economic perspective across the board is clear win.
Conversely I’ve also seen multi cloud customers that weren’t leveraging things in a way that it made sense for them to do so. Pick a vendor, maybe it’s AWS, maybe it’s not, and consolidate into that provider. That was always something that I felt comfortable doing because I didn’t have a formal business relationship with any of these companies.
If I’m touting being an AWS premier partner and then saying, “Ooh, take that load out of AWS, ignoring whether or not this upsets Amazon, which is no small thing to consider in that context, there’s also the question of integrity, of, “Okay, I’m effectively biting a hand that feeds me and yes, it is to the benefit of my client, but it doesn’t feel great.” How do you square that circle?
Justin: I don’t think you can. That’s the problem. I think if you were to go into an account and suggest that they move into a private data center and they’re going to stop spending money on AWS, AWS is going to probably kick you out of the partner program.
I haven’t seen that scenario happen but I can see where a sales rep somewhere is going to be very upset about it. It’s going to to be a ripple problem for AWS or now the flip side of it, you have the opportunity to a company that’s maybe on the edge of solvency and move them to GCP or to their own data center and now they’re a solvent company.
You’re doing the right thing for your customer and at the end of the day, Amazon wants you to do the right thing for the customer. That’s their customer focus side of it, but I haven’t heard of a scenario where it’s happened, where it’s become bad one side of other, but a lot of times even when AWS comes in and talks to you. They talk about, “Hey you could be up buying RIs. You could be doing these things that save you money.” Amazon is not opposed to you saving money—did I hear save that money on their platform—but I do thing they have to figure out how to incentivize partners and show that partners support and allow that to be transparent to the customer so the customer understands what the model look like and how these things are put together, so that it doesn’t look at that conflict of interest.
Corey: Absolutely. One of the challenges that I’ve had personally in my career is that I’m not particularly drawn to conflict, I’m not a big competitive person. One of the reasons that I picked fixing the AWS bill as what I wanted to do with my consultancy, has been that there is no one standing on the other side of this issue. The only time that I’m not aligned with my clients is when I’m negotiating what the fee is going to be. After that, even Amazon doesn’t want the narrative to be, “Well, we were on AWS but it was horrifyingly expensive so we left.
They want people to spend money intelligently on their platform. They’re not in this to take people for every cent they have even over the short term. They’re really keeping their eye on the longer-term prize. It do believe that. No one on the company side as well wants to have enormous piles of money go to waste. It really does tend to be a scenario of everyone is aligned in these stories, at least in my experience.
Justin: Yeah. They’re aligned on the outer room perspective. They want you to spend your money the right way, they want you to spend the least amount of money possible to get what you need out of the door. But there’s still going to be the business side of it. If you were going and you consult at Pepsi Co. for example, which is one of their big customers who is going to mainstay to reinvent or Capital One, for example, and you convince them to get off AWS, I’m not sure that AWS is going to be super happy with that story, even though it might have been the right business model for that customer.
Corey: No, I think that’s the point where they wind up dispatching someone with no neck to visit your office and then magically you pivot the business model the following morning.
Justin: Yeah, exactly.
Corey: By and large, I’ve always been reasonably content with my interactions with Amazon. I’ve never felt that I was being mistreated. I never felt that they were not acting in what they perceive to be the interest of their customers. Just for clarity on that.
Justin: Oh yeah. I agree. I’ve never experienced that either which is why it’s hard to say what would happen because it only has happened. At least I haven’t heard a story of it happening in the way that Amazon got hostile about it. At the end of the day, I don’t know if they would. My gut says they probably wouldn’t, but you’re into that business guy at the back of your head saying, “Yeah, but the business people wouldn’t be happy.
Corey: Where can people reach out and talk to you about your thoughts on this?
Justin: I’m on Twitter at @jbrodley. I also have a SaaS 11 startup company that basically focuses on helping SaaS companies fix their business model, really adopt the new DevOps world that we’re in today, AWS, I’m not doing a lot actively with it but I have several friends who work with me in the business who are very busy and very active. We’re always out there helping SaaS companies get to the next level.
I’m currently working at Ellie Mae when I’m driving their public cloud transition story and we’re actually hiring for all roles a classic company from engineering through DevOps to my public cloud team. We’re definitely excited and we’re on three-year journey to AWS and we’re in year one of that. Things are running really well. We’re super excited what our future holds with AWS, then eventually multi cloud as well. We’re definitely heading in the right direction.
Corey: And you’re not an AWS partner.
Justin: I’m not an AWS partner now. I did the AWS partner thing for two years and it was great. I now know how that whole game works, and ironically enough I have a different partner who helps us here at Ellie Mae than the partner I used to work with but they are a great bunch of guys out of San Francisco that I really enjoy working with.
It’s just different. It’s interesting that the partners that you meet, what they’re doing, how they approach things, and they all have their little intricacies that make them special. You have to find the right partner for your business.
Corey: Thank you so much for taking the time to speak with me. This has been Screaming In The Cloud. I’m Corey Quinn and this has been Justin Brodley.