Best Practices for Procurement Teams Using AWS Marketplace

AWS Marketplace is a digital catalog of third-party software, services, and data that makes it easy to find, buy, deploy, and manage software on Amazon Web Services (AWS). With AWS Marketplace, you can unlock innovation with access to thousands of software listings and improve software governance with streamlined approvals and spend visibility.

When discussing AWS Marketplace with procurement teams, customers frequently ask, “What are the recommended practices to get the most out of AWS Marketplace?”

Here are seven best practices for procurement teams purchasing through AWS Marketplace. Whether you’re starting your AWS Marketplace journey or optimizing and scaling your use, these practices can help.

1. Cross-functional Alignment

As organizations begin using AWS Marketplace, transactions are handled on a case-by-case basis, with knowledge residing with individuals rather than being standardized across the organization. This ad-hoc approach doesn’t scale well, leading to misalignments and friction as usage increases.

It’s crucial for organizations to establish alignment on how AWS Marketplace fits into their procurement process with cross-functional input from relevant stakeholders such as cloud, procurement, legal, and finance. The approved process should be documented so it can be applied and repeated, and then communicated to relevant stakeholders to help educate them on how AWS Marketplace is used within the organization.

2. Procurement to Take Control

Organizations often face a scenario where a single technical stakeholder, typically the cloud admin, becomes the go-to person for AWS Marketplace activities, including accepting private offers. Having technical personas operate in a procurement role can introduce friction, delays, and potential violations of procurement policies.

AWS recommends that the procurement team, with its expertise and visibility into the overall procurement process, take the lead in reviewing and accepting offers in AWS Marketplace. This approach ensures that all necessary steps are completed prior to offer acceptance, after being involved in the negotiation process.

AWS Identity and Access Management (IAM) roles and permissions provide you with granular access control to AWS services, including AWS Marketplace. Two different roles that procurement teams may want to establish are the procurement purchaser, a role that has IAM permissions to make purchases, and the procurement viewer, a role that has IAM permissions to view subscriptions but can’t make purchases. Use AWS managed policies to provide basic AWS Marketplace permissions or define your own permissions if further customization is required.

With private marketplaces, you can enable self-service procurement and curate lists of third-party software, services, and data listings in AWS Marketplace. This approach allows you to control which users can purchase third-party offerings and from which AWS accounts they can make purchases. It provides an efficient way for different teams to access third-party products with free trials to evaluate potential third-party offerings and pay-as-you-go pricing options for time-bound, project-based activities or when you need flexibility to experiment, expand, and scale with new third-party offerings. Another option is to leverage the Bring Your Own License (BYOL) model available in AWS Marketplace. With BYOL, you can realize deployment efficiency while using your existing software licenses from third-party providers.

3. Planning Ahead

Transactions involve different stakeholders, such as category managers, technology owners, and business stakeholders, who may not be familiar with AWS Marketplace. Without proper planning and alignment, AWS Marketplace can become an afterthought, leading to friction and inefficiencies.

Organizations should establish a pipeline of potential AWS Marketplace opportunities, defining a timeline of upcoming software investments and renewals that are available from AWS Marketplace. An opportunity pipeline ensures that AWS Marketplace is not an afterthought at the end of the process and helps align different procurement stakeholders. If working with channel partners, the pipeline can be used to align on an AWS Marketplace approach and help remove friction during deals.

Positioning AWS Marketplace early in discussions with potential software vendors provides time for vendors not currently listed in AWS Marketplace to consider listing their solutions. Additionally, through proactive engagement with AWS, customers can inform AWS about software solutions they are looking for but are not yet available. This allows AWS to check if those solutions are already in the pipeline for onboarding to AWS Marketplace and, if not, attempt to onboard those software vendors to AWS Marketplace.

4. Assess Products

Access to the broad selection of products available in AWS Marketplace, including free trials and pay-as-you-go pricing options, allows organizations to undertake due diligence on potential software solutions. This can be done through proof of concept or as part of sourcing activities (e.g., RFx – Request for Quote, Information, Proposal), without the need to engage with sales personnel. Once solutions are identified and shortlisted, organizations can request Private Offers from the respective software vendors to support further commercial assessment.

Many of our customers engage with AWS when considering alternative or new solutions, as we have a range of resources that operate in specific categories (infrastructure, machine learning, business applications) that have extensive and unique market insights and can contribute to your planning and analysis.

5. Negotiate Downhill

Most organizations are forced to negotiate uphill when purchasing software, starting from the vendor’s boilerplate End-User License Agreement (EULA), which favors the vendor. This can lead to increased time and effort in negotiation and suboptimal contract terms.

With AWS Marketplace, you can use previously negotiated contract templates developed in collaboration with the customer and seller communities to accelerate transactions. We call it the Standard Contract for AWS Marketplace (SCMP). The Standard Contract is available for over half of AWS Marketplace listings, and many of the software vendors that don’t use it publicly will accept it in a private offer.

First, you review the standard terms with your procurement and legal teams. Second, you use the amendment template to create amendments that reflect your specific needs, for example, relating to your industry, geography, or business. Then you create different amendments for different risk or use case criteria, but always using the same base terms document for efficiency. The agreed contract terms are then applied as the starting point for contract negotiations with software vendors, creating a scale mechanism that helps accelerate transactions with different software vendors.

6. Commercial Flexibility and Control

Customers can use AWS Marketplace features to have sellers schedule the timing of payments and amend agreements to reflect your changing needs. The flexible payment scheduler provides sellers with complete control over the timing of billing for an AWS Marketplace transaction when they create a private offer, allowing them to agree to dates that best reflect their needs (for example, financial year budget constraints or AWS spend commitments).

You can renegotiate existing agreements at a time that suits your business needs. If changes are required, the existing agreement can be amended by the seller (for example, for new pricing, quantity, contract terms, or payment schedule), and a revised offer sent to you for review and acceptance. This gives you flexibility to renegotiate at the most opportune moment.

7. Spend Allocation

Customers create a purchase order for their expected cloud services spend with AWS and want to confirm spending on software solutions doesn’t consume this purchase order. With purchase order support, spend for purchases from AWS Marketplace with contract pricing can be allocated against another purchase order aligned to the relevant software owner and associated cost center. You receive invoices from AWS that include your specified purchase order number, simplifying payment processing and cost allocation.

Products charged on a consumption basis will appear on a consolidated invoice for all such AWS Marketplace subscriptions against which you can attribute a blanket purchase order. Any product with a specifically defined cost will generate its own invoice to which you can attribute a purchase order number.

Use our preconfigured AWS Marketplace report in AWS Cost Explorer or AWS Marketplace Single Pane of Glass dashboard in Amazon QuickSight, which provides a consolidated view across multiple AWS management accounts. Alternatively, work with your AWS technical account manager or solutions architect to have these imported to your business intelligence (BI) tool using the Cost and Usage Report (CUR) data.

Conclusion

In this post, we explored best practices for procurement teams purchasing through AWS Marketplace. These practices help simplify and optimize your use of AWS Marketplace. By applying best practices, a global food delivery customer reduced time to market and increased return on investment. The customer leveraged AWS Marketplace in collaboration with third-party independent software vendors (ISVs) and AWS Marketplace Channel Partners. The customer empowered product and engineering teams with self-service access to pre-approved third-party software, while maintaining governance and a security focus. The customer also streamlined the evaluation of potential third-party products and leveraged AWS to introduce new third-party opportunities.

Want to learn more about these best practices? Reach out to your AWS Account Manager, who can connect you with an AWS Marketplace specialist.

About the authors

	Anthony Hadfield is the procurement innovation manager for AWS Marketplace in Asian Pacific and Japan (APJ). Bringing his technology procurement experience from consulting and industry, he works with customers across the region, advising on how to maximize the value of AWS Marketplace to their organization. Based in Sydney, Australia, he enjoys downhill mountain biking, playing video games and will often be found at one of the many local cafes and breweries.
	Christiaan Murphy leads the AWS Marketplace Procurement Innovation team and works with AWS customers in the EMEA region. Christiaan has experience in negotiating complex software licensing agreements with major technology vendors. Prior to joining AWS, he worked for a leading analyst firm advising clients on negotiations with key global software vendors. Christiaan enjoys adventurous mountain treks with his wife and four kids in the Alps.
	Keith Browning is the procurement innovation manager for AWS Marketplace in the Americas. With over 17 years of extensive indirect procurement expertise, he has transformed procurement organizations, from startups to Fortune 50 companies. Based in Minnesota, he enjoys spending time with family and friends, playing golf, traveling the world (especially beach vacations) and enjoys watching or attending any Wisconsin Badger sporting event.