AWS Smart Business Blog
Why Small and Medium Businesses Simplify Software Procurement with AWS Marketplace
As a small and medium business (SMB) leader, you know how important software is for employee productivity, management, and other critical functions—but what happens as your company scales or infrastructure changes? SMBs are continuing to adopt cloud and often need to supplement the native capabilities offered on a cloud platform with software products from Independent Software Vendor (ISV) partners. This can lead to operational challenges without a careful procurement strategy.
What is an Independent Software Vendor and how does it intersect with procurement?
ISVs offer products and services that address specialized business use cases—such as project management, collaboration, customer relationship management, and more. SMBs arrive at a decision to use specific software after determining these will address their organization’s business needs. Without careful due diligence during ISV procurement, SMBs may face these common issues:
- Paying for too many licenses
- Multiple cost centers paying for similar software
- Managing several invoice payments and renewals
- Underutilizing software investments
- Overpaying for software
These procurement challenges can become an obstacle to your organization’s focus on delivering business value. You can benefit greatly by simplifying the time-consuming and operationally intensive activities related to software procurement. Later in this blog post, we’ll teach you how to do so.
IT procurement is a traditional IT function. This is now accompanied by cloud finance management or FinOps (finance operations). The joint objective of these IT functions is ensuring your organization derives the most value from IT investments by aligning with your organization’s financial goals, and measuring return on investment (ROI). Larger SMBs usually have a department dedicated to this effort, but smaller ones view it as an additional responsibility of one or two people, alongside their regular job duties. Businesses can simplify this process, reduce time spent, and reinvest it toward better customer experiences. In the absence of a well-established processes to make software purchases, there are four different challenges procurement teams must contend with.
1. Making the right software purchase for an SMB
In an extremely competitive and crowded ISV market, it is not an easy choice when it comes to making a purchase for your software needs. You must consider factors such as capabilities offered, their alignment with your business needs, purchase and operational costs, as well as the ease of training and adoption. This is especially important when signing long term vendor contracts that are hard to amend or terminate. For many SMBs, they may not be costs they can absorb if it’s an incorrect choice.
It also helps to understand what other users have to say about the software’s ease of use. Consumption-based models with flexible usage terms and “try before you buy” options are also beneficial to making the right purchase. You may also want to evaluate the security posture and compliance information for the software purchase you are making, so that it aligns with your organization’s compliance requirements.
2. Finding and removing duplicate software investments
In striving to get the most value from software investments, one thing businesses cannot afford is purchasing multiple software products addressing the same need. This usually happens due to a lack of communication, or preference by different teams for different solutions. This challenge usually extends beyond just procurement, and there are solutions. One such solution is establishing governance guidelines for software usage with better visibility into available products. With shared visibility to available products, teams can more easily adopt approved and already purchased solutions. And when having to purchase additional tooling, they’re also able to easily compare to available software solutions and existing vendor relationships.
3. Addressing rogue internal tools that lack scalability
Your technical counterparts use the term “Shadow IT” to describe what happens when business units need to solve a problem, but cannot wait for an IT department or third-party tech vendor to provide the right solution. Internal teammates move ahead with what they perceive to get them the fastest outcome. At times, this can be a custom solution built using internal skills, but it often means procuring software through unapproved channels. If not discovered in time, SMBs can become very reliant on these solutions and find it hard to pivot away as they grow. Many may not fully align with the IT team’s recommendations or the SMB’s overall business needs. Shadow IT can be prevented by regularly educating business teams about options available to them, and reducing the turnaround time for new software procurement with centralized IT involvement.
4. Managing payments and renewals with a stronger procurement strategy
Procurement also separately tracks invoice payments for each vendor, and must be prepared for upcoming renewal or contract renegotiations. You may use a value-added reseller (VAR) to simplify this process, but this requires maintaining a payment relationship with one or more specialized resellers. When software renewals are left too late, businesses have insufficient time to renegotiate terms or look for alternatives. This usually causes renewals to follow the same or less favorable terms. Having a centralized inventory of purchases and the option to renew with minimal paperwork helps make this a smooth process.
New to digitization or looking to add more cloud capabilities to your SMB? Explore solutions by industry, benefit, use case, and more on AWS Smart Business
What is AWS Marketplace and how can it help streamline SMB software procurement?
AWS Marketplace is a trusted online marketplace providing simplified procurement, provisioning, and governance of software for organizations. It helps you find, buy, and start using the software and services that run on AWS in a matter of minutes. ISV partners are vetted by AWS and list purchase offerings with prices and services, which is helpful for resource-constrained SMBs. Read on to see how AWS Marketplace provides a means to addresses the procurement challenges shared earlier in the post.
Figure 1: Diagram depicting how AWS Marketplace helps address procurement challenges
Governance
You can govern user or group purchase permissions using AWS Identity and Access Management (IAM). AWS Marketplace allows organizations such as yours to build catalogs of approved products using Private Marketplace. Administrators at your company can create unique sets of vetted software available in AWS Marketplace for procurement by different teams within your organization. This helps alleviate duplication in purchases and Shadow IT.
By curating the list of software your organization is allowed to purchase—and only allowing approved groups within the organization to make purchases—helps solve these challenges. Several AWS Marketplace vendors offer a trial period through which teams can take advantage of to understand and test if products really are a good fit for their use case, and make a more informed decision about subscribing. As a prerequisite, you must have access to the AWS Marketplace console.
Product and service reviews
Researching software—especially if it’s not your area of expertise—can be time consuming. Another great source of research is product reviews from users like you. Feedback from other SMBs in the AWS Marketplace provides a useful way to determine what might address your needs.
Compliance requirements
For organizations that have specific compliance needs, you can make use of AWS Marketplace Vendor Insights. Vendor Insights can be useful for products that need certifications such as ISO 27001 or SOC2. It helps you accelerate the risk assessment by compiling security and compliance information in a single, unified dashboard, saving you weeks in evidence collection and validation.
Better software billing and budget negotiations
AWS Marketplace allows consolidated billing for software purchases—a major benefit to SMBs. Vendor software purchase orders are paid for as part of your AWS bill. Depending on licensing terms this may be monthly recurring or a one-time payment. These payments are displayed as a line item on your AWS bill, and utilizes the same payment method. This eliminates the need to maintain separate payment contracts with the vendors directly.
Software vendors list products in AWS Marketplace with a public price for various contract term options. While this public pricing is available for customers to use as-is, you can negotiate a private offer from the vendor while procuring through the AWS Marketplace. With private offers, AWS Marketplace allows you to keep building a relationship with your preferred vendors, while negotiating pricing and licensing terms specifically to your account. It allows VARs and Amazon Partner Network consultants to list software products and services, so the value they bring can still be realized. This flexibility allows you to continue to benefit from existing discounts you receive from preferred vendors/resellers, while taking advantage of the features offered by AWS Marketplace.
Next steps
SMBs using AWS can benefit from the ease of procurement and governance offered by AWS Marketplace. The challenges outlined in this post can be significantly simplified with our unified solution. You can achieve the right outcomes for your business by picking the right tools for the job from a trusted channel. You will spend less time on procurement management overhead and more time deriving value from investments. Learn more about software solutions for smart businesses such as yours.