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Channel partners that embrace cloud are growing more quickly than their rivals and are tapping into a small and medium-sized enterprise (SME) customer base that is starting to shift towards a hosted environment, according to research commissioned by Amazon Web Services (AWS).
The public cloud giant has released its Impact of AWS in the UK report to put some numbers around the role that cloud plays in the nation’s financial health.
The headline stats are that AWS is generating £8.7bn worth of economic value for the UK economy, distributed across large and small businesses and all vertical segments. Not all regions are benefiting in the same way and the firm argues that if more could be done to redress the balance, then cloud could be a major source of recovery and growth out of the coronavirus crisis.
The research, carried out by Public First, also showed that companies running on the cloud were three times more likely to be growing at more than 5% a year.
When it came to those partnering with AWS, the research concluded that AWS partners have reported revenue growth of between 21% and 50% over the last three years.
Darren Hardman, vice-president, general manager, UK&I at AWS, said the company had decided even before the pandemic hit that it wanted to find out the impact of cloud on the SME sector and had been surprised by the report’s findings.
“What we found was pleasantly surprising,” he said, referring to the £8.7bn of economic value that the cloud represented, having more economic impact than Premier League football and the music sector.
“There is an opportunity to level up the growth across the UK and cloud is an enabler for growth,” he added.
From a channel perspective, Hardman said the report showed that 80% of AWS Network Partners had reported that the cloud gave them a chance to develop better customer outcomes and 58% pointed to a relationship with the vendor helping them to win more business.
“We are supporting and helping our partner network with specialisms and competencies so they can differentiate from the competition and we see a growing demand for cloud services,” he said.
Hardman added that the report put some numbers around the experience that many partners had reported and it would give many even more confidence to “go deep with us and join us on the journey”.
“We need partners to join with us to target many of the issues in this report [particularly the regional differences in cloud adoption],” he said.
The impact of AWS on partners
The report has a section covering the economic impact that AWS had on those that chose to join its partner network.
- Growth – it found that, on average, APN partners reported revenue growth of between 21% and 50% over the last three years, and headcount by around 20%.
- Wide use cases – partners reported that AWS was being used by a large number of verticals, including financial services, government, energy, retail and healthcare.
- Flexibility – partners indicated that customers appreciated being given options and the main reasons for choosing cloud included scalable and/or flexible capacity, increased reliability and lower costs.
- Growth potential – on average, AWS partners reported earning about 60% of their revenue through their work with the cloud giant, and over the last five years this revenue had increased by between 25% and 50%. Importantly, 41% of the partners surveyed said their business would not be possible without AWS.
Gareth Workman, head of the cloud practice at AWS partner Kainos, said the research backed up his company’s experience at the coalface that cloud was an accelerator and more SMEs understood that the technology could level the playing field and enable them to compete more effectively with larger competitors.
“It is acting as a disruptor in some of the smaller organisations that wouldn’t have the scale to procure that kind of hardware themselves,” he said. “The cloud gives them that opportunity so they can lean on the depth and breath that AWS has available.”
The report was commissioned before the coronavirus struck but since then, the demand for cloud services have increased and Workman said Kainos had seen a reaction from customers over the past six months.
“We see a heightened demand to adopt cloud and one of the things that has driven it more than anything else initially was the response from healthcare and the NHS and for all those health providers out there to get services to all the citizens. They couldn’t do that without procuring hardware and they didn’t have time for that, so they used cloud services,” he said.
“It has only accelerated adoption and coronavirus has highlighted some of the capacity challenges that existed with some of the more traditional on-premise delivery models.”