1 in 5 Google Cloud Partners Generates 75% YoY Revenue Growth

Google Cloud partners are prospering, despite global economic struggles.

Even before COVID-19 took hold, organizations were turning to the Google Cloud channel to fuel digital transformation projects. But the pandemic has only furthered those goals — and boosted revenue for MSPs, VARs, integrators and other partners.

A new report from research firm IDC, commissioned by Google Cloud, found that 44% of organizations are spending more than expected on IT amid shutdowns, quarantines and limited social movement. And the channel is key in guiding, implementing and managing the requisite deployments.

Google Cloud’s Carolee Gearhart

“Partners are benefitting from our goal of 100% partner-attach on all customer sales, and partners are seeing strong margins across multiple activities, including resale, IaaS, PaaS, and SaaS add-ons, IT services, business services, and support for hardware and networking,” wrote Carolee Gearhart, Google Cloud’s channel chief, in an Aug. 10 blog.

Attention to Value

IDC analysts agree. Much of the success, they say, regardless of whether COVID-19 is a factor, stems from partners’ attention to value.

“In another IDC survey, many end customers were re-evaluating transformation projects in a bid to find greater ROI and efficiencies from those implementations,” Paul Edwards and Steve White note in “Partner Opportunity in a Cloud World: How Partners Are Winning in the Google Cloud Economy.” “This should come as no surprise to partners focused on solutions that provide business impact, which will benefit from close strategic relationships with clients;  that is, understanding the business and quantifiable value of the solutions being deployed.”

Not surprisingly, then, Google Cloud partners are raking in the dough. IDC discovered that, on average, they are recording 35% year-over-year revenue growth. One in five (20%) respondents told the firm their Google Cloud business is ratcheting up by 75% or more year over year.

“Combine those growth rates with an average margin of 34% that partners make on their own [intellectual property] … in Google Cloud deals and it points to healthy businesses,” Edwards and White wrote. “Of course, partner IP margin will vary greatly among project-based services, managed services, and software, but many Google Cloud partners are embracing all of these.”

But Wait, There’s More

The positive financial news doesn’t stop there.

IDC forecasts that, by 2025, partner revenue from Google Cloud opportunities will more than triple. In other words, over the next six years, accumulated net-new partner revenue will reach $341 billion.

“Looked at another way, for every $1 of Google Cloud technology sold in 2020, partners will generate $5.32, predominantly through their own offerings (services and software) but also from resale margin,” said Edwards and White. “By 2025, that number will top $7.54. This is the value created in partner businesses based on their relationship with Google Cloud.”

Those numbers indicate Google Cloud partner revenue is growing faster than the company’s revenue itself, IDC said. And the channel can expect the increases to show up across the range of capabilities they provide. Here’s how that breaks down in terms of profit between 2019 and 2025, according to IDC:

• Resale will account for 27%.
• IaaS, PaaS, SaaS add-ons will make up 26%.
• IT services will comprise another 26%.
• Business services will contribute 15%.
• Hardware and networking support will add up to 6%.

For Gearhart, the outcome of all this activity is clear: “We have a tremendous opportunity together to help customers across industries and around the world transform their organizations with the cloud,” she said. “I’m proud of the amazing work that our partners are doing, and we’re committed to continuing to work closely with partners to expand the Google Cloud economy together.

The success of Google Cloud’s channel partners comes as little surprise. Even though the company remains the third-largest public cloud vendor, it boasts several exclusive partners and tends to move with more agility than some of its rivals. The company also has been expanding its data center regions and private cloud partnerships, extending coverage options to more potential end users.