Five years ago, we faced a choice: continue to compete with Amazon, or become an Amazon cloud partner. Like many IT services companies, we found ourselves constantly one step behind Amazon’s incredible product innovation and cost savings.
Logicworks made the decision to develop our AWS cloud capabilities, and in 2016, this continues to be the best decision our company has ever made. Our customers are highly satisfied with the AWS platform, and we are serving a market that Gartner projects to be one of the fastest growing segments in global IT. Our growth has been amazing.
As we wrap up 2016, we are reflecting on another great year as an AWS Partner. Here are the highlights from the year:
Amazon Continues to Lead the Pack
AWS began reporting revenues last year, and its growth has been astonishing. AWS brought in $3.23 billion in revenue in the third quarter of 2016. That means revenue was up 54.9 percent year over year, for a total of $11.08 billion in revenue for Amazon in the last four quarters. (Oracle, the butt of Amazon execs’ jokes at re:Invent, missed quarterly earnings last quarter and revenue was down 1%.) Gartner’s 2016 IaaS Magic Quadrant ranked them as a “Leader” with the highest ability to execute and completeness of vision for the 6th straight year.
Gartner Magic Quadrant for IaaS, 2016
Anecdotally, this year we saw interest from larger, more risk-averse companies that are willing to make significant technical and operational changes in order to move to AWS. Healthcare was one of our fastest growing industry segments.
New AWS PaaS and SaaS Services Foretell Major Channel Partner Change
If there is one consistent theme out AWS’s service announcements for the year, it would be that Amazon is more than IaaS. It is increasingly an enterprise software vendor, and it wants customers to turn to Amazon for its management, orchestration, analytics, and IoT capabilities.
Amazon wants to make it easier for you to migrate to and operate in AWS. They have spent the last ten years perfecting their core services; now they are bundling those services together and filling in gaps so that you have a comprehensive solution. Their EC2 System Manager announced at re:Invent 2016 is essentially a “wizard” for configuring instances correctly; Lightsail is a PaaS service similar to Digital Ocean; serverless, where Amazon has been a pioneer, transcends IaaS, PaaS, and Saas; and finally, the aptly-named AWS Glue strings together several existing analytics solutions. AWS is still an infrastructure company, but they are also changing the boundary between infrastructure and software.
When Amazon veers into the realm of software, partners and ISVs are forced to adapt. ISVs need to continue to provide value when Amazon launches products that replace their software, and Managed Services Providers need to provide value when Amazon releases management and orchestrations services. The partners that can keep up will still thrive.
AWS customers are the largest benefactors of this ongoing innovation. For existing customers, trying out new services does not require a lengthy prospecting/budgeting/planning process; it is as easy as going into their cloud console (or calling their MSP) and spinning up a test. Platform services help smaller companies get up and running in AWS with lower risk and fewer staff. Even the announcement of new instance types can mean many thousands of dollars of savings for companies that no longer have to choose a larger-than-necessary instance type when they just need high storage but low memory, for example.
Strong Market Potential
Gartner predicts that $1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years. In 2016, the IaaS market was $294 billion.
This year saw major technology companies make more serious investments in public cloud (Oracle, VMware), and you can expect that international investors will want to capitalize on this market growth by investing in North American cloud software and partners.
Case in point: Logicworks announced last week that it was acquired by Pamplona Capital for $135 million. This investment follows a three year CAGR exceeding 90% for our cloud automation software business. We have been in business for over 20 years, and making the choice to partner with Amazon, rather than compete with them, has led to our strongest revenue growth ever.
2016 has been an exciting year for AWS customers and partners. We are riding a very fast moving freight train — and while it sometimes seems hard to keep up, we expect that the benefits of AWS’ speed and innovation will only continue to grow.
Logicworks is an enterprise cloud automation and managed services provider with 23 years of experience transforming enterprise IT. Contact us to learn more about our managed cloud solutions.