Screaming in the Cloud - Episode 8: A Corporate Prisoner's Dilemma

Episode Date: May 2, 2018

Have you dabbled with IT infrastructure in AWS? Have you been through the process of AWS partnership? Does being an AWS partner add value? Amazon seeks partners that helps drive its business, goals, and value. Today, we’re talking to Justin Brodley, the vice president of Cloud engineering at Ellie Mae. He has been through the AWS partnership process and shares his thoughts about it. He encourages you to find the right partner for your business! Some of the highlights of the show include: Different levels and types of AWS partnerships Shakedown vs. opportunity method for new leads; lead generation expectations Amazon’s improvements eroding business models Partners trying to pivot, but not exclusive to AWS Whether to invest in multi-Cloud Amazon can’t scale its sales team to handle everybody; views partner program as an extension of its salesforce Your company is important and you’re spending a lot of money, but Amazon may not care about you; partner market fills that gap and makes you feel important Corporate prisoner’s dilemma: Your tech company offers something that Amazon doesn’t; but what about when Amazon does offer it? Competitors’ horizontal move to become more diversified Amazon expects partners to offer products and services that it cannot offer yet If partners fail, Amazon decides to do it and do it better Is Amazon’s best interest geared toward its partners or you and your customers? Amazon needs to give incentives and support partners Links: Justin Brodley on Twitter Brodley Group Ellie Mae Digital Ocean AWS Partner Network Lambda API Gateway AWS re:Invent Salesforce Azure Rackspace .

Hello, and welcome to Screaming in the Cloud, with your host, cloud economist Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud. This week's episode of Screaming in the Cloud is generously sponsored by DigitalOcean. I would argue that every cloud platform out there biases for different things. Some bias for having every feature you could possibly want offered as a managed service at

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That's do.co slash screaming. Thanks again to DigitalOcean for their support of Screaming in the Cloud. Hello and welcome to Screaming in the Cloud. I'm Corey Quinn. Joining me now is Justin Broadley. Welcome to the show, Justin. Hi, thanks for having me. Always a pleasure. So you've been dabbling in IT infrastructure for a while now,

coming up on 20 some odd years at this point, last I checked. And a lot of that has been with AWS in a variety of different ways. Today, you're effectively leading the public cloud transition at Ellie Mae, but before this, you worked at a large premier AWS managed services provider. Is that correct? That's correct. Wonderful. So you've been through the process of AWS partnerships. Yes, and it is a process. With my consulting business as an independent, I looked into it about a year or so ago to see if this was something that was going to add value. And at the time, I didn't really see

where it was coming from. So let's take a step back. What is an AWS partner? Yeah, so there's several different AWS partner levels and types. And so typically, when you're talking about a partner for Amazon, the most common ones are what they call lift and shift partners. And so this partner is really around bringing you to the cloud as fast as possible in the most simple way possible to the cloud to get that revenue going for AWS. And so Amazon sees a partner like that as an on-ramp to their cloud and really helps drive their business and their goals. And so there's a close alignment between their sales team and the partner and then also the customer to make sure that that is a symbiotic

relationship that has value for Amazon. Okay. So when it comes down to AWS partnerships, I keep seeing different notices as a part of my gathering the news for last week in AWS about different companies attaining a competency level in certain areas of Amazon. I mean, I always read the, we have declared, we have found this company to be competent. It sounds like a middling performance review, but I get the sense it means something different. Right. So basically, Amazon, knowing that the partnership market is bigger than just lift and shift, right? And there's the desire for, they want people to be doing things like machine learning, and they want them to be focusing on mobile and IoT, and they want them to have vertical strategies as well.

Like, I'm really into fintech, or I'm really into healthcare and HIPAA compliance. And so basically, if you're a partner and you have established a partner relationship with AWS, and you reach a certain level of threshold in your either committed spend or your influence spend, you basically then can apply for these competencies. And some competencies are as simple as, you know, go through this assessment. It might be a self assessment. It may be a third-party assessment. And basically, show us how you're doing these things and show us customers where you've been successful with these competencies. And if you meet those criteria, then you get to move forward and become that particular competency in your profile. So what types of different partners are there?

So like I mentioned, the lift and shift partners out there, there's a fintech specialty competency now focusing on financial technology. The company that I was at where we did managed services was a mobile IoT partner and Alexa partner, really focusing on that niche and really how do we implement API gateway and Lambda to support mobile applications and IoT use cases. And so those are typically very focused and targeted on those verticals. And really, so that way a salesperson at AWS can say,

hi, Mr. Customer, you're really interested in mobile. Let me connect you with the right partner who has that mobile competency, who can tell you about all the amazing Amazon services that we have in mobile and can actually help you do something with those services. Does that model generally tend to play out or is it one of those areas where it's the carrot and the stick? The carrot being they offer to drop new clients into your lap and the stick very often being, oh, unless you're a partner, we'll recommend other partners in your place to all of your customers. I mean, how much of it is shakedown and how much of it is opportunity for new leads?

So I don't think Amazon's at the level of maturity yet where they can really adopt the competency model that makes sense, right? So typically, a customer will come in, they'll be a new prospect to Amazon, they'll get partnered with a lift and shift partner, and that lift and shift partner will then take on and they'll become considered the prime partner for that account, right? And that company is going to do what they're going to do, they're going to get them to the cloud. And then when you start talking about, okay, now I want to go do mobile, or I want to go do something different with IoT, if that partner has the competency, or it has at least passed the bars to meet the competency, then maybe they take that work on. But typically, Amazon won't bring in a new partner if there's an established partner in

place. So the lead gen, if you're like a lift and shift, and it's really about that on-ramp, I think is there. I think if you're looking at something like, I want to be a mobile partner, and I really want to focus on something very specific or very niche, I don't think you'll get the lead generation that you'd really expect from the partner program. Okay. And that's probably fair. I mean, I admit I'm a little harsh on Amazon from time to time, but on the other side of it, just a few months ago was my first re-invent. And walking the expo hall was fascinating because they didn't open the expo hall till after a bunch of announcements had been made. So to some extent, we'd walk around between different booths and notice a number of different companies that give you custom views and they charge a penny per API call,

suddenly having a company that charges a few percent of your AWS bill in order to do that exact same thing no longer has the strong value proposition they did a week ago. And not to pick on people in the costing space, there are companies out there that do all kinds of neat tricks around Amazon feature shortcomings that eventually get fixed. I mean, that's the general trend line of all of Amazon services. Over time, they get better. At what point does Amazon's improvement erode the business model of its partners? Well, I mean, Apple famously started this trend with the Sherlocking several WWDCs ago where they killed Sherlock, which was a pretty lead search engine for the Mac at the time. And then they came out with their own spotlight service at WWDC about 10 years ago. So that's been a pretty common thing. And that's really where the adage, be careful when you build your product

on someone else's platform. And the ones that, some platforms are more apt for that and the other for replacement and for just being moved out of the market. I think force.com, for example, as a platform is difficult to be successful because Salesforce now sees all this data

that you're collecting on their platform. And then they can say, wow, that's a really interesting market to us. We could go build that same feature set into our service cloud or our sales cloud product, right? And so I think the same risk you have with Amazon. And so those risks, Amazon will always get better. They'll always be continuing to innovate. They'll be adding new features. And so it's really a question as a partner, can they get ahead of that and be more innovative and more quick to adopt things? Or can they do it in a way that's better and more efficient, right? And I think when the cloud health providers and all the different people in that space are in the cost management, they've all gone basically multi-cloud. And that's their strategy. It's like, well, yes, you can get that

great cost management tool from Amazon's API, but you're on multi-cloud now, and you need a way to see all that in one single unified dashboard. And so that's typically where you're seeing partners trying to pivot, but then that also puts them in a bad situation from the partner program perspective because now they're not exclusive to AWS, and they potentially could be seen as hostile to AWS because they might recommend use Azure for this model because it's cheaper than using AWS services. So that's an interesting choice.

And I think it's an area that the partner market has to mature enough to understand that building your product on someone else's platform like that is going to be a risk. Now, when I was at Mobiquity before this, and this partner I was at, we were building out managed services business for mobile where we wanted to run your mobile backend on our AWS system and bill you and all that. And this is the same time Rackspace was basically going through its downward spiral before they were bottled by private equity. And I was convinced that Amazon was just going to pick up Rackspace. And if Amazon picked up Rackspace, they were basically going to destroy the MSP market because Rackspace has thousands of people who are specialized.

They can train them in AWS. Their killer customer service pitch is all really value added. And as a customer partner going into that market and trying to say, how do we get competitive? It's a lot of fear that you've been breaking on and saying, is this market going to be destroyed either from Amazon really getting serious about professional services, which they really need to do, and they haven't done a lot there yet, or is it going to be another big player who's just going to start consolidating the market? Well, there's always going to be an opportunity for companies to expound and expand upon the business that AWS has provided for them. I feel like past a certain point, it almost becomes a point of being the lowest common

denominator. For example, as Amazon gets better at delivering professional services themselves, the needs of third parties to start acting in that capacity starts to diminish. As multi-cloud becomes something that acts as a differentiator for these partners to start tying things together, you see companies at certain points of scale not investing heavily in multi-cloud because that closes off pathways to higher-level services. How do you see that eventually playing out? Yeah, it's interesting.

Even if you look at other companies that have been really successful with partner, companies like Microsoft, SAP, et cetera, they typically have their own professional services organizations as well. But they also have a large number of partners. And so typically what you see is that the Microsofts of the world, they're going for the big Fortune 500 companies who can pay them $350 to $400 an hour rates and things like that. And then you have this smaller mid-market space that's really going to be dominated by these partners, even if Amazon gets professional services in line. And that's really going to become a cost question, right? And that's a small to mid-market partner is going to be able to be much more cost effective to a company who's in that space than to leveraging Amazon's native services or Amazon's native people. And that's really where you're going to see that differentiation

happen. But right now, the partner market doesn't really have any competition from Amazon that's at any level that's serious. And so typically, you're seeing partners crossing the entire gamut from high-end Fortune 500 all the way down to I have a shop of 10 people who want to get onto AWS. And that really depends on what they're trying to do and what they're focusing on. While that makes sense, to some extent, from my perspective, in a particular vertical where you have expertise that reaches into a market Amazon isn't familiar with, such as large finance company or federal

contracting, where they don't have the expertise industry-wide to bring to bear on it, I feel like that resonates a bit more than it does in smaller or, I guess, private enterprise companies that look like Amazon did at various points of its own growth. So to some extent, it almost feels like when you reach out to Amazon as a small company, dipping your toes into it, and get handed to a partner, that's almost signal to some extent of a go away, kid, you bother me. Whereas if you're an interesting household company, does that still happen in the partnership context? Or does Amazon keep that for itself? Yeah. So I mean, Amazon can't scale their sales team to the levels to be able to handle everybody, right? And so for them, they do see the partner network as an extension of their sales

force and their ability to engage in more places than they're able to do with their own sales team. So you're going to see them continue to support that model because for Amazon to go and hire 10,000 salespeople who can specialize in AWS and really targeting this market is going to be difficult for them.

You'll continue to see partners take a dominant place, especially in smaller companies. And, you know, you and I are on the OG AWS, you know, forums and the Slack channel and all that. And you see people come in all the time and talk about, you know, hey, I don't have an Amazon rep. Who do I go to for this help? Right. And, you know, we're always telling them, you know, go get a support contract or, you know, get a partner in place who can help you, who has gives you a voice. Because it is a challenge where you end up in a situation where you're spending a lot of money in your perspective, maybe $10,000 or $20,000 a month.

But to Amazon, you're just a drop in the bucket. And so you as a company feel like you're important, but Amazon doesn't care about you. And that's really where the partner market can really come in and fill that gap and make you feel important as a $20,000 spend customer. And that's really where Amazon has to continue to drive their partners to be that person and to be that role. And I think that's where the partner market has to mature and really understand what their place is going to be in that space. Right. And I think there's likely to always be a place for that type of partner. The other side of it, though, is if you take a look at the technology partners, for example, there are entire companies whose sole offering is that they build VPNs between various regions. And that went well for a while.

And now you have Amazon coming out with inter-region peering of VPCs. They always called it cross-region before. That was a fun little head fake. So if your entire company has a partnership with Amazon and your company itself is built around the idea of offering a thing that Amazon doesn't and suddenly they do, that's got to be something that keeps some of these companies up at night. It feels a bit like a corporate prisoner's dilemma. For sure. And I think this is the question of, if your value add to Amazon is going to be to continue to build out infrastructure pipes and really the core primitives that Amazon really specializes in, you're going to be at risk. And it's only a matter of time until AWS gets the scale

or cracks the code to how they can do something in a much more simplified way that makes sense for their model. And so I think if you're looking at, I want to be able to connect to a single Direct Connect gateway and then be able to connect

to multiple AWS regions, that was great because you had maybe three or four years of runway where you were able to provide that service and Amazon wasn't. But now after reInvent, Amazon's in that market. And Amazon's going to come after that space aggressively because their cost is going to be way less than yours. And so, a company like that, potentially, this is the end of the road for them.

And they have to take that realistic, or they need to pivot and say, how do we become better and more interesting? And then that goes into, okay, now do they pivot into health cost management and saying, look, we have a better way of understanding where your traffic comes from and how to analyze your traffic and get security pieces that Amazon can't provide you with their VPC gateway or direct think gateway. So that's what their pivot place can be. They're trying to sell that value prop. It is a risk. And I think that's why a lot of these partners have to start diversifying in big ways. And you're seeing that in the cost management space, right? Cost management companies are now moving into security management space

and competing with companies like Evident or Dome9. And you're just seeing that horizontal move by the partners to become more diversified so that if Amazon does come after their business space, that they have that flexibility to be able to continue to maintain their customer base and revenue models. Right. And to be very clear, I'm not blaming Amazon for these things. Getting something like inter out because the story of yes you can securely send data between multiple regions except when it breaks yeah don't look too closely at that is a terrible story i'm also not advocating that they don't release things well

we have this awesome thing that makes everyone's lives easier but it would upset some of our partners so we're not going to go ahead and release that to the world. That just feels like it doesn't work. Protectionist approaches to maintaining partner relationships is non-viable for a variety of reasons. So I'm not blaming Amazon for any of the decisions that they've made. It's just a delicate and sometimes painful experience if you're on the smaller side of that partnership agreement. Oh, for sure. But you also see Amazon, they had a reliance on partners to do that right. The cross-region VPC peering and the concept of a transit VPC led by the Ciscos of the world to be able to do it, they asked them to do it. They said, look, we're not going to be in this

space for a while. We want you to build products that customers want to solve this problem because it's a problem we recognize is there. And they're asking the partner market to help them. And then the partner market just didn't deliver, right? Like they're still not a viable solution for transit VPC, in my opinion. You know, the thing from Cisco is not really fully baked. It's not quite what it needs to be. And so, you know, Amazon's probably going to come into that space and fix it because they see that they tried to get the partners to help and the partners failed. So there's that side of it, too, where Amazon does want partners to help bridge those gaps sometimes.

And I think if the partner was doing a really great job and there was no need for Amazon to get in that space, they would deprioritize fixing that problem. But customers keep asking for it because there's not good solutions. And I think Amazon makes a choice. It says, yeah, we know we have partners in the space, but no one's happy with the partners. Let's do it ourselves and do it better. Absolutely. And this one might be a little bit on the contentious side. But one reason that I decided not to become an Amazon partner, for those just joining the show, I spend my days solving one problem. I fix the horrifying AWS bill.

And that takes a variety of different forms. But when I looked into the Amazon partnership program, one of the things that I saw that concerned me was what tier of partner you are, in addition to having certain certification requirements, which isn't that big of a deal, is it's predicated upon spend that you wind up driving into or influencing within AWS. And that's an interesting proxy, but it also felt to me, at least in the cost control space, to some extent, like it put me at a different alignment than my customers. There's always the question to some extent when there are partnership agreements

coming into play, okay, is what this consultant is suggesting to me, is that because of a partnership agreement where they're trying to boost revenue or is this what's actually in my best interest? By not having a partnership piece to worry about on my side, I first keep my business model much more straightforward and simple from my perspective, but I also don't have even the appearance of a conflict of interest. Once you get past the one person from a home office handling these things, do you find that that concern tends to grow, tends to go away, or does it persist? Yeah, it's interesting because, you know, especially in the case where cost management is a focus, you know, integrity is really important because, you know, Amazon wants to spend more money, but more money in the right way versus wasting money on things like EC2 instances that are underutilized.

But another side of it, you know, it's also the, as a customer, you don't necessarily know how a partner gets paid. And so, you know, partners typically don't get, you know, a partner gets paid. And so partners typically don't get direct money from AWS. So it's interesting because it looks on the surface to be a very interesting integrity problem. On the other side of it is it seems counterproductive, but I'd almost think Amazon should be trying to get partners in this space. And this should become a competency around cost optimization and really driving the savings. Because I think this is an area that Amazon struggles with. If you have a sales rep who's been there for more than two or three years, they'll talk about the story of the sales rep who inherited a $10 million account, and 12 months later, it was zero because they just didn't have the lock-in. They didn't have

the ability to use anything but commodity services on AWS. And so it's interesting because you can see where AWS would want a partner to be able to come in and say, well, yeah, you're spending $10 million, but you're not using API Gateway, you're not using Lambda, you're not using these services that really could save you a lot of money and really are the modern way to do things. But that's not how they typically position their partners. And so that's an interesting challenge, and how do we focus on that? And it's a problem I think they have to solve.

And I think it's, you know, when you look at these partnerships and if they're a premier partner or not premier partner, this is all about how much spend they have either influenced or they're directly doing with AWS. And it's hard if you're measured only on influence and how much you're spending. Right. And there's also the idea of when you partner with someone, you generally don't want to stab them in the back. That's always been my approach to these things. So there have been engagements where I have advised companies to pull projects and resources out of AWS and put them into GCP in some cases, to build a data center for some workloads and host them there. From an economic

perspective across the board, it was clear win. Conversely, I've also seen multi-cloud customers that weren't leveraging things in a way that it made sense for them to do so, pick a vendor, maybe it's AWS, maybe it's not, and consolidate into that provider. That was always something that I felt comfortable doing because I didn't have a formal business relationship with any of these companies. If I'm touting being an AWS premier partner and then saying, oh, take that load out of AWS, ignoring whether or not this upsets Amazon, which is no small thing to consider in that context, there's also the question of integrity of, okay, I'm effectively biting a hand that feeds me.

And yes, it is to the benefit of my client, but it doesn't feel great. How do you square that circle? Yeah, I don't think you can. I think that's the problem, right? And I think if you were to go into an account and suggest that they move to a private data center and they're going to stop spending money on AWS, AWS is going to probably kick you out of the partner program. I haven't seen that scenario happen, but I can see where a sales rep somewhere is going to stop spending money on AWS, AWS is going to probably kick out the partner program. I haven't seen that scenario happen, but I can see where a sales rep somewhere is going to be very upset about it

and it's going to become a ripple problem for AWS. Or on the other side of it, you have an opportunity to hit a company that's paying me on the edge of solvency and move them to GCP or to their own data center and then now they're a solvent company. So you're doing the right thing for your customer. And at the end of the day,

Amazon wants you to do the right thing for the customer. And that's their customer focus side of it. But I haven't heard of a scenario where it's happened where it's become bad either on one side or the other. But a lot of times, even when AWS comes in and talks to you, they talk about, hey, you could be buying RIs. You could be doing these things that save you money. So Amazon's not opposed to you saving money. They'd like you to save that money on their platform. But I do think they have to figure out how to incentivize partners and show that partner's support, and then allow that to be transparent to the customer so that the customer understands what the model looks like

and how these things are put together, so that it doesn't look like that conflict of interest. Absolutely. One of the challenges that I've had personally in my career is that I'm not particularly drawn to conflict. I'm not a big competitive person. And one of the reasons that I picked fixing the AWS bill as what I wanted to do with my consultancy has been that there is no one standing on the other side of this issue. The only time I'm not aligned with my consultancy has been that there is no one standing on the other side of this issue. The only time I'm not aligned with my clients is when I'm negotiating what the fee is going to be. After that, even Amazon doesn't want the narrative to be, well, we were on AWS, but it was horrifyingly expensive, so we left. They want people to spend money intelligently on their platform. They're not

in this to take people for every cent they have over the short term. They're really keeping their eye on the longer term prize. I do believe that. And no one on the company side as well wants to have enormous piles of money go to waste. So it really does tend to be a scenario of everyone is aligned in these stories, at least in my experience. Yeah. I mean, they're aligned on the outward perspective, right? We want you to spend your money the right way. We want you to spend the least amount of money possible to get what you need out of the door. But there's still going to be the business side of it, right? And if you were to go in and you consult with PepsiCo, for example, which is one of their big customers who's been on MainStage or Reinvent or Capital

One, for example, and then you convince them to get off AWS, I'm not sure that AWS would be super happy with that story still, even though it might have been the right business model for that customer. No, I think that's the point where they wind up dispatching someone with no neck to visit your office and then magically you pivot business models the following morning. Yeah, exactly. Yeah. By and large, I've always been reasonably content with my interactions with Amazon. I've never felt that I was being mistreated. I've never felt that they were not acting in what they perceived to be the interest of their customers, just for clarity on that. Oh, yeah, I agree. I've never experienced that either, which is why it's hard to say what would happen

because I don't think it's happened. At least I haven't heard a story of it happening in a way that Amazon got hostile about it. And at the end of the day, I don't know if they would. My gut says they probably wouldn't, but you always have that business guy on the back of your head saying, yeah, the business people wouldn't be happy.

So where can people reach out and talk to you about your thoughts on this? Yeah, so I'm on Twitter at Jay Broadley. I also have a SaaS 11 startup company that basically focuses on helping SaaS companies fix their business model, really adopt the new DevOps world that we're in today, AWS. And I'm not doing a lot actively with it, but I have several friends who work with me in the business who are very busy and very active. And so we're always out there helping SaaS companies get to the next level. And then I'm currently working at LMA where I'm driving their public cloud transition story, and we're actively hiring for all roles across the company, from engineering through DevOps to even my public cloud

team. So we're definitely excited, and we're on a three-year journey to AWS, and we're in year one of that, and things are going really well, and we're super excited about where our future holds at AWS, and then eventually multi-cloud as well. So we're definitely heading in the right direction. And you are not an AWS partner? I am not an AWS partner now. I did the AWS partner thing for two years, and it was great. And I now know how that whole game works. And ironically enough, I have a different partner who helps us here at Ellie Mae than the partner I used to work with. But they're a great bunch of guys out of San Francisco that I really enjoy working with.

And it's just different. It's interesting the partners that you meet and what they're doing and how they approach things. And they all have their own little intricacies that make them special. And so you have to find the right partner for your business. Thank you so much for taking the time to speak with me. This has been Screaming in the Cloud. I'm Corey Quinn, and this has been Justin Brodlin. This has been this week's episode of Screaming in the Cloud. You can also find more Corey at screaminginthecloud.com or wherever fine snark is sold.