In an interview we published last week with a Former Go-to-Market Strategy Director at AWS, the executive noted that the 'third wave' of cloud adoption will be driven by the ability of hyperscalers to effectively partner with SaaS companies to build customised, vertical cloud solutions for enterprise customers. Microsoft's history of enterprise sales has given its Partner Network a slight edge over AWS today.
from my observations. Azure, a different organizational philosophy, but equally tenacious and equally structured. They don’t have exactly the same lexicon for their innovation engine, but they’re very focused on it and they’re very focused on partners. A lot of those examples of innovation really happen with partners. Yes, AWS does that, but look between the lines when you see the announcements for Microsoft Envision and other conferences they have, versus re:Invent and I think you’ll see more of these credible industry solutions that we’re talking about that are endemic of this third wave of growth and market maturation. You’ll see more of this from Azure. - Former GTM Director at AWS
Over the last few years, AMZN has revamped its Partner Program to drive more co-selling between AWS and companies like Snowflake.
This has led to a new incentive structure for sales reps:
If you think about Snowflake again, if Snowflake and Discover sell a million-dollar deal – say it's a $3 million, three-year deal for easy math – into an enterprise client, that rep gets 30% of that or a $300,000 against their quota amortized over the three years. So that would be $100,000 a year; call it $8,000 a month amortized over the lifetime of that deal against their quota. At first, it wasn't a huge incentive, but if you start thinking about selling more and more of these partner deals, it turns into the gift that keeps on giving against your quota. - ISV Partner Sales Lead, AWS
It's become so much more material to the point where I can get on calls with reps, and they will ask a partner, are you part of our SaaS Revenue Recognition Program. You can see in 18 months that this program has gained a lot of traction with our ISVs and sales teams. I think most sales folks at AWS will tell you that the SaaS Revenue Recognition Program and the 30% commission towards quota is a bigger incentive to work with ISVs than the SPIF, which is a change. So two programs are cash incentives towards quota for those partners. - ISV Partner Sales Lead, AWS
The third piece is this year, AWS reps and inside sales reps, and anybody tied to an account, has an MBO objective about so many partner-attached wins. It's probably in the neighborhood of 15 to 20, and it's just one of their, call it, 12 goals that their performance is evaluated against. They need to have X number of partner-attached goals. That's another incentive to work with partners. Many of my good reps will say, let's knock off these 20 goals before six months because I want to turn that one green, so I don't have to worry about it. - ISV Partner Sales Lead, AWS
Each time an AWS sales rep co-sells a service like SNOW, it drives incremental revenue to AWS compute and storage services that host Snowflake. This enables AWS to fill more capacity and drive greater scale efficiencies. Maybe AWS doesn't care too much about potentially losing share at the PaaS layer to companies like SNOW? As long as it drives more compute and storage revenue, it drives scale for AWS. The long runway of workloads moving to the cloud offset any potential margin decline.
In Q2 22, tight capacity and higher pricing led Old Dominion to report an operating ratio below 70% for the first time in the company’s history.
For LTL carriers, controlling costs is vital to price freight accurately. Pricing structures are different across LTL providers but are mainly based on weight and size.
Pricing models are all over the place. Some base it on tonnage while others base it on piece and weight. Different models have created challenges with price variations. 3PLs have made the pricing models more consistent, which is good and bad. Shippers were frustrated with LTL carriers making this way too complicated and having no clarity, so 3PLs clarified that for them by negotiating on their behalf. - Former VP at Southeastern Freight Lines
The 3PL providers sit in-between LTL’s and shippers and could pose a threat to LTL’s positioning in the value chain:
3PLs are a threat. Old Dominion held a harder line in negotiating with 3PLs than others. They had their pricing strategy and when a 3PL came in to negotiate, they would simply say no. 3PLs are definitely changing the landscape fast because smaller ones are getting bought up and larger ones are growing and gaining more control over the business. - Former VP at Southeastern Freight Line
The executive argues that ODFL should begin to offer services that 3PL’s provide. But didn’t Brad Jacobs, one of the best entrepreneurs out there, just spin-out XPO’s 3PL assets and stay with the LTL business? Maybe he has realised this is the most attractive part of the industry?
Spirax Sarco is a London-listed engineering company that provides steam engineering products to industrial customers such as food and beverage, pharma, and energy companies. The company earns >20% EBIT margins and revenue is far less cyclical compared to other industrials given >75% of the revenue is recurring.
The physical properties of steam make it one of the most effective methods to transfer heat to power an industrial process. Because it’s a relatively old technology, most customers don’t have in-house steam expertise to update, fix, or maintain steam processes in the production plant. This enables SPX to earn superior margins by providing steam products and acting as an outsourced steam consultant for customers.
People specialized in the steam area are becoming fewer and fewer and this is also true from the customer side. For a given customer, there used to be some experts in the steam system. Those people are now often retired. This is good for Spirax because that means the customer will have to go to Spirax to get their knowledge. In the past, a lot of customers had experts. You will also see Spirax recruited some of those experts, from time to time. - Former GM of Spirax Sarco
Spirax enjoys pricing power given it offers low-cost, mission critical products and a unique consultative service to customers.
If you don’t have a lot of knowledge about the steam system and are uncertain as to what is going on in the steam system, you wouldn’t mind paying a bit more to get products from the person that you think is very competent and absolutely knows how to deal with it. It’s not an area where you can save a lot of money by going to another supplier. Maybe percentage wise, but in terms of the overall production budget, it’s not a huge amount. You go for the safe bet. - Former GM of Spirax Sarco
Most steam boilers in existing production plants are powered by fossil fuels. The decarbonisation trend will increasingly pressure customers to power industrial processes with renewable sources including electricity. Spirax has recently purchased a few companies to create an Electrical Thermal Heating Solutions division to benefit from this trend. SPX is now the only company globally that has both steam and electric heating solutions for industrial clients. We will be covering more on SPX positioning and the market over the next month.
Interesting answer from a former Duck Creek SVP on why Guidewire is better positioned for the next 5 years.
Guidewire. Believe it or not, I've been a non-Guidewire person. I just know the tech that that Duck Creek has and what they have to dig out from. It's going to be hard, and it's going to be expensive. I just think that the R&D spend that Guidewire has and their approach, especially under Rosenbaum's leadership, and the moves that they've been making, at the end of the race, they'll be ahead. I think Duck Creek has an advantage right now, specifically when it comes to cloud offerings. But I think that gap has been closing over the past two years, at a rate that was alarming to Duck Creek. And I don't think Duck Creek is extending their lead and making the smart investments that they should be with their R&D spend, with mergers and acquisitions. I think they're holding the ball and being very conservative and I think Guidewire has the R&D growth, has the ecosystem of investment from the EYs that are making them better. I just think at the end of the day, they'll eclipse Duck Creek. Coke and Pepsi, you can think of it that way. I just think that Duck Creek will be eclipsed and Guidewire will recement themselves as a market leader, call it two, three years from now. - Former SVP, Duck Creek Technologies
Cytek have a good shot at winning more reagent business for flow cytometry machines:
I think if they expand the number of monoclonal antibody clones that they offer to match what other companies are doing – maybe not in number but the most common one at least to start with – because companies like BioLegend have a pretty big catalog, same thing with BD Biosciences but if they can expand that as well as conjugate them with unique dyes, unique fluorescent dyes, that could really spread the word that they are a big player...Then it's a matter of, if it's identical in theory, you could go with the cheapest one and as I said earlier Tonbo was. I don't know if Cytek bumped up the prices or if they're still very affordable and so that would really help get even more market share. If we can get new dyes that are better than the competition, that are more unique, that can keep the overall complexity meaning the overlapping of the different dyes in a very big panel, a high dimensional panel, that would be another cell. I know that Cytek is also generating pre-made panels for immunophenotyping for some of their assays. I don't remember their names but they have several of them...That was very good of Cytek to place themselves on the reagent side with these premade kits. I think that if they continued making some that are specific, either making them bigger or making them more targeted to specific cell types, they might be able to also sell more. - Flow Cytometry Manager at Regeneron Pharmaceuticals
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