Enterprise business application markets are booming. The growth of the integrated application marketplace, such as Salesforce.com's AppExchange—which at press time included 1,739 apps created by third-party developers and partners—has led Gartner to identify the enterprise ecosystem as one of the top 10 strategic technology trends for 2013.
Gartner predicts that app stores will facilitate 70 billion downloads of mobile apps per year by 2014. While most are consumer-driven today, the market for enterprise apps will gain momentum as well, according to Gartner.
"With enterprise app stores, the role of IT shifts from that of a centralized planner to a market manager providing governance and brokerage services to users and potentially an ecosystem to support entrepreneurs," according to Gartner's predictions for 2013. "Enterprises should use a managed diversity approach to focus on app store efforts and segment apps by risk and value."
Many CRM vendors already have enterprise application marketplaces, with software delivered in the cloud. Gartner says the resulting robust ecosystem is a draw for independent software developers. In addition to cloud-based marketplaces from Salesforce.com and Microsoft, SAP is building a partner ecosystem using a set of open application programming interfaces (APIs) for its Sales OnDemand application.
One of the newest entries in the business apps space is social collaboration tools provider Yammer, which was recently acquired by Microsoft. Yammer deployed an App Directory, featuring third-party applications that make it easy for enterprise users to discover and install apps that have already been approved by Yammer. NetSuite's SuiteApp directory offers customers a venue to search reviews, try out solutions, and ultimately buy SuiteApps that integrate with and enhance NetSuite solutions. Social marketing platform HootSuite hosts a spate of partner extensions and applications from partners—including Get Satisfaction, Reddit, and Zendesk—enabling users to build a customized social dashboard.
Vendors and developers interested in hosting or joining a third-party app marketplace have plenty of opportunities. The market is currently in "a phase of rapid innovation, with plenty of best-of-breed, purpose-built solutions," according to Ray Wang, principal analyst and CEO of Constellation Research.
Each vendor's marketplace enables enterprise customers to build integrated suites out of independent applications, Wang says.
For the app partner, one of the built-in perks is the inherent marketability that stems from showing up in a Web app directory. As Tom Petrocelli, a senior analyst at Enterprise Strategy Group, describes it, "It's like living in a gated community. You pay [to live with] rules and restrictions to get the safety and features of the gated community."
Essentially, it's impossible for vendors to build everything their customers need themselves, so an integrated ecosystem serves as a way to plug the holes. Wang calls it a "win-win" on both sides, but points out that one of the major challenges is that app players must be really strong at software development. The more open your APIs are, the more open the ecosystem is, and, consequently, the greater lengths to which a company has to go to manage a diverse mix of third-party applications and ensure consistent pricing and interoperability.
For software technology vendors that host a variety of cloud-based applications, there are a bevy of benefits. Steven Woods, chief technology officer at marketing automation software company Eloqua, says this affords companies like his more value than operating as a simple stand-alone solution. To attract buyers, hosting an app marketplace in the cloud becomes an attractive proposition for an IT department, since an ecosystem allows developers to build once and deploy many times using built-in connectors.
Eloqua hosts 75 partner apps—including applications from GoToWebinar, YouTube, and WebEx in its Eloqua App Cloud—and two-thirds of its customers use at least one application from its marketplace. According to Woods, the speed at which the App Cloud achieved a 70 percent to 80 percent adoption rate was faster than any other product adoption curve the company has seen. Simplicity was a key reason, since "marketers could say, 'Ok, it's an app, and I can drag and drop and tie this to that' instead of calling IT and requesting a project," Woods explains.