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There's an App for That
The AppExchange, Salesforce.com's application marketplace, simplifies the selling process for developers and the buying process for users. What's the catch?
For the rest of the November 2009 issue of CRM magazine please click here
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Even before Apple’s iPhone App Store made the phrase famous, Salesforce.com was effectively telling users that, when it came to adding functionality,“there’s an app for that.” No surprise, then, that when the AppExchange marketplace debuted at the annual Dreamforce conference in 2005, Marc Benioff, the company’s cofounder, chairman, and chief executive officer, went for the obvious metaphor, calling it the iTunes of the software community.
 
“Our vision for the AppExchange,” says Bruce Francis, the company’s vice president of corporate strategy, “is to provide a place where our customers and partners could come together and find new applications that either extend their success in the Sales and Service Clouds, or take them into new areas.”
 
Put simply, the purpose of the AppExchange is to keep Salesforce.com users happy. “At the end of the day,” Francis says, “we want customers to buy more subscriptions and stay with us, and become customers for life.” Most AppExchange offerings deliver technology absent from (or superior to) Salesforce.com’s own solutions, contributing to the overall success of a Salesforce.com customer—which, in turn, contributes to the overall success of Salesforce.com.
 
The AppExchange debuted with just 70 software-as-a-service (SaaS) applications to choose from. Only four years on, the ever-expanding menu now includes 817 applications—more than 300 built natively on Force.com, the platform-as-aservice introduced at Dreamforce ’07. (There are also 176 AppExchange services available, bringing the marketplace’s total tantalizingly close to 1,000.)
 
Why do so many third-party vendors choose to partner with—and, in some cases, pay fees to—Salesforce.com, rather than going it alone? Easy, says Laurie McCabe, a partner at consultancy Hurwitz + Associates: economies of scale. “Love ’em or hate ’em,” she says, “Salesforce[.com] has done a fantastic job of building a customer base.” That base now includes more than 1.5 million subscribers, across more than 63,000 organizations. For any company marketing an add-on SaaS functionality to small-business, midsize-business, or enterprise users—in other words, every SaaS application vendor in existence—those are some very attractive numbers.
 
“For most of the companies I’ve spoken with, being able to be on the AppExchange and visible within the customer base is the most important…thing in the Salesforce[.com] community,” says Liz Herbert, senior analyst at Forrester Research.
 
The AppExchange, as Benioff intended all along, has become a diverse marketplace empowering consumers with choice. But user freedom can be an application developer’s worst nightmare, and AppExchange players often struggle to differentiate their offerings.
 
Amy Guarino, vice president of business development at marketing automation provider Marketo—an AppExchange offering—says exposure is critical, but success requires more than being on a list. “Some people go into this with rose[-colored] glasses—it’s not a panacea,” she says. “You need to leverage the AppExchange in addition to working with Salesforce[.com]’s field organization [to generate] awareness.” Just as any potential user needs to be convinced before downloading, Salesforce.com’s salespeople also need to be convinced before they can, or want to, sell a partner’s solution. “Salesforce[.com] gives you a channel, a vehicle, to get access
to those potential prospects, but it’s incumbent upon you to create the marketing effort,” Guarino says. Still, she admits, an appearance on the AppExchange homepage provides an uptick in leads.
 
For developers, the Force.com platform has revolutionized the way applications are created and delivered. “If you go on your own, you spend money on things the customer will never see [such as the] database [and] infrastructure,” says Denis Pombriant, founder and principal analyst of CRM consultancy Beagle Research Group. Offloading those requirements onto Salesforce.com, he adds, enables application vendors to focus on customer-facing tasks such as marketing.

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