The Apple app store had its 10 billionth download this weekend as consumers load up on apps for their iPhones and iPads. At the same time, but with slightly less fanfare, this dynamic is invading enterprises. Cloud computing is the business software industry’s response to delivering business applications that end users can access and use in a convenient way using the Web as a platform. And App Stores are growing in number and size, for example salesforce.com’s AppExchange, Google Apps Marketplace and IBM’s Smart Market.
But what does this mean? Are companies really going to download apps the way they download Angry Birds? The answer is not as complicated or as out of reach as you might think. And the demand for an App Store dynamic is even clearer.
In the early 1990s, companies were forced to choose between the best application in a particular class versus buying a suite of applications from a single vendor. ERP vendors eventually won that battle by providing an integrated suite of applications – some of which were nowhere near best-of-class in terms of functionality – which companies preferred rather than integrating disparate application elements from many different vendors based on different platforms and programming languages.
However, the big application platforms are very slow to react to new technologies and functions whereas new apps spring up all the time on a cloud platform – it is a richer, more agile alternative. This is similar to the open source world where the market creates innovation as opposed to lumbering product roadmaps built by introspective ERP suppliers.
Cloud platforms erase many of the old issues related to a best of class approach. They offer a common UI, single sign-on and a palette of dev tools, reporting tools, shared objects, collaboration tools, mobile computing support etc. that users, IT staff and app developers can collectively leverage. On a common cloud platform, apps don’t just speak the same language, they can share the same culture. More importantly, the best cloud platforms are built for the “App Store” world. They are designed for extensibility by mere mortals and the ability to push add-ins into the environment akin to the iPhone in your pocket. It is a refreshing change from the inward facing ERP platforms that are built to dominate – not to cohabitate.
Salesforce CRM customers have known for some time the benefits of adding other Force.com-built applications that can be delivered as services. In fact, many innovative salesforce.com customers have already used the Force.com platform to build a comprehensive on-demand application portfolio, using Force.com-native apps available on the Salesforce AppExchange, that mirrors a traditional on-premise ERP package. A great example is our customer All Traffic Solutions, that has integrated Salesforce CRM, FinancialForce Accounting and Ascent for order management.
This is carving out a new trend that we are calling free-market ERP – a fairly radical idea based on a common cloud infrastructure that means enterprises are no longer locked in or beholden to their ERP provider. This will create a dynamic that most every company has always preferred but could not do with on-premise software – a free market approach to acquiring software where enterprises select the ideal applications for their business based on a single platform to assemble their own free market ERP in the cloud. A collection of operational systems that just work together.
ERP suppliers have traditionally worked in a secretive and closed way. They only give out their best references, so there is no way to fully see what you are getting into. Application, support and pricing issues are kept behind closed doors. With Free Market ERP on the other hand, forum ratings such as the AppExchange give buyers unfettered access to the market. This keeps suppliers on their toes to ultimately deliver better apps and services. This is the way that enterprise computing is moving.
Companies want to work with vendors that are focused on business functionality, not the technology stack that underpins it. They want suppliers with expertise in their application domains and true cloud applications that are functionally rich. It’s about choice in the end: a free market approach to ERP that has not been possible before. In the cloud computing era, there will be richer and more vertical applications to choose from and more transparency. As a result, organizations will be more adaptable to change.
This trend is only just beginning and I’ll have more observations about it over the next few weeks. Stay tuned!