News & Updates

Is Salesforce an AAAS?

By James MacTavish / December 17, 2014

Salesforce Logo
With hindsight, we can now see how visionary was in 2005 (yep, almost a decade ago) when they launched AppExchange, not least of which because it wasn't really about apps as we know them today, but was more of a SaaS marketplace and matchmaking platform, enabling third party partners of Salesforce to show their wares and find buyers.A decade on, the word “app” has been monopolized by downloadable and mobile apps, but Salesforce’s platform is still called AppExchange and there are a growing number of SaaS and PaaS companies looking to emulate Salesforce’s proven model. In effect they are creating “App as a Service” or “Application as a Service” business models – maybe I have just created a new acronym, AaaS. What’s driving this?Let’s consider a typical platform company like Salesforce (and there are thousands, delivering cloud solutions to all manner of industries and use cases). They start off quite closed, then a lead customer or lead partner asks them to open up their platform via a couple of APIs so that the partner can get access to some platform data or capability and do something custom. An extension or add-on to the core platform is created, and everyone is happy for a while. Then the process is repeated, and before you know it, there are quite a few disparate APIs opened up, and quite a few third parties leveraging them. So the PaaS company introduces a more formal API program, where they begin policing who uses the APIs and how they use them, they often introduce fees for access, and they approve the resultant extensions to their platform. Along with this, they also introduce a mini developer program to encourage more third parties to innovate on their platform.Guess what they then find? A lot of the innovation and value in their ecosystem is being created by third parties, and those third parties are making lots of money. What concerns the platform provider is that their customers are going directly to the developers to get their apps, extensions, plug-ins, add-ons and services … yep, they are being bypassed. In parallel their customers are telling them that they find it hard to find the right add-ons to meet their needs resulting in “Wouldn't it be great if there was a central marketplace for all these value-adds”.That’s where Salesforce got to in 2005, and since then we have seen many other SaaS companies come to the same realization. There’s a great short article on the history and success of AppExchange here. What’s this “app exchange” concept all about then?Going back to my original point, most of the time these aren't apps in the more familiar sense of downloadable executable pieces of software, they are more like value-added capabilities that enhance the platform. Here at AppCarousel we provide app stores, app management and app ecosystem solutions for all manner of companies, and I can tell you that the terminology varies from one to the next. They use:
  • Extensions
  • Assets
  • Add-ons
  • Plug-ins
  • Assets
  • Executables
  • Modules
  • Entitlements
  • Applications
  • and of course apps
In the list above, the word “entitlements” nicely summarizes the new world order. Here’s why: when you pay for – and download – a piece of software like an app, you effectively have it on your device or server and you can use it. However when the thing you are buying is SaaS, i.e. a cloud based capability, you are really buying an entitlement to use that capability rather than physically downloading anything. Of course that’s what Salesforce pioneered all those years ago, but here at AppCarousel (as a provider of white labelled app stores) we are now seeing requirements for app stores and marketplaces that have a mix of downloads and entitlements.Oh, look, there’s another mix of terms; app store vs. marketplace. The way we see it, an “app store” is primarily focused on selling apps, a la Google Play. However “marketplace” more lends itself to the AppExchange model outlined above, where Salesforce fundamentally wants its customers to be able to find the right third party capabilities in a safe and approved (and well policed) manner, and to be the matchmaker. When AppExchange began, it’s main goal in life wasn’t to make money per say, but to act as a facilitator, and in doing such a good job in that role, the revenues have most definitely flowed into and through Salesforce. They have found that customers have been more loyal, and that more and more third parties have innovated around AppExchange; a most definite ecosystem, and a thriving one. Business and B2B apps = moneyWhat’s also fascinating is the range of commerce models that have sprung up, particularly around enterprises’ use of these cloud platforms and their third party solutions. Subscriptions have become vogue, as have bundles of apps (e.g. a handful of cloud apps that every salesperson in a company needs to do his/her job), and models based on the number of active seats. Managing all these entitlements, licenses and payment models means there’s plenty of life in the good old app store – re-purposed as a commerce marketplace these days. The other aspect of these markets is security and access control. When AppExchange began, SSO (single sign-on) hadn't been heard of, now it’s commonplace to sign in once into a marketplace and access all the apps and services that you are entitled to, from all those third parties. With such cloud access comes security, and the need to ring-fence those important business assets that are online. So platform providers and their app store providers focus on carefully vetting who is in the marketplace along with rigorous security measures to protect the walled garden that’s within. Where is all this heading?As an indication of where things are going, Salesforce recently introduced its AppExchange Store Builder. It allows enterprise customers to build custom app stores hosted on Salesforce’s platform, enabling them to offer company-related apps within the enterprise. This tool was originally for Salesforce’s internal use, but was recently repackaged and made available as a B2B product. The services and features include:
  • Mobile App Management (MAM): A service that allows enterprises to control access to internally developed apps on both BYOD (bring your own device) and CYOD (choose your own device)
  • App development: Enterprises can leverage Salesforce’s app development tools or use their own resources to build apps
  • Analytics: Built-in analytics allows the app store administrator to monitor and track the most popular apps according to usage
  • Accessibility: Users can access the app store from the web or mobile, giving enterprises the power to operate internal functions remotely
  • Potential external-facing app stores: Salesforce could offer Store Builder for external-facing use and could enable plug-in payment options so that app store owners (i.e. enterprises) can monetize their app stores
Where does that leave companies like mine?After reading all of the above, those of you that know my company AppCarousel may ask whether we see Store Builder as a threat. The answer is most definitely “no”. As an example, Google Play, Android and AOSP (Android Open Source Project) could have been seen as a threat to us when they came out, but in fact they opened the market up for us, stimulated a whole new range of device manufacturers and solutions providers to want their own Android app stores, and our business is booming as a result. So we see the same in this new space of SaaS and PaaS app stores; every platform in the world will need a marketplace, Salesforce will stimulate demand, Store Builder won’t address every need, and we will be there to deliver custom application marketplaces for a wide variety of verticals and their associated business models.Salesforce is most definitely an AaaS, but in the nicest possible sense! Terry Hughes