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Pam Baker The Rise of CRM App Stores

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 By Pam Baker

Online CRM Marketplaces Increasing Customer Options and Vendor Reach

SaaS CRM vendors look prophetic at the moment, showing up as they did just ahead of the rise of cloud computing and the demand for everything as a service. Several have even launched their own third-party app stores tapping yet another wildly popular trend. "CRM marketplaces have experienced rapid growth, spurred partially through concerted efforts by Microsoft and Salesforce.com," says Greg Pierce, cloud computing expert at Tribridge, an IT services and business consulting firm.

While Microsoft and Salesforce are indeed pushing ahead of the pack on third-party app marketplaces, they are not the only players in the field. However, nearly all of the players are SaaS CRM vendors, for obvious reasons, and the lineup is relatively small and skewed toward the vendors with cloud platforms, mature APIs and growing customer bases. Besides Microsoft's Dynamics Marketplace and Salesforce.com's AppExchange, online apps stores are available from CRM vendors such as NetSuite's SuiteApp.com, Sage.CRM.com's Partner Solution Source, SAP's Business ByDesign ecosystem, SugarCRM's SugarExchange and Zoho's online Marketplace.

Older CRM technologies, such as those limited to on-premises installations, are challenged to offer third-party app marketplaces simply because their base technology is too old to attract developers and make the jump. Narrow CRM suites or point solutions are simply too light to serve as platforms and therefore can't support apps from third-party developers. Some CRM applications such as Highrise just list apps they integrate with.

On-premise CRM vendors have historically created alliances or even small directories of integration partners. However, a CRM directory of integrated apps doesn't offer the vendor certifications, customer reviews, online trials or upgrade assurances that are typically part of the newer CRM app stores. Now it's almost too late for the on-premise vendors to gain sufficient momentum to lure enough app developers to make the switch work. There is one notable exception: Microsoft's Dynamics CRM 2011. But here too, Microsoft has become a serious cloud player by virtue of Azure, its cloud-platform, and its online CRM application, Dynamics CRM. Even beyond its own CRM app store, third party marketplaces are sprouting up, such as the Dynamics Exchange.

The models of the SaaS CRM vendors that do have third-party app stores vary. Sugar CRM, for example, offers two marketplaces. The first is in keeping with other open source code repositories such as Sourceforge. SugarCRM's open source marketplace is called SugarForge and it allows developers to list their apps for free. "The community supports those apps, not SugarCRM, as is standard for open source in general," explains Martin Schneider, formerly senior director of Marketing at SugarCRM and now vice president of Marketing at Basho Technologies.

The Sugar Exchange online marketplace is SugarCRM's other third-party app store. "The developers pay a fee to be listed and the apps must be by established companies and pass a strict certification process," says Schneider. "However, users are seamlessly directed back to the developer's site for the actual transaction so developer's keep 100% of the app sales price."

By contrast, Schneider says Salesforce.com "takes a percentage of every transaction, that is almost a hosting fee, but developer's get a lot more service from that model." Actual percentages range from 20% to 40% depending on just how much service a developer wants from the AppExchange.

NetSuite, according to published accounts, is shooting for quality over quantity in apps on its SuiteCloud Developer Network (SDN), although at this time it does not have a certification program. It offers three developer network memberships ranging from free to a paid premium and escalating tools and services to match. By comparison, Google Apps sports a long list of CRM apps and requires developers to pay a 20% "revenue share fee" and use Google's Checkout for payments.

While the business models may vary, the issues these app owners run into are strikingly similar. "You're inviting points of failure with every added app," says Schneider. "That's why you need a strong certification process—to ensure flow logic, data security and that upgrade processes don't break the API connection."

The ultimate goal is to attract as many developers around your CRM product as you can. However, that is easier said than done.

"The problem is that even though app stores are kind of exploding, the field of Cloud CRM is very narrow," says Michael Krigsman, president and CEO of IT Failure Analysis firm Asuret.

Beyond that obstacle, developers prefer to work with companies with large app stores and user communities. That's just a matter of pure economics. "CRM vendors attract developers by having lots of customers and a very good API," says Mark Krieger, co-owner of MediaRoost, the maker of TweetRoost, a CRM-like app for enterprises.

The competition for independent software vendors and app makers is intense. Further, for them to invest their time and money, they generally insist on good technology, expansive distribution, a well structured program and a trusted partner. They also resist a single vendor's technology and the over arching threat of vendor lock-in. Despite its challenges, growing a successful ecosystem of developers is critical for SaaS CRM companies to scale. "The trick is in getting people to show up at the party," says Krigsman. "It's very bad if no one comes." End

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Comments (2) — Comments for this page are closed —

Guest Denise Johnson
  Google released their online marketplace back in March 2010. I just did a search for “CRM” on the Google marketplace and hundreds of apps were returned, many of them well known CRM players and many of them not so well known. A quick review suggests these cloud CRM apps tend to target SMBs and integrate with Google Apps. I think the Google marketplace is the single largest online ecosystem for CRM systems not run by a CRM vendor.

Guest Zach Kirk
  For more than three decades, business applications have sought to provide packaged integration with other business apps in order to make customers lives easier and promote both software products. The results really haven’t been very good. Integration quality is mixed, there are few if any standards, upgrades often break the software and trouble-shooting leads to inevitable vendor finger pointing. I think the cloud and online app stores can improve the process, however, again, there seems to be a lack of consistency. On the most cited app store, AppExchange, several products offer tight knit integration to Salesforce. However, many of the app store products, perhaps most of them, did not create the integration with Force, the integration appears extremely minimal, and it really looks like most of the vendors put more effort into the marketing propaganda than the actual integration.
 

 

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You're inviting points of failure with every added app. That's why you need a strong certification process—to ensure flow logic, data security and that upgrade processes don't break the API connection."

~ Martin Schneider

 

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