Whither Application Marketplaces?

Everywhere you turn in ERP-land these days, up pops another app marketplace. The roster of ERP players large and small with online showcases includes Lawson, Microsoft, NetSuite, Openbravo, SAP (with EcoHub and its upcoming SAP Store), and xTuple.

Today’s ERP app marketplaces have a stronger focus on window-shopping than trying to be a software equivalent to Apple’s iTunes store. Vendors are using their marketplace websites to draw attention to an increasing variety of their own and third-party ERP app extensions as well as complementary products and services, segmented by industry, line of business, and product type.

What do you think is driving the move by ERP apps vendors to open marketplaces and what might those sites may evolve into? Here’s some of my current thinking on both topics:

Why have an app marketplace?

  • Reflected glory. By the scale and breadth of its offerings, an app marketplace can give customers a sense of a thriving ecosystem growing up around the vendor’s ERP software. At the same time, overstuffed marketplaces with limited ratings and segmentation can be confusing places for customers and partners alike.
  • Future M&A. ERP vendors can mine their app marketplace to gain insight into the extensions and apps of particular interest to their customers. The vendors can use that knowledge as a basis for future investment, either taking a stake in or buying outright the most popular third-party software.
  • Expansion of app usage and customer retention. ERP vendors are working to make their apps more usable and opening up the data they hold to a wider set of users. App marketplaces can help flag ERP-related extensions and apps suitable to non-traditional ERP users.
  • Potential revenue generation. Making money isn’t the primary driver for app marketplaces today, but they could start making modest contributions to ERP vendors’ bottom lines. Buying directly from a web site might be particularly suitable for small business SaaS ERP offerings, app extensions and modules and potentially specific business processes. Clearly, ERP vendors going down this route would need to invest in or build the necessary infrastructure including subscription and billing management software.
  • Keeping up with the Joneses. If an ERP vendor’s competitors are offering app marketplaces, they might feel under pressure to do the same.
  • Experimentation. This is where a lot of ERP vendors are today — putting a toe in the water and seeing if customers want to browse or buy from their app marketplaces.

Where are app marketplaces going?

  • Just a passing fad. ERP vendors are exploring the possibilities the sites may offer, but not committing much heavy firepower to them. As a test case for this argument, it’ll be interesting to see whether or not Infor, which is set to become Lawson’s new owner, will continue the recently launched Lawson Marketplace or shut it down.
  • An ERP hub. For now, there’s something of a division between app marketplaces catering towards ERP running on computers and ERP running on mobile devices, the latter being showcased on the appliance vendor’s app marketplace. In future, ERP vendors might look to their own marketplaces as a hub to show off all the different available versions of their apps, whether they run on computers, smart phones or tablets.
  • Evolving into more community-oriented forums. App marketplaces could expand their focus beyond highlighting software and services and occupy some of the functionality of vendors’ community sites. A marketplace could be a great place for more exchange between customers both around apps recommendations and best practices.