Enterprise App Stores Driving Free-Market ERP

By Jeremy Roche, president and CEO, FinancialForce.com

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, in the same way consumers download apps for the iPhone. Enterprise App Stores are growing in number and size, for example salesforce.com’s AppExchange, Google Apps Marketplace and IBM’s Smart Market. But are companies really going to download apps the way they download Angry Birds?

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. Cloud platforms 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. 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. It is a refreshing change from the inward facing ERP platforms that are built to dominate – not to cohabitate. Force.com is perhaps the leading example of a cloud platform. From the start, it has provided an open architecture to move beyond the Frankenstein-like app environments that helped spur the No Software movement to begin with.

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.

With Free Market ERP, 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. 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.