Salesforce Releases Product That Lets Businesses Create Custom Enterprise App Stores

Salesforce.com (NYSE: CRM), the world’s leading CRM software vendor, has rolled out a new product that allows enterprise users to build their own app stores. Its “AppExchange Store Builder” is an easy to use platform that lets companies build customizable app stores for managing and delivering apps to end-users. The new product is free for existing Salesforce licensees and costs $5 per month for users that don’t have a Salesforce license ^[1].

In this article, we analyze this product category, its market and what it means for Salesforce.

See our full analysis for Salesforce.com

First Mover’s Advantage May Give Salesforce a Competitive Edge

An increasing number of enterprises are using private marketplaces to deliver pre-approved apps to employees, customers and partners. This allows them to gain direct access to users, thereby bypassing public marketplaces like Google’s Play Store and Apple’s App Store. The enterprise app store is not a new concept and has been around since as far back as 2011 ^[2], but Salesforce is the first major player to create a common platform and release it ready to use for individual businesses.

Until now, such private marketplaces were developed and used in-house by corporate giants like Cisco (NYSE: CSCO) and Symantec (NYSE: SYMC), or were used to deliver specific apps to end-users like in the case of SAP (NYSE: SAP). Salesforce’s new AppExchange Store Builder allows businesses to create customized app stores with their own branding and allows the inclusion of in-house, company-specific apps as well as commercial, publicly available apps. An important feature is that app stores built using this platform can be used on desktop, mobile as well as web-based devices, thereby ensuring across-the-board uniformity.

Other than Salesforce, currently only a handful of startups provide such customizable enterprise app stores, chief among them being Apperian.

BYOD Culture to Necessitate Need for Enterprise App Stores

The AppExchange Store Builder gives Salesforce a first-mover’s advantage in a nascent product category that is set to witness a boom in the near future. With the advent of Bring Your Own Device (BYOD) culture, it is expected that by 2016, 38% of companies will allow employees, business partners and other users to use their personal devices for executing enterprise applications ^[3]. This creates a need for regulation of apps that can be downloaded, installed and executed by end-users in order to ensure internal security and compatibility. Furthermore, end-users often have difficulty in finding in-house apps in public marketplaces and may be misled by fakes or apps with similar names.

This problem can be circumvented by having a private marketplace which can be used to manage and deliver in-house as well as pre-approved commercial apps to the companies’ employees, customers and partners. Such enterprise marketplaces have potential added advantages of providing app-usage analysis, simultaneous rollout of updates for all users, and reduced administrative fallout from inadvertent download of unauthorized apps.

This untapped demand is further reinforced by Gartner’s estimate that about 25% of enterprises are expected to have an enterprise app store by 2017 ^[4]. Considering the very limited number of companies that have the resources to build custom enterprise app stores from scratch, this presents a lucrative opportunity for introducing ready to use, customizable enterprise app stores.

Monetization

Given that the AppExchange Store Builder is currently being offered free of cost to existing customers, it will not have any impact on Salesforce’s top line. However, this may be an initial marketing strategy to kickstart adoption and the company may soon monetize this product. Such monetization may occur in the form of either offering the AppExchange Store Builder as a paid add-on, or including its cost in a larger product package. Additional features such as compatibility checks, security reviews and feature updates may be rolled out in the future at additional charge, further augmenting this revenue stream. Adoption of this platform may also be beneficial to Salesforce’s bottom line since it will facilitate smoother roll out of updates for apps across desktop, windows as well as web-based devices.

However, long-term success of enterprise app stores is dependent upon adoption of a large number of apps by enterprises, which would increase the return on investment on creation of private marketplaces. We believe that the ongoing shift to mobile enterprise applications, as well as the emerging BYOD culture, will inevitably result in increased app adoption, thus underscoring the need for enterprise app stores.

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1. Salesforce Delivers AppExchange Store Builder—Now Any Company Can Quickly Create Its Own Fully Customizable App Marketplace, Salesforce Press Release, December 2014 [↩]
2. Enterprise App Stores: Great Idea or Potential Disaster?, Gartner, January 2011 [↩]
3. Gartner Predicts by 2017, Half of Employers will Require Employees to Supply Their Own Device for Work Purposes, Gartner, May 2013 [↩]
4. Gartner Says That by 2017, 25 Percent of Enterprises Will Have an Enterprise App Store, Gartner, February 2013 [↩]