Emerging ERP Apps Stores Could Change the Way Enterprises Buy ERP

Choosing your company’s next mission-critical ERP system might have just gotten easier.

A new wave of online ERP “app stores,” set up much like other online software and music one-stop shops, are slowly appearing in the IT marketplace, offering centralized venues where customers can learn about a broad range of ERP products.

The app stores are so novel nowadays that they’re the topic of a report from Forrester Research, “App Stores: A New Way to Try and Buy ERP,” written by Forrester analysts China Martens and Paul D. Hamerman.

“In opening their own app stores, ERP vendors are looking to bottle some of the vibrancy they’re observing in established third-party mobile application stores, such as Apple’s iTunes Store, Google’s Android Market, Microsoft’s Windows Marketplace for Mobile, and Research In Motion’s BlackBerry App World, and apply that model closer to home,” write Martens and Hamerman in the report. “ERP vendors are also taking note of the steady growth of AppExchange, the online marketplace of SaaS CRM vendor salesforce.com, which opened in early 2006 and is now home to more than 1,000 apps.”

So what will IT leaders find in an ERP app store, and how can they use this information to help them better choose the right applications for their companies?

Usually they’ll find listings of available apps and add-ons, typically organized in categories by cost, industry or supported languages, according to the report. “Each app listing will include user-generated ratings, reviews, and recommendations, as well as the potential to download, try out, and buy the app. Today, the click-to-buy link frequently puts the customer in direct touch with the seller — the ERP vendor or its partners — rather than having a transaction occur directly within the app store.”

The app stores being offered by ERP vendors are still at a very early “toe in the water experimental phase,” Martens told CIO.com via email. The stores represent a potential new sales and distribution channel as well as a possible new interaction point for ERP apps vendors, their customers and their partners, she says.”

For corporate IT decision-makers, the app stores could offer several key benefits, she says, including a more efficient way of getting the right apps into the hands of your staff more quickly.

At the same time, though, the app stores might end up as a dead-end if not enough companies choose it as a way to test out or deliver apps, says Martens.

So far, the app stores are just beginning to appear, particularly for SaaS and mobile ERP offerings, from vendors such as NetSuite Other stores are still emerging slowly.

The stores are being set up as comparison sites for multiple ERP products and as showcases for the products of individual ERP vendors, according to the report.

“Some ERP apps vendors are positioning their app store as a way to highlight their own platform-as-a-service (PaaS) — both the apps they develop on the PaaS and those developed by partners,” such as NetSuite’s SuiteCloud PaaS, Martens says. “The idea with apps that run natively on the same PaaS is that they can be tightly integrated from the get-go since they run on the same platform. They can also potentially have very similar user interfaces and user experiences and possibly share functionality.”

The stores could also be useful by providing upfront advice on any potential hang-ups and extra involved costs when mixing best-in-breed components from competing vendors, Martens says. That user advice could even include information about who can help solve any conflicts, including the vendor, third-party integrators, or the customer.

Another option for enterprises is to create their own ERP app stores where their staff can choose pre-approved apps that fit their needs, Martens saysShe adds that app stores may present new purchasing challenges, but advises CIOs to not let that limit how they use app stores within their organizations.

The report lists several recommendations for determining whether ERP app stores make sense for a company :

*Start engaging with ERP app stores as a trial channel. Assess the possible benefits of making use of this emerging additional purchasing channel and gather as much information as possible to help plan your strategies.

*Use app stores as a gauge of ERP vendor vitality. Check out what they offer andmake sure you are comfortable with the vendor’s products, pricing, features and supported integrations with other products.

*Work with ERP vendors to gain access to usage data relevant to your organization. Use application usage and app store trial data as a basis for making internal policy decisions about who can purchase apps for corporate usage and whether you should seek changes in your current licensing agreements. For instance, with that knowledge in hand, does it make sense to move to an “all-you-can-eat” license from your ERP vendor?

*Investigate whether an internal app store would be beneficial to your company. How could you use it to foster more internal and external collaboration around app delivery and user support?

Companies using ERP app stores have to discuss all kinds of related issues, such as convenience and control, before deciding how they want to proceed with ERP app stores, Martens says. To that end, she adds, customers must ask vendors questions such as:

*How does the app store vendor stand behind the third-party apps offered in its store?

*Who provides first-line support for the apps?

*What access to usage data does the customer get and how can they control or regulate use of the app store by the company’s staff?

*What is the interoperability between apps from the vendor and from other third-party apps offered in the app store? What extra costs are involved?

*How easy is the app store to use and how simple is the provisioning and billing process?

*Can a customer easily synchronize their subscriptions across a number of apps in the store so it’s simple to manage renewals?

One challenge for the stores, according to the report, is that they need to remain focused to be truly useful to corporate users. “As app stores grow, business process pros may find them overstuffed with products that are poorly differentiated or of questionable fit and quality.”

If they are successful, similar app stores could begin to appear for other enterprise apps beyond ERP, Marten says.

“Many app players are intrigued by the possibilities of having an app store, particularly those that are keen to highlight their PaaS and the kinds of apps that partners and customers can build on them,” she says. “A key issue is whether app stores stay very individual vendor-focused or whether more aggregators appear or a particular app vendor appoints themselves to that role. It will also be interesting to see how more established mobile business app stores might in the future merge with these new enterprise app stores.”

Todd R. Weiss covers Enterprise Applications, SaaS, CRM, and Cloud Computing for CIO.com. Follow Todd on Twitter @TechManTalking. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Todd at tweiss@cio.com You can also join Todd in the “CIO Forum” group on LinkedIn.com to talk with CIOs and IT managers about the things that keep them up at night.