At this year's Small Business Web Summit, an annual gathering of SMB-focused ISVs and other partners, an unofficial theme emerged: SMBs’ move to the cloud is making large brands sit up and take notice in a big way. For confirmation, you just needed to look at some of the panelists—including executives from Staples and TeliaSonera—to see that major players are starting to focus on the relationship between small and medium-sized businesses and cloud computing.
It’s easy to understand why; the market for cloud-based business applications is exploding. Whether you’re an independent software vendor (ISV) that builds apps, or a channel looking to sell them, there's a ton of opportunity right now for anyone willing to get into the game. To thrive in this increasingly competitive space, however, you need to stay up to date on the latest developments and innovations. I served as moderator for a few of the Summit's panels, and here are the five most important lessons that I learned:
XaaS Continues to Expand
XaaS (the blanket term for any product offered in the -as-a-Service format, such as Software-as-a-Service, or Platform-as-a-Service) is starting to find a serious foothold. Nearly every business task you can think of—rewards, lending, order fulfillment—is being offered in the -as-a-Service format. While savvy users already familiar with SaaS and PaaS might catch onto this concept quickly, the fact remains that a proliferation of -as-a-Service products stands to confuse SMBs and fragment the industry even further. This is one of many pain points that app marketplaces can address.
App Marketplaces Show No Signs of Slowing Down...
All signs point to app marketplaces becoming the standard for SMB cloud adoption. Ninety percent of the ISVs attending the Summit were distributing their products through marketplaces, and 10 percent of the crowd said that about a third or more of their sales are coming through application stores. Another testament to the momentum of the marketplace model is the high-profile brands that are investing in them. Two of AppDirect’s partners, Staples and Comcast, recently unveiled their cloud service marketplaces, and Staples was at the Summit to promote their launch and network with ISVs.
… But APIs Need to be Standardized
For ISVs, distributing through app marketplaces can be a boon, but these partnerships are sometimes derailed by technical difficulties. Half of the ISVs in attendance said that API incompatibility had blocked more than one past integration for them. For marketplaces to thrive, channels need to build a catalog of attractive applications to draw users, and ISVs are eager to integrate. But when technical incompatibilities get in the way, these partnerships fall flat, which benefits no one. API standardizations for Single Sign-On, Provisioning, and Access Management across app marketplaces will get more products on the virtual shelves, which will drive more users to register and buy apps.
The Great Billing Debate Continues
The beauty of app marketplaces, in part, is their ability to give customers a single bill for multiple services as opposed to dishing out your credit card information to many different providers. Large channels like Staples, Salesforce, and Comcast cite research that their customers prefer to purchase software through one bill with a trusted provider. However, some ISVs in tattendance stated their billing models were simply too complex to allow an app store provider to bill for their them. Many other ISVs were entirely unaware that an app store provider could bill for their product in the first place. In order for the cloud industry to move towards a wholesale/retail model - which it needs to do fast - it’s clear that app store providers and ISVs need to push for less complex billing models to ease partnership barriers and provide more transparency to end-users.
Our Collective Future Looks Bright
The final, and perhaps best takeaway? Things are going really, really well. We heard from several ISVs that they had doubled in size—measured by sales, headcount, or both—since the last Small Business Web Summit the previous year. Conversations this year revolved around how to make the leap from individual business applications to larger platforms through the use of open APIs, developer programs, and reseller agreements. The major brands in attendance were a positive indicator that cloud applications are beginning to cross the chasm into the mainstream small and medium business. And I have to say, here at AppDirect, is that we couldn’t agree more.
Paul Arnautoff is a director of business development at AppDirect.