Are enterprise app stores the future?

CIOs searching for enterprise software-even those ready to buy-know they're in for a long haul. Get ready for a deluge of vendors, products, contracts and integration hassles.

Now big software vendors hope to streamline the searching and buying process by following in Apple's footsteps. Companies like SAP and others are opening virtual doors to so-called enterprise app stores, which sell not only their software but software and services from an ecosystem of partners and resellers.

"We asked ourselves, how can we learn from the Apples of the world and bring that simplified buying experience to SAP customers?" says Dan Maloney, global vice president of e-channel and mobile cloud sales at SAP, which opened the SAP Store for enterprise apps last year.

While enterprise app stores like the SAP Store help overhaul a traditionally inefficient process, the Apple shine of simplicity doesn't fool anyone. Enterprise apps stores are wrought with challenges, much more than a consumer app store such as Apple's App Store. Issues ranging from neutrality to app certification to software reviews plague vendor-hosted enterprise app stores.

"Sometimes we roll things out and get, um, pretty good feedback from our customers," Maloney says with a nervous laugh. "They know we're making some mistakes along the way, but every single customer is supportive of this process. They know how difficult it's been in the past dealing with the enterprise."

The SAP Store serves up some 1,500 different solutions across computing categories: mobile, cloud, on-premise, PC-based. Hundreds of solutions are added every quarter. Apps can vary in price from a few bucks to millions of dollars. SAP's 190,000 enterprise customers around the world have access to the store. A couple million unique visitors came into the store in the first year.

It should be noted that the term "enterprise app store" is used in this case as a vendor-hosted electronic marketplace serving up apps to customers. This shouldn't be confused with another meaning of enterprise app store, whereby a company serves up apps (usually mobile ones) to employees.

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Enterprise app stores hold a lot of potential, yet it's difficult to define the market. Companies and employees download business apps from both consumer app stores and enterprise app stores. Gartner forecasts mobile application downloads from app stores will top 31 billion by the end of this year.

Is the enterprise app store a new phenomenon?

Not really.

In early 2000s, an exciting technology surfaced promising to make buying and selling between businesses quick and easy. Called business-to-business exchanges, or e-markets, the idea fell flat largely because of the lack of neutrality among e-market operators. Businesses offering up goods and services in an e-market run by a major vendor didn't feel like they were getting a fair shake.

So the problems and the promise of enterprise app stores are nothing new. "The Apple App Store wasn't even officially out yet when we were floating this idea to the Board of selling SAP products and ecosystem products online through an app store concept," Maloney says.

SAP's Dan Maloney

The Board wasn't initially enthusiastic, he recalls. Members worried whether or not e-contracts could be used to sell multi-million dollar products. They fretted over the idea of customers and partners reviewing and rating solutions. What if a review was negative?

The SAP Store has some of the same challenges as the Apple App Store. As an app curator, Apple has taken a lot of criticism for a lack of transparency when allowing some apps into the store and disallowing others. Apps that don't perform well, contain malware or sneakily track user information bruise Apple's image. And then there were iOS developers gaming reviews to rise higher on all-important top ten lists.

"We have a lot of the same challenges, and I think even tougher because the enterprise concept of an app store adds in so many more complexities," Maloney says.

Consider the kind of apps on a consumer app store and an enterprise app store. An iPhone user who buys a buggy $.99 app on the App Store may be a little miffed. But software bought on the SAP Store that doesn't work in the customer environment can crash a manufacturing system and lose the company $10 million a day, Maloney says. "We have to worry much more about the quality, the certifications, these products go through."

Not just anyone can buy apps on the SAP Store, either. Newell Rubbermaid, for instance, has up to 60 different entities within the company but only two are allowed to purchase software on the SAP Store. "We've done a lot of great things there, but we still continue to struggle with those challenges," says Maloney.

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One of the great upsides of the SAP Store is that software has indeed been rigorously tested to work in various customer environments so that manufacturing systems don't crash. Apps are already designed to integrate into SAP.

Case-in-point: Liquid Analytics, a mobile software developer, put its expense and business analytics apps into the SAP Store earlier this year. Pre-integration played a key role; Liquid Analytics crunches data on the back end and serves up information to the iPhone and iPad via native iOS apps.

"The app has to tunnel into the enterprise and get to the business process within SAP where your travel and expense processes are already defined," says Vish Canaran, CTO of Liquid Analytics. "If you buy an app that is disconnected, you'll have to add in middleware with integration points to SAP."

Liquid Analytics also craved access to the SAP Store's many global enterprise customers. A good store also needs many product offerings to entice buyers to come to the store. This is known as liquidity in the parlance of e-markets. The SAP Store's liquidity is already paying off for Liquid Analytics. "We're at 5,000 subscribers and expecting around 10,000 by the end of this year, in terms of sales reps using the app," Canaran says.

Storefront of the SAP enterprise app store

Vendor-hosted enterprise app stores have instant liquidity at the expense of neutrality. That is, some vendors may feel that competitors are getting favorable treatment. Major vendors competing with the store host often won't participate, thus limiting the availability of heterogeneous solutions. Problems with neutrality have led to the demise of many e-markets.

"Oracle has no desire to even put anything or engage with us besides maybe some things on the database side of the house," Maloney says.

That's not to say that there isn't competition in the SAP Store. SAP has solutions in 26 different industries across multiple lines-of-business, such as human resources and finance. Microsoft and IBM have products that compete with SAP on the store. Liquid Analytics apps also compete with other apps. (For his part, Canaran says his company is being treated fairly.)

Whether or not the SAP Store can overcome these challenges remains to be seen. So far, though, the SAP Store is showing signs of success in its first year. The enterprise app store is changing the way enterprise software, especially mobile apps, is being discovered, evaluated, bought, deployed and used.

"In the past, sometimes you wanted a piece of software tomorrow, and it felt like we were not trying to sell it to you because it would take six months," Maloney says. "It can't be that way anymore."

Tom Kaneshige covers Apple and Consumerization of IT for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Tom at tkaneshige@cio.com

Read more about applications in CIO's Applications Drilldown.

This story, "Are enterprise app stores the future?" was originally published by CIO.

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