OPINION

SaaS Marketplaces Are Ready to Soar

Now that Software as a Service and the broader cloud computing concept havegained widespread recognition and acceptance, it will be interesting to see whether onlinemarketplaces will become a preferred method for acquiring these on-demand resources.

Given the proliferation of SaaS/cloud providers and solutions, it makes sense that manyIT and business decision makers would like to take advantage of a “one-stop shop” wherethey can procure multiple SaaS apps and cloud services.

One indication of the rapidspread of SaaS/cloud solutions is THINKstrategies’ Cloud Showplace, which has more than1,900 SaaS, Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) providersdivided into 90-plus different application, industry, technology and service categories.

Although it is the largest directory of cloud companies, my guess is that the Showplacelists less than half of the overall universe of providers.

SaaS Marketplace Advantages

While it is a buyer’s market, the truth is that it is pretty confusing for many SaaS/cloudbuyers to sort through the proliferation of players and solutions.

So, rather than having to sift through a myriad of offerings website by website,prospective SaaS/cloud customers should like the idea of going to a single marketplacewhere they can find everything they need.

Many SaaS/cloud vendors are also attracted to the promise of online marketplaces asthey seek additional channels to market that can extend their reach into segmentsthey couldn’t attack otherwise, such as small and mid-sized businesses (SMBs).

Online marketplaces also appeal to a growing number of service providers that want toexpand their service portfolios to offer their customers more solutions designed to deepentheir account penetration, create new revenue streams, and increase their stickiness in anincreasingly competitive market.

The most prominent examples of the first wave of SaaS marketplaces have beenSalesforce.com’s AppExchange and Google’s Apps Marketplace. While these havedemonstrated the cursory capabilities of a marketplace, they have been primarily used asreferral tools rather than real transaction engines, because of technical limitations of theearly marketplace platforms.

2nd SaaS Marketplace Wave

Jamcracker and Parallels have been on the vanguard of marketplace platform vendors, representing the second wave of marketplace capabilities.

Jamcracker has hadsome success selling its platform to telcos, and Parallels is gaining momentum supplyingits platform to hosting companies, resellers and distributors. One of its most interestingwins has been with Insight USA, which has built its cloud marketplace on the Parallelsplatform.

There is now a new generation of marketplace platform vendors, led by companies likeAppDirect, offering additional functions that make them even more compelling.

These features include better procurement, provisioning and usage tracking, along withsingle sign-on capabilities that make it easier for users to access their apps, and morerobust analytics for administrators to monitor usage patterns from a single managementconsole. AppDirect’s recent wins include Deutsche Telecom and Rackspace.

While AppDirect is getting plenty of work with a wide assortment of established serviceproviders, it is also getting a growing number of inquiries from enterprises that are notonly investigating the possibility of creating in-house marketplaces for their employees,but also exploring the opportunity to launch external marketplaces that will appeal totheir customers and business partners.

As I suggested more than two years ago, you should expect many banks,universities, accounting firms, and others to pursue these marketplace opportunities,along with IT retailers such as Staples, distributors like Ingram Micro, and traditionaltechnology vendors such as Dell that are already moving down this path.

Jeffrey M. Kaplan

Jeff Kaplan is the managing director of THINKstrategies and founder of the Cloud Computing Showplace. He can be reached at jkaplan@thinkstrategies.com.

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