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SaaS Marketplaces Are Ready to Soar

SaaS Marketplaces Are Ready to Soar

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

By Jeffrey M. Kaplan
08/10/12 5:00 AM PT

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

Given the proliferation of SaaS/cloud providers and solutions, it makes sense that many IT and business decision makers would like to take advantage of a "one-stop shop" where they can procure multiple SaaS apps and cloud services.

One indication of the rapid spread of SaaS/cloud solutions is THINKstrategies' Cloud Showplace, which has more than 1,900 SaaS, Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) providers divided into 90-plus different application, industry, technology and service categories.

Although it is the largest directory of cloud companies, my guess is that the Showplace lists 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/cloud buyers 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 marketplace where they can find everything they need.

Many SaaS/cloud vendors are also attracted to the promise of online marketplaces as they seek additional channels to market that can extend their reach into segments they 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 to expand their service portfolios to offer their customers more solutions designed to deepen their account penetration, create new revenue streams, and increase their stickiness in an increasingly competitive market.

The most prominent examples of the first wave of SaaS marketplaces have been Salesforce.com's AppExchange and Google's Apps Marketplace. While these have demonstrated the cursory capabilities of a marketplace, they have been primarily used as referral tools rather than real transaction engines, because of technical limitations of the early 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 had some success selling its platform to telcos, and Parallels is gaining momentum supplying its platform to hosting companies, resellers and distributors. One of its most interesting wins has been with Insight USA, which has built its cloud marketplace on the Parallels platform.

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

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

While AppDirect is getting plenty of work with a wide assortment of established service providers, it is also getting a growing number of inquiries from enterprises that are not only investigating the possibility of creating in-house marketplaces for their employees, but also exploring the opportunity to launch external marketplaces that will appeal to their 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 traditional technology vendors such as Dell that are already moving down this path.


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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