Application Exchange FAQ

Updated: August 20, 2012

What is an online application exchange?

BusinessWeek has called Salesforce.com 's AppExchange, "The eBay of Business Software ." And the description is nearly accurate. Like eBay, or any e-commerce site for that matter, an application exchange is a Web site that brings together products from multiple vendors. Unlike eBay, these products are all software applications, and they're offered at a set price.

What are the benefits?

Purchasing software from an application exchange has all the benefits of any online shopping experience — avoid the lines, the traffic and the hassle. Plus, as with buying music online via Apple Inc.'s iTunes Store, consumers don't have to wait impatiently for the mailman to show up with a shrink-wrapped CD. Instead, they can download the software immediately — or in the case of Salesforce.com applications, they can subscribe and run the software from a hosted server.

Application exchanges also focus solely on applications that run well together or are geared toward a specific industry or platform. When AppExchange was started, the site focused on CRM application modules that integrated seamlessly with the Salesforce.com application. Now, the company offers ERP (Enterprise Resource Planning) modules as well, and the customer doesn't need to use Salesforce.com CRM to make use of the other products.

Where did it start?

Salesforce.com first launched its AppExchange service back in 2005. But SaaS (software-as-a-service) marketplaces were actually around before that. Three years prior, IBM Corp. launched a site that offered applications from a network of its partners. IBM's service wasn't CRM-focused, and not all of the featured applications functioned as one seamless offering. Salesforce.com's introduction of AppExchange was the first example of a marketplace featuring integrated CRM software modules.

Who else offers application-exchange sites today?

Many companies now offer online application exchanges. Some good examples are those from Apple and Microsoft , where users can purchase software related to their operating systems and download it on the spot. Apple's Download Center brings together Apple and third-party products, including freeware and shareware, for OS X. Windows Marketplace offers the same kinds of products, but for Windows.

In the CRM world, many growing companies have followed Salesforce.com's lead and now offer CRM-focused application-exchange marketplaces. Each features its own blend of CRM modules along with other ERP-related products. Here are a few examples:

• NetSuite Inc. — SuiteSource
• Etelos Systems Inc. — Etelos Store
• SugarCRM Inc. — Sugar Exchange
• WebEx — WebEx Connect

You can learn more about each of these marketplaces by reading this article .

What are the downsides of purchasing software this way?

As with any on-demand software, some companies may have concerns about licensing software in this manner. For example, hosting your company's crucial data on another vendor's server can present some security issues. Additionally, if customer relations are a critical part of your business strategy, ensuring uptime may be at the top of your list of concerns.

But these concerns stem more from the subscription model of SaaS rather than from the Web-based delivery channel of the marketplace. As with any major system or software purchase, it's important to have a period of careful planning and consideration, as well as a good heart-to-heart with the vendor about your needs, before you click the "Purchase" button. But once you've taken those critical steps of the decision-making process, the online marketplace does make that last step — the actual transaction — a little easier. There is no software to install, there are no systems to upgrade, and the solution you choose is all right there and automatically working with your current applications.