Salesforce.com To Market, Sell ISV-Developed Apps

Software-as-a-service CRM application vendor Salesforce.com will market -- and eventually sell -- on-demand applications developed by its independent software vendor partners. Salesforce's "AppStore" plans, announced Tuesday, provide a way for solution providers to play a role in the expanding software-as-a-service world.

For nearly a year, ISVs have offered applications that work with Salesforce's CRM services through Salesforce's AppExchange Web site. AppExchange today has more than 430 applications from some 230 ISV partners. Salesforce even hosts some of those applications through its own data center. But it's still up to ISVs to provide customers with a way to pay for the on-demand applications.

AppStore will transform AppExchange from a listing service into a true commerce site, where customers can order ISV applications and pay for them through Salesforce's billing system, says Ariel Kelman, senior director of platform product marketing. Salesforce will also provide commercial services and revenue-sharing programs for ISV partners who use AppExchange as a global distribution network to market, sell, invoice and deliver on-demand applications, Salesforce says.

Gartner predicts that 25 percent of new business software will be delivered as services by 2011, up from 5 percent in 2005. While some of this growth will come from newer companies like Salesforce.com and start-up Workday, enterprise application giants Oracle and SAP also offer on-demand versions of their products. All this raises questions about the role solution providers can play as more businesses subscribe to hosted services rather than buy software through indirect channels.

It will be nearly a year before Salesforce's AppStore vision is complete. Starting in February, AppStore will offer partners "standard referral" services, including premium placement on AppExchange categories and searches, marketing assistance and eligibility to join the Salesforce application incubator program.

"Premium referral" services, available in August, will add demand-generation programs and seminars to educate customer-facing Salesforce employees about partner products. Salesforce will charge 10 percent and 25 percent referral fees on closed transactions, respectively, for the standard and premium services.

AppStore Checkout, which will provide online ordering, billing, invoicing and collection services, is scheduled to be available in December 2007, with Salesforce charging a 20 percent commission -- separate from the referral program fees -- on invoiced amounts.

A Salesforce spokesman also said this week the company would not accept new AppExchange listings for one week, starting Jan. 5, to accommodate planned system maintenance. Customers will still be able to try out and install applications on AppExchange during the week.