When I first sat down with Marc Benioff in 2007 to discuss us being an early adopter of Force.com to build back office applications, we not only discussed the technology that we would need to build successfully on the Salesforce platform, but also how we would launch the products and our routes to market. 

As the AppExchange has developed, it has been a key driver in our go-to-market strategy. Recently, Salesforce celebrated the six year anniversary of the AppExchange with news that it has now passed one million app installs. As Salesforce’s blog reported, milestones like this are impressive, but “what’s far more interesting is the fact that apps and app marketplaces have completely changed how we find, try and buy technology.”

Salesforce reports almost 100 thousand customers. With at least 1,300 listed apps on the AppExchange it is clear that customers are already building out broad portfolios of AppExchange apps, approximately 10 on average. And Salesforce just launched AppExchange Mobile to expand those apps onto the millions of mobile devices in the hands of business users.

In six years, the AppExchange has upset the closed world of on-premises based ERP and created a transparent marketplace where competition and collaboration drive innovation. Now, using Force.com-native apps available on the AppExchange, organisations can build a comprehensive, on-demand portfolio of applications that work together seamlessly.

We’ve taken to calling this shift Free Market ERP – the radical idea that you can choose from a library of integrated best-of-class applications on a common cloud infrastructure.

To millennials, who are used to instantly downloading an app to an iPhone, it’s become an expectation that innovative apps deploy easily and help people move their businesses forward. And that’s due in large part to the AppExchange.

The Cloud Opens the Door to “Free Market ERP”

If you look back at the original promise of ERP, it was sold on the notion that an integrated “stack” of technologies and applications was better than buying and integrating separate best-of-class applications (never mind that ERP vendors acquired a myriad of technologies and companies, then garnished them with the word “integrated” to paper over the different UI’s, logins, data structures, customisation and reporting tools that came from their acquisition sprees).

With traditional ERP, you were forced to choose: Would you trade the benefit of innovative apps to solve the integration headache? Or would you accept the integration headache to get exactly what you needed?

Free Market ERP means you no longer have to compromise. You select the best applications for your business that plug together easily. You are able to work with vendors that are focused on business functionality, not the technology stack that underpins it.

You can choose suppliers with expertise in their application domains and true cloud applications that are functionally rich. Not only do you get choice, but you get choice on a consistent cloud platform in much the same way you buy a mobile app on a mobile platform. As a result, markets like the AppExchange have fundamentally challenged the old ERP business model.

Free Market ERP Exterminates “Spreadsheet Gap Apps”

Another pitfall of traditional ERP thinking is that a single vendor can address all of what a company needs, including critical industry-specific and company-specific requirements. Companies had to take control of their own destinies, and they did it with their own homegrown custom apps, typically built from spreadsheets. Often called “gap apps,” they sprouted up everywhere ERP fell short.

Despite all of the marketing claims about the functional depth and breadth of ERP, companies today are infested with these custom spreadsheets, which have become critical to how they run their businesses. This is also a symptom of companies stuck on old ERP releases – unable or unwilling to pay a massive upgrade bill – who are literally frozen in time application- wise. So much for the promise of integration.

For companies that can’t get out from underneath the spreadsheet burden, the cloud provides a better approach that’s hard to pass up. Imagine a new scenario of providing business users with the chance to plug in – or easily build – custom, niche apps on a single cloud platform where they don’t just share data but share the same look, feel, tools and technical philosophy.

The result? Organisations can better serve customers, differentiate themselves from competitors, and run a leaner, faster, more effective business. That’s the power of Free Market ERP.

A Free Market ERP Manifesto

As we’ve seen in cloud computing, nothing stays still for long. The applications and the businesses creating them are evolving at a much faster pace than we’ve ever seen in the computing industry. In the cloud computing era, there are more rich, vertical applications to choose from than ever before, all resulting from the thriving free market approach to ERP.

With this anniversary, it’s time that every company embrace their own Free Market ERP “manifesto” – a call to remake the way they do business based on the potential of the cloud; to rethink what is possible; and to make way for the next generation that is already embracing these realities.

It’s about choice in the end: a free market approach to ERP that has not been possible before. And the time to take advantage of that is now