AppDirect enables marketplace monetization, because it's all about the cash

It's one thing to create a marketplace for companies to sell their products. It's another to enable the monetization of those products. AppDirect is delivering both.

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AppDirect is an impressive vendor that is hardly ever recognized by the users who interact with its product. AppDirect sells a cloud marketplace platform that organizations use to build their own marketplaces. Telstra, ADP, Samsung and Deutsche Telekom (among others) power their software marketplaces using AppDirect's platform. As more and more companies have seen the success of Apple's AppStore and other similar marketplaces, they start to think about how a marketplace could be applied to their situation. If they're smart, they'll not try and build a marketplace in-store but will rather leverage a platform like AppDirect's to quickly and easily create a marketplace.

But there is something of an elephant in the room when it comes to building marketplaces, especially for existing organizations with legacy core systems. That elephant is the difficulty involved with the monetization side of a marketplace. It's one thing to set up your store, populate your products and start to market your offerings. It's another to actually start charging for them. The issue here is that traditional businesses often use big and inflexible billing systems that really don't lend themselves to being integrated into other solutions.

Another serious issue that exists for independent software vendors (ISV) is that the monetization around their own solutions is problematic. I've spent time within growing software companies and seen firsthand the massive difficulties they have with subscription management. This is the reason that subscription services such as Zuora, Aria, and Vindicia push themselves as the way for ISVs to monetize their products. Rather than building billing and subscription into the product, they just integrate with these solutions to do that part of the equation.

So it makes sense to hear that AppDirect, a company that helps ISVs to sell their products, is introducing a monetization suite aimed at software developers and service providers. The suite aims to fulfill the billing and distribution, marketplace and reseller side of the marketplace opportunity. The interesting thing about this offering, at least compared with the pure-play subscription vendors, is that it covers both direct commerce and the reseller channel through AppDirect's existing and future platform customers. ISVs can, via a single platform, launch self-service commerce from their websites, grow reseller networks or distribute their applications across provider-run marketplaces.

“With our proven track record monetizing cloud services, developers are turning to us for tools to support each stage of their business growth. For many SaaS companies, we’re helping them build an API for the first time for an integration that will automate a commerce effort, power a marketplace presence, a channel strategy or all of these combined,” said Daniel Saks, co-founder and co-CEO of AppDirect. “Through our Monetization Suite, we’re making a difference in a young company’s path to success while also enabling later-stage companies to reach a higher level much more quickly."

But where the rubber really hits the road is with customer adoption. One interesting touch point is Zendesk, the publicly listed company that sells help desk software. When it was founded, Zendesk had fairly manual subscription processes. More recently, however, it has gone on record as using Zuora to power the monetization part of its business. While the wording of this press release makes it clear that Zendesk's involvement with AppDirect is a "pilot program," it will be interesting to see if it goes any further than that.

"Selling SaaS solutions is deceptively complex. From a technology standpoint, it's critical to be able to support an evolving go-to-market strategy in a way that's fast, secure and scalable,” said Mindy Lieberman, vice president of information technology at Zendesk. "AppDirect's Reseller Management Service gives us the ability to sell through our partner ecosystem, enabling both reseller and referral partners to close deals while giving us the internal visibility we need. Zendesk has had a great experience working with AppDirect's team and technology on our pilot program. We look forward to continuing to expand our offering as the platform matures."

In addition to Zendesk, SugarCRM, Cakemail, UnifiedInbox and AODocs are among the first SaaS companies to use the services to either launch new reseller programs, expand distribution through new marketplaces or drive self-service commerce from their websites using subscription billing.

The real value here would seem to be for ISVs that are both partnering with AppDirect as a channel to sell via AppDirect's marketplace customers, and also using it as a subscription tool.

“We struggled to sell our product internationally with our previous billing solution," said Julien Seguin, vice operation of operations at CakeMail, an email marketing provider for small businesses. "AppDirect's APIs allow us to sell CakeMail to international customers without introducing unnecessary red tape. "Since we were already integrated with AppDirect’s network of marketplaces, integrating the billing and distribution service was very straightforward. Ultimately, AppDirect makes it easier for our customers to purchase and use our software, no matter where they are or what devices they use.”

Subscription and billing are hard. AppDirect has the experience of delivering it at scale. The question here is whether the AppDirect solution has the ability to compete with the other subscription and billing vendors. For those ISVs that want to use AppDirect as a channel to market, it's a no-brainer. As a stand-alone subscription product, that's a harder call to make.

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