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Last week I speculated to some impending announcements from Google about application stores specifically tailored to the small and medium business market. Well, readers didn’t have to wait long, Google has just launched what is essentially an SMB application marketplace – A place where (they hope) customers will discover, purchase and deploy integrated third party cloud applications.

The Google Apps Marketplace is a store front aimed at the 25 million individual users that Google apps has across two million businesses. It’s a standards looking web application space that leverages some core facets:

• Central management of application availability

• Universal navigation within and between apps

• Single sign on
• Secure data access via OAuth

In terms of the business details, later in the year Google will be releasing a flexible billing API for vendors to allow them to set their own pricing policies – either way Google extracts a 20% revenue share for applications purchased through the Marketplace.

I spoke with Bob Warfield, CEO of Helpstream who are part of the salesforce.com AppExchange (a similar, yet slightly different, app store). Helpstream acquires around 100 sales leads a month from their involvement with the store. I asked him what vendor and customer drivers there were around involvement on an app store. Not surprisingly, Warfield’s answer showed the bipolar nature of application store involvement:

For a vendor, app stores are all about how much traffic they bring you.  I suspect for buyers, they’re all about how many choices they bring.

It seems to me that Google’s approach is a somewhat limited perspective on what app stores can achieve for SMBs. Platforms (notably the AppExchange and the Intuit Partner Platform (see disclosure) have a much broader set of touch points than does Google’s incarnation. Whereas the other two examples use a broad common data model, Google’s is limited to management at the back end and calendar/docs/mail at the user facing end.

I put this to Scott McMullan, enterprise lead at Google, who expressed the position that Google believes “the web is the platform, and where common data models are typically created” a seemingly more open approach, but one that arguably drives less benefits to end users than a more proprietary, but richer, approach. I spoke to Sunir Shah from freshBooks about this matter and he, unsurprisingly, supported the oepn web view saying:

The reason the Open Web is important is because closed platforms lock small businesses into solutions they may not want with services worse than why the free market provides. The lightweight data structures is how the Web works best: small pieces, loosely joined. Forcing third vendors to buy into a massive monolithic data structure locks them into a smaller market which limits how much they can grow and reinvest resources into innovation.   

Shah was also very positive about Google as a player in the marketplace saying:

I am a big fan of them. Not just for the obvious reasons of their size and market reach but because from the beginning they have put a huge emphasis on building a marketplace the right way. For years they have supported the Open Web movement and helped usher in protocols like  OpenID and OAuth. They have reached out to partners and competitors to involve them in a fair and meaningful way. Moreover working with them has been great. They have been extremely helpful and I just want to give them a public high five for that. 

McMullan’s view about open versus proprietary platforms was that:

We’re [the more proprietary platforms and Google’s more “open” approach] both promoting “integrated apps”.  We just tend to bring different types of data to the party to integrate. Intuit has a lot of transaction/finance data, so they’re extending the value of that into other contexts.  We have a lot of collaboration and messaging and user profile data, so we’re looking to make that more useful to users.

This view is, unsurprisingly, borne out by Intuits Director of the Partner Platform, Alex Chriss, who told me recently that the IPP, with its common data model, will be more appealing for SMBs who want a “one stop shop” for their apps. “The simplicity of sign up and sign in and the ability to have data working seamlessly across applications is a very powerful thing” he said.

I also questioned McMullan about The Small Business Web and it’s goal of getting SaaS vendors to work together and publish open APIs. McMullan was positive about the initiative, saying that “I know this group and we like what they stand for.”

McMullan and I talked about app stores in general and for SMBs in particular. I asked McMullan whether there were synergies between what Google is doing and other SMB plays such as the AppExchange or Intuit’s Partner Platform. While not wanting to look too far forward, he was positive about Intuit’s approach saying that “We believe strongly in what they’re doing w/App Center for sure and are fans. Synergies are mainly ahead of us, given we don’t do much together, other than believe this is part of the future for small businesses acquiring software”

It should be noted that with the launch of the Marketplace, Intuit and Google are working together as Intuit has an Online Payroll application already listed.

So… as for the Google initiative. With 25 million users it almost guaranteed that developers will flock to the app store (at launch there are already around 50 applications available). The current APIs available to developers are well proven and hence integration with the store should be relatively straightforward. McMullan gave an example of Google apps appearing within Atlassian’s Jura application (see below) as a useful and efficient use case for users.

Coming up on the road map are what Google calls contextual gadgets – in the same way that Gmail is now automatically embedding YouTube videos with Gmail, so too could application developers chose to have contextual data from their apps embedded in an email – see the image below showing Appirio data within Gmail. This is from a real product “PS Connect” that Appirio are demo-ing at the Google CampFire right now.

All in all it’s an exciting move. The purist in me would have wished for a far higher granularity around data integration points and a richer common data model but notwithstanding that I’m fully confident that Google’s app store will gain significant traction in the marketplace.

As I’ve mentioned previously, I’m on the advisory board for Glue conference in Denver in May. I’m also moderating one or two sessions. One session in particular has me really excited. My background is small business – as readers will know, I own and run a handful of small businesses in varied industries and so have a pretty good appreciation of the pain points for SMBs. Given my technology bent, I also have a good understanding of how technology can help with those pain points. The session I’m really amped about is titled “Small Business Glue – Tying it together for the 96%-ers” and the abstract for the panel goes as follows:

Small and medium businesses make up the vast bulk of enterprises in most countries – web applications are finally delivering on the long promised playing-field-leveler for SMBs. But what does a completely integrated selection of web apps look like, what does it mean for SMBs and what problems and opportunities does this introduce fore vendors and users alike…

It’s for this reason that software platforms tailored to SMBs really get my attention – there’s a reason I’m so positive about the approach that Intuit is taking with the App Centre (but, as always, see my disclosure statement – Intuit is a client). So I was interested the other day to see a Wall Street Journal article (that surprisingly got little attention in the blogosphere) regarding Google’s possible intentions with a small business app store.

From the article:

Google Inc. is preparing to launch a store selling online business software that integrates with its Web services… the store will sell business software designed by outside developers to integrate and add capabilities to Google Apps, such as enhanced security features or the ability to import contacts. Google eventually plans to allow customers to purchase its partners’ software through the site, taking a cut for itself and sharing some revenue with the developers, these people said. Google will allow users to quickly access their purchased applications through the menu at the top of their screens within Gmail or Google Docs, they said.

What people seem to be forgetting is that Google already have an app store (solutions marketplace – whatever) for enterprise customers – it’s probably safe to say that any SMB store would follow a similar format. More interesting are the potential synergies between what Google is doing (and may do in the future) and other SMB plays such as the IPP. It seems the Intuit approach and that which Google looks set to be taking with its offering are sufficiently different that there will be more opportunities for synergy than there are points of competition.

Which pretty much concurred with what IPP director Alex Chriss said. His perspective is that there are potential synergies between the two companies in relation to SMB plays and that IPP is built on the ethos of being an open platform and playing with anyone: “there’s possibly some competitive areas but at the same time we’re complementary. It’s a good opportunity to work together”.

Chriss did state that they believe the IPP, with its common data model, will be more appealing for SMBs who want a “one stop shop” for their apps. “The simplicity of sign up and sign in and the ability to have data working seamlessly across applications is a very powerful thing” he said.

I questioned Chriss about The Small Business Web and it’s goal of getting SaaS vendors to work together and publish open APIs. He said he looks forward to working closely with the Small Business Web folks in order to solve for the needs of SMBs, he liked the approach but pointed out that Mom and Pop SMBs are unlikely to do even the small amount of heavy lifting necessary to use different applications – hence the “one suite” feel that IPP creates with its single sign on, billing and data model approach.

I was also interested in the data models that both organizations tend to use. Intuit’s model is all about a common data model whereas Google’s tends to be around sign on, billing etc. It tends to come down to a “horse for courses” discussion both parties are pushing “integrated apps”.  They both just tend to bring different types of data to the party to integrate. Intuit has a lot of transaction/finance data, and are extending the value of that into other contexts.  Google on the other hand has a lot of collaboration and messaging and user profile data, so they’re likely to be looking to make that more useful to users.

Interesting times and really fascinating watching the big vendors position for the SMB market – let’s see where this all goes…