Opening up an internal resource to outside developers, a la Amazon Web Services and Force.com, isn’t just for the big guys anymore.
Smaller organizations with systems that may be aimed at narrow markets are also deciding to open up their platforms to third-party developers. They may do so as a way to create a new revenue stream or to make their own offerings more attractive.
Either way, companies with this kind of internal resource should consider opening it up, said Frank Gens, a lead analyst responsible for cloud research at IDC. Using an internal platform solely to deliver an internal product “is a very limited vision,” Gens said. “The real distribution channel is to take parts of your own cloud services and distribute them to others.”
One example of a company that has opened up its platform to outside developers is TrueCredit, which offers credit reporting services.
It developed APIs (application programming interfaces) so that third-party companies could build applications that use TrueCredit’s credit reporting, monitoring and scoring services.
Tickets.com is another company that has opened its platform to third parties. The company, a subsidiary of MLB.com, provides the back-end ticketing engine for some Major League Baseball teams.
About four years ago, Tickets.com set out to revamp its platform, which at the time was composed of incompatible legacy systems. It decided to build an entirely new platform with a service-oriented architecture and a Web-based front end, said John Rizzi, vice president of product marketing and strategy at Tickets.com.
The decision to open that platform up to third parties came about by chance. “Somewhat by accident, we came to this spot,” he said.
As it began building the new platform, Tickets.com hired technology experts to help with the process. “It took us bringing in people from outside the ticketing industry who were much more technology-centric to understand that we had a lot more in this platform than just something more modern and cheaper,” Rizzi said.
Tickets.com isn’t making its APIs available to just anyone, though. “It’s not like we’re going to say, ‘here’s the API, go develop and have fun.’ Our clients aren’t asking for that,” he said. “They are asking for more flexibility and options, and we want to give them that.”
Some third-party companies have already started offering services to Tickets.com customers using the new platform, and others are in the works.
Ballena is offering a product, built on Tickets.com’s system, that lets online shoppers see in 3D the view from the seat they are considering buying. StubHub, the official secondary ticketing provider of the MLB, is also using the new platform. Its offering is integrated with Tickets.com, which ensures the tickets offered on StubHub are valid.
Tickets.com is also working with Qcue and Digonex, which offer dynamic pricing tools. Qcue, for example, feeds data, including sales inventory provided by Tickets.com and other data about the team’s record, the weather and the game’s pitching matchup, into its algorithms to recommend that baseball teams adjust ticket prices.
Developers may pay for access to Tickets.com in different ways, depending on how they operate. “My intent is, yes, to profit from this,” Rizzi said. Qcue pays a subscription to receive the data feed. Stubhub shares revenue.
Rizzi’s advice to other companies thinking of opening up their offerings in a similar way is to carefully think about the revenue model. “That’s huge, because in the end, we could wind up opening our system and having a great system and making all the third parties really wealthy, and not participating in that. We don’t want to do that,” Rizzi said. “We want them to prosper… but I think having a plan in terms of how to monetize it before you implement is pretty important.”
He also suggested that it’s important to think about how to support the third-party developers. “Supporting an ecosystem of third parties is a lot different from supporting a client who is the end user of the system,” he noted. He recommends that other companies make sure to consider those kinds of structural and business components and factor them into their revenue models.
At a recent cloud computing conference, Rizzi said one central theme was making the cloud about more than cost savings.
That’s what Tickets.com and some of the pioneers in offering infrastructure or platforms as a service have done. Amazon, Google and Salesforce.com are among companies that have opened up their internal resources so third parties can develop on them.
For example, Salesforce.com launched its Force.com offering as a way to expand its reach into the enterprise. Force.com came about after customers pushed Salesforce to add more customization options, said Ariel Kelman, vice president, platform product marketing at Salesforce.com.
“Once we gave them that power to have highly customized [customer relationship management] apps, we noticed something. Some of these companies weren’t just using this for CRM customization but for building brand-new applications,” he said.
For example, one company showed Salesforce how it had started using the CRM application as a recruiting application.
“They were doing things with our technology that we hadn’t anticipated. That inspired us to double down on investments in tools for both IT and third-party developers,” he said.
Early on, Salesforce decided that it wasn’t worried about third parties using Force.com to build competitive CRM offerings. Now the company sees others, such as Veeva, developing CRM applications for targeted business segments, including pharmaceutical sales reps, he said. “We didn’t have the expertise to market and sell there,” Kelman said.
Plus, Salesforce benefits because Veeva is still using its Force.com platform.
Kelman wouldn’t say how much revenue Salesforce earns from Force.com but said it is “one of the fastest-growing parts of the business.” There are about 1,000 third-party applications built on Force.com, plus 160,000 custom applications. But he said Force.com is “more of a business strategy push than a financial mathematical exercise.”
For companies that might similarly be interested in opening up to third-party developers, he suggests working closely with developers early on to prioritize features and the development experience.
While the idea of opening up an internal resource is “old news” to companies such as Google and Amazon, which were among the first to do it, more companies should consider it, IDC’s Gens said. “My thinking is that suppliers have to think of their own cloud offerings and how to parse them out to others,” he said.
Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy’s e-mail address is Nancy_Gohring@idg.com