BUSINESSWEEK ONLINE : JUNE 19, 2000 ISSUE
COVER STORY DiCarta: Providing "Apps on Tap" You've probably never heard of diCarta Inc. CEO Scott Martin doesn't ever expect the company to be a household name. No matter. In the Technology-on-Tap world, there's more than enough room for diCarta, which makes an arcane accounting "app on tap" used by CFOs. As the Net morphs into a reliable utility delivering all kinds of software, anyone with a great idea can suddenly reach the entire world. That's enticing thousands of entrepreneurs like Martin to develop Net services, making diCarta a prime case study on how Technology on Tap could turn the high-tech world on its ear. "We can reach a much broader market, much faster," says Martin. "The barriers to entry are dropping dramatically, allowing companies like ours to get launched must faster." Just consider diCarta's story. In October, 1998, Martin and some cohorts set out to create a conventional software company. They had a great idea for a business. With the dot-com gold rush in full swing, diCarta would make programs that these harried upstarts could use to keep better track of their contracts and cash flow. But as he discussed diCarta's plan with customers, it became clear diCarta's old-fashioned software approach wouldn't fly. For starters, diCarta would have to charge millions of dollars for the program, since it would have to do lots of custom work to adapt the software to run on each customer's computer setup. STRATEGIC SHIFT. More important, contract management wasn't critical enough for customers to put up with the hassle and expense of installing and maintaining yet another program. "It was just too low on the totem pole to be worth the effort," says Edward Kinsey, chief financial officer of e-commerce software maker Ariba.com, who was visited by Martin at the time. That's when Martin hit on a new way: He made diCarta into an application service provider. Almost immediately, pieces fell into place. By renting rack space at hosting company Exodus, he got a high-speed connection to the Net at reasonable rates. Since the software would have to run only on diCarta's own computers, Martin could dramatically reduce development costs, enabling him to sell the program for as little as $1,000 per user. Since it wouldn't be necessary to train each customer on the innards of the program, diCarta wouldn't have to hire a boatload of field personnel to tend to customers. To use the program, customers just log on. And diCarta could turn on the service in just a few weeks, rather than months, satisfying customer's need for no-hassle speed. "Once we were sold on the benefits of it, we wanted it to be up and running right away, not in nine months," says Kinsey, now a happy customer. DiCarta now has 25 customers, ranging from Phone.com to TWA and is on track to do more than $6 million in sales this year. While gross margins are now around 35%, that should rise to 80% by late next year if diCarta can meet its plan to have 300 customers by then. While that's still not headline-grabbing stuff, it could be a glimpse of what's to come. By Peter Burrows in San Mateo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Technology on Tap COVER IMAGE: The Info Tech 100 TABLE: The Leading Public Info Tech Companies TABLE: The Leading Private Info Tech Companies TABLE: Who Wins When the Web Is On Tap TABLE: As PCs Take a Back Seat, New Technology Drivers Emerge TABLE: Three Who Are Tapping In ONLINE ORIGINAL: How Four Pioneers Are Turning on the Tech Tap ONLINE ORIGINAL: Yipes Communications: Bandwith on Demand ONLINE ORIGINAL: Equinix: The Mother of All Hosters ONLINE ORIGINAL: DiCarta: Providing "Apps on Tap" ONLINE ORIGINAL: Everdream: Turning on the Tap for Small Biz INTERACT E-Mail to Business Week Online

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