BUSINESSWEEK ONLINE : MARCH 5, 2001 ISSUE
SPECIAL REPORT

How Software Services Stack Up


Companies called application service providers sell software as a service that's piped to customers over the Net

THE FIRST GENERATION
The early ASPs license corporate software from companies like SAP (SAP) and then resell it for a monthly fee. They operate out of data centers that they own or lease.

THE KEY PLAYERS:

CORIO
Suffered an $83.7 million operating loss last year on $43.6 million in revenues. But with $150 million in the bank, the company still has life, since it didn't build its own data centers. Profitability is expected in a year.
OUTLOOK RATING: 3*

USINTERNETWORKING
Looks like a money pit. It has spent almost $500 million in three years, largely on data centers. There's light at the end of the tunnel now that the data centers are nearly complete. Profitability is expected in the fall.
OUTLOOK RATING: 3*

PANDESIC
Dead and buried. Despite the deep pockets of parent companies SAP and Intel (INTC), Pandesic was wed to older SAP e-commerce technology that was hard to use, and it never landed big-name customers. Shuttered in January.
OUTLOOK RATING: 0*


THE NEW GENERATION
A second wave of software-rental companies has surfaced over the past year. These upstarts create their own programs, which they rent over the Net. Most are still private.

THE KEY PLAYERS:

SALESFORCE.COM
Barely a year old, it already has 25,000 companies trying its sales-force-automation service for free and 1,700 paying customers. But its biggest customer has just 300 employees. The challenge is to reel in the big fish.
OUTLOOK RATING: 4*

NETLEDGER.COM
Its accounting software is for companies with less than 100 employees. It has 3,000 paying customers but faces serious competition from Intuit (INTU), which has created a rental version of accounting package QuickBooks.
OUTLOOK RATING: 3*

EMPLOYEASE.COM
Provides a software service for human-resources departments. It has more than 1,000 paying customers. Could be crushed, though, if HR software king PeopleSoft (PSFT) remakes its programs as a service.
OUTLOOK RATING: 4*


THE LUMBERING GIANTS
Traditional software companies aren't budging an inch for the likes of Corio (CRIO) and Salesforce.com. They're aggressively launching their own software-rental services.

THE KEY PLAYERS:

INTUIT
Two years into the company's online efforts, more than 20% of Intuit's revenues are coming from Net services. Intuit's whole shebang of accounting and tax software is offered as an online service.
OUTLOOK RATING: 5*

ORACLE
The database giant sells its e-business suite--from financials to procurement--over the Web. Some 50 companies have signed up. Oracle aims to have half its revenues from online services by 2004.
OUTLOOK RATING: 4*

PEOPLESOFT
It has barely put its toe in the water by offering its regular software applications over the Web--but none have been created as a service. It has 30 customers who get their licensed software zapped over the Net.
OUTLOOK RATING: 3*

* Rating Scale: 0 through 5


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