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COMPANY CLOSEUP By Michael Moeller October 19, 1999


NetLedger: Letting the Web Wear the Green Eyeshades
Oracle chief Larry Ellison is funding this small-business accounting startup that embodies his vision of software as services -- not product. Can it succeed in a QuickBooks world?

Accounting has never been very exciting. But now, at least, it might not have to be costly and cumbersome -- or so Larry Ellison, Oracle Corp.'s billionaire chairman, is betting.

Ellison is funding a new Internet startup, NetLedger, which aims to convince small companies with up to 50 employees that it can help them do their bookkeeping over the Web. The idea: For $4.95 a month, companies can hire NetLedger to store, and handle, all of their invoices, bills, and general ledger records. Customers can tap into the NetLedger service site -- powered, of course, by Oracle's database software -- and, in effect, let the Net wear the green eyeshades.

 NEW GENERATION OF SOFTWARE. Ellison's backing of the Menlo Park (Calif.) company comes as no surprise to industry watchers. He has been an outspoken advocate of Web services. Says Ellison: "NetLedger is creating a new generation of software -- one that is never a product but only a service. That is where the future is headed."

Helping to fulfill that vision of the software future, Evan Goldberg, the 33-year-old founder and chief technology officer of NetLedger and a former Oracle vice-president, says the company will strike partnerships in the coming months to connect Web stores with NetLedger's software. That will allow Web purchases to be entered automatically into the accounting software. Goldberg says the company plans to start off with 100 companies and hopes to grow to 1,000 this fall.

 

NetLedger holds customers' hands every time they log on and lets them shrug off software hassles
 

Can NetLedger, which launched just last month, ride the crest of a big software services wave? According to market researcher International Data Corp., the market for outsourcing technology such as software applications and services is expected to grow to nearly $200 billion over the next three years. Says Asha May, a Net services analyst at market researcher Dataquest: "Services is the way that the software market is going -- nearly everything on the Net is going to be a service. It just makes it so much easier for customers. The customer relationship-boosting possibilities are huge."

How so? Unlike traditional shrink-wrapped software -- where a buyer's only interaction with the software maker is during help-desk calls -- NetLedger and other Net-based software services give customers a chance to get their hands held each time they log on. And the advantages for customers go beyond just being able to shrug off the hassles of managing the software. If they don't like the service, they can simply stop using it. Simple as that. No messy contracts to untangle.

For Goldberg, that means customer service is key, and happy customers will be critical to the company's success. In small-business accounting software, NetLedger is a David trying to take on accounting software giant Intuit Inc. and its QuickBooks product. "It's a QuickBooks market out there -- no question about it," Goldberg says. And Intuit is increasingly adding Web features. Another rival is Peachtree's Complete Accounting software.

 "HUGE OPPORTUNITY." It's tough competition so far: NetLedger doesn't, for example, currently support budgeting, customized invoice forms, and time-tracking. NetLedger, though, frees users from worrying about data backup, program upgrades, and a variety of other maintenance issues. To print checks and invoices using NetLedger, all a user needs is Internet access, a Web browser, and the free Adobe Acrobat Reader software that NetLedger provides.

NetLedger is hoping its price advantage will be the biggest turn-on for potential customers. The service costs $4.95 per month for 1,000 transactions and up to 10 users. That means users can enter, change, or tweak the information inside of its accounts payable, general ledger, or accounts receivable system 1,000 times a month without having to pay more for the service. If a user exceeds the 1,000-hit threshold, NetLedger will notify the user and upgrade their subscription to $20 a month.

NetLedger's ease of use and low price could give it a huge push forward into the marketplace, say Ellison and Goldberg. Dataquest analyst May agrees: "That combination of features for that kind of a price is amazing," she says. "NetLedger has a huge opportunity ahead of it." If that's true, it shouldn't be long for NetLedger to start balancing its own books quite nicely.

Moeller covers software for Business Week in Silicon Valley.


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WEB POINTERS
To try the sites mentioned in this story, click here:
NetLedger
Oracle
Intuit
Peachtree Software
International Data Corp.
Dataquest



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