Report on E-business
Internet business services the new ASP model
Friday, May 25, 2001
Special to The Globe and Mail
In the office, at home or in a hotel room -- it doesn't matter where Brian Fillo is. As long as he has a computer and an Internet connection, the sales manager for Calgary-based Guest-Tek Inc. can check data on his customers. And as soon as he updates the information, it's available to co-workers.
Because those customers are hotels -- to which Guest-Tek sells high-speed Internet-access systems -- Mr. Fillo and his colleagues travel a lot. So Guest-Tek wanted a sales-force-automation system its sales people could reach from wherever they are.
Being a small but rapidly growing enterprise with 50 employees, Guest-Tek also wanted a system that could adapt to rapid changes with a minimum of effort, project manager Alison Puckridge says. Not having to pay a hefty fee up front was a bonus, too.
So, rather than install conventional software on its own computers, Guest-Tek turned to Salesforce.com,a San Francisco-based company whose software for tracking customers and sales leads resides on the World Wide Web. All Guest-Tek sales staff need to use it is a portable computer with Internet access and a Web browser. And rather than buying the software, Guest-Tek pays a monthly fee of about $50 (U.S) a user.
Salesforce.com is part of a new breed of companies called Internet business services. They resemble application service providers, most of which install existing software on their own servers and then run it on behalf of customers, who are linked directly to the ASP's servers.
The difference: Internet business services use software designed especially for the Web, and their customers can connect to it from any Web browser, wherever they are.
It's an important distinction, supporters say. Indeed, Internet business services represent the future of the ASP model, says Ben Pring, principal analyst with Gartner Group Inc.'s Dataquest unit in San Jose, Calif.
One of the first Internet business services was Employease, an on-line human-resources system that helps manage employee benefits and makes benefits information available to every employee. Jeff Beinke, vice-president of product strategy at Atlanta-based Employease Inc., calls it "software delivered as a service."
"It's completely platform-independent," says Kim Green, business-development manager at Acme Interactive Inc. in San Francisco, which operates OurProject.com, a Web-based alternative to project-management software. "All you need to use it is an Internet connection and a Web browser."
That means access from anywhere -- the office, a hotel room, a client's office or a Net café.
The browser interface also means simplicity. "It's intuitive, just like a Web site is," says James Dougal, vice-president of marketing communications at New York-based Virtual Growth Inc., whose Virtual Accountant service combines on-line accounting services with live accountants and bookkeepers to manage customers' accounts.
Another benefit is cost, especially for smaller firms. Traditionally, acquiring software meant a hefty up-front licence fee. Internet business services charge a modest monthly fee for access to their services. "It's like a subscription more than a traditional software-licensing agreement," Ms. Green says.
For instance, OurProject costs $125 to $200 a user each month -- customers with more users pay less, Ms. Green says.
Not all Internet business services follow the monthly subscription model strictly. For Employease, monthly fees run just $4 to $8 an employee per month, but there is a $5,000 setup fee.
More often, though, these services charge a simple monthly fee. For example, NetLedger Inc. of San Mateo, Calif., offers a Web-based accounting system for small businesses for $99 a month. And Works Procisa, an on-line system from Works.com Operating Co. of Austin, Tex., that helps manage purchasing from the purchase requisition to payment of the invoice, costs about $20,000 a month for a mid-sized company.
"As a small business, we're trying to keep our monthly costs down," says Brendan Kerin, head of four-person Web-design firm Brendan Kerin Media in Cobourg, Ont.
Besides eliminating the initial cost of software, Mr. Kerin says, Los Angeles-based Elite.com Inc.'s Timesolv time and billing service has simplified his bookkeeping chores to the point where he believes he is saving the cost of one employee. "They really take a lot of the load off of us."
Nor is it just a matter of spreading out payments. John Dillon, president and chief executive officer at Salesforce.com, says the actual licence fee for business software accounts for only about 10 per cent of the real cost of owning it.
The rest comes from the employee time -- and often consulting fees -- taken up in installation, troubleshooting, upgrading and other tasks that come with running software on your own computers.
The Internet business service model does away with virtually all of that, he says.