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January 31, 2000

Single-Application ASPs Seek To Carve Out Their Niche
But partnering with other vendors or outsourcers may be in their future

By Jennifer Mateyaschuk

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new breed of application service provider is emerging, providing small and midsize businesses with homegrown applications delivered over the Internet. During the next two weeks, three single-app ASPs will launch: Intacct, MS2, and Mirronex.

But will their strategy--providing a single application without customization or integration--be viable? It may be for businesses that need only one application. But most companies need more--and they may not want to deal with several vendors to get a complete ASP solution. "Ultimately, you're not going to want 27 different companies supplying, maintaining, and managing your applications over the Net," says Bill Martorelli, VP of E-services and sourcing for Hurwitz Group.

Customers could struggle with integrating outsourced applications unless single-app ASPs establish partnerships with other vendors and outsourcers, analysts say. Or, new middlemen may emerge to manage relationships between customers and single-app ASPs, integrating hosted applications or internal systems for them.

Intacct, which will launch this week, plans to form partnerships. It's already considering a payroll processing pact with Automatic Data Processing Inc. to bolster its Internet accounting software. Intacct founder David Thomas says his company's application has all the functionality of a similar program from Great Plains Software Inc., but costs much less because it's a Web program. Great Plains says it typically charges $200 to $500 per month per user. The Intacct program costs $50 per month for two users.

Other single-app ASPs will go it alone--for now. Mirronex this week will reveal the first customer for its MxConnect workflow-management software. Tom McFadden, group VP of The Limited Technology Services, a division of The Limited Inc., was trying to improve response time from outside consulting and staffing firms. "I wanted the paperwork and telephone calls taken out of the process entirely," he says. Before using MxConnect, he had to wait 30 to 90 days for a response from the firms. Now, he gets a response in about 14 days. His IT managers send their requests to Mirronex over the Web. Mirronex submits them to a predetermined list of consulting companies, which post resumés of potential contractors on Mirronex's site. The software also coordinates hiring documents and delivers bills electronically.

Meanwhile, MS2, launching next week, will offer online project management. The software will let IT workers track project progress and collaborate on problems online, using a password and ID, for a flat monthly fee, depending on the number of users.

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