PeopleSoft Inc. officially joined the flurry of application service providers today with the launch of its ASP business, complete with applications, customers, and partners. Still, analysts say the software vendor is playing catch-up with rivals such as Oracle and SAP and may have a difficult time differentiating itself from the mass of ASP vendors offering PeopleSoft applications, in addition to other third-party suites.

With the new service, dubbed eCenter, PeopleSoft is offering its own human-resources, financials, and procurement applications running on PeopleSoft 8, a new version of PeopleSoft applications that lets the company run the entire application from a remote location without having to install any software on the client side. Before these applications, ASPs would have to install some PeopleSoft software at the client site because the application was not designed to be accessed through a browser. Like Oracle and SAP, PeopleSoft plans to offer its own applications along with some noncompeting third-party products. GroceryWorks.com and Stratum Med were named as eCenter's first two customers.

To put together its ASP business, PeopleSoft enlisted many outside providers, including Exodus Communications Inc. for data centers; Sun Microsystems for Unix servers; Cisco Systems for routers and hubs; MCI WorldCom for telecommunications lines; and Pilot Network Services for security.

Unlike some enterprise ASPs that charge a low monthly fee to rent enterprise applications, PeopleSoft says it will still require that customers buy the software license outright from the company as well as pay the upfront implementation costs. PeopleSoft will let companies finance the cost of the software over three years, says eCenter general manager Deepak Gupta. The company will offer customers an 18-month ASP license, giving them the option to bring the software in-house if they are displeased with the service. Most ASPs sign three- to five-year contracts with their customers.

One analyst says the company's model will offer customers a mixed bag. "There's an advantage to turning to PeopleSoft if you want all of your applications to be rooted in their technology," says Joshua Greenbaum, an analyst with Enterprise Applications Consulting. "But other ASPs have forged partnerships with many different vendors, offering a mix of applications that the software companies aren't offering." Corio Inc., for example, has signed deals with SAP, PeopleSoft, Commerce One, and Seibel Systems, among others.

PeopleSoft is hiring new project managers to oversee its implementations for ASP customers. The project managers will work with PeopleSoft's consulting staff and outside implementation partners as well as the customers themselves. PeopleSoft will not dedicate any of its 2,000 consultants solely to ASP projects. "Our value proposition is in our service ability," says Gupta, who asserts that the company knows its own applications better than other providers, and it can make those applications work together easily.

By the end of this year, PeopleSoft says it will begin to host the PeopleSoft eStore E-commerce application, customer-relationship management suite, supply-chain management applications, as well as applications for government and higher-education institutions, and business-intelligence applications. The company expects that eventually 40% to 50% of its software revenue will come from ASP implementations, but it did not specify when it expects that to happen.