Hosted Services Gain Ground

Despite years of trying to get off the ground with enterprise users, the hosted software business may be getting some traction—particularly among small and midsize businesses.

IBMs acquisition of Corio Inc. earlier this month for $182 million is expected to boost the Armonk, N.Y., companys hosted application services business in the SMB space, where Corio has a strong presence. Corio, of San Carlos, Calif., hosts ERP (enterprise resource planning) applications from the likes of Oracle Corp., PeopleSoft Inc. (now part of Oracle), SAP AG and Siebel Systems Inc.

Oracle itself is putting a lot of resources behind its On Demand business, currently the Redwood Shores, Calif., companys fastest-growing division. In January, Oracle named Jeurgen Rottler as the new head of support for PeopleSoft applications, combining that with its On Demand business, which Rottler also heads, to better align the two areas.

At the same time, smaller companies offering software as a service—Intacct Corp. and NetSuite Inc., for example—are coming out with new functionality.

Intacct, of Los Gatos, Calif., offers a joint ERP software package with IBM. The company plans to announce in April several customized hosted offerings, including Accounting Outsource-in-a-box, ERP-in-a-box and ISV-in-a-box, to help users quickly get on board with the software-as-a-service model. The products provide a step-by-step plan to help smaller companies streamline business processes and enter new markets through business enablement services, training, marketing strategies and joint business planning, Intacct officials said.

Jack Pearce, chief financial officer and chief operating officer at Navis Logistics Network, a shipping company with about 150 franchises nationally, is using Intaccts hosted software for internal accounting.

"We believe in the hosted software system. We waited around as long as we could to see who was going to survive," said Pearce in Greenwood Village, Colo. "Our ability to extend out to new [entities] and extend the same continuity of data flow [is crucial]."

Likewise, NetSuite, based in San Mateo, Calif., announced earlier this month two new modules, Revenue Recognition Module and Advanced Financials Module, to help users to flexibly recognize revenue according to GAAP (Generally Accepted Accounting Principles) and other reporting standards.

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