If you build it they will come…and then rent, according to the founders of a new Canadian software portal.
Only a month old, Appstreet.com is among the application service provider (ASP) pioneers ready to take advantage of a young and still relatively untested market. However, despite the market’s youth, experts are predicting big things for ASPs; b
y 2001, 15 to 20 per cent of packaged application software licences will be in the form of rentals, according to analyst firm Forrester Research Inc. of Cambridge, Mass., which has studied the application rental market.
Under the Appstreet.com model, Canada’s estimated 8,000 small software vendors – brimming with good ideas but lacking the marketing muscle of their more established counterparts – can make their product available for rent over the portal, at a fee of one-third of revenues.
Appstreet.com, meanwhile, rents out the software to small and medium companies, especially those which can’t afford to buy all applications they need, but who can certainly rent them on a monthly basis.
According to Geoffrey Genovese, president and CEO of Toronto-based Envoy Communications Group Inc., which owns Appstreet.com, the portal also offers a service that sets it apart: namely, a helping hand. This distinction, he said, makes Appstreet.com an application service developer, rather than an ASP.
“We will not only assist them in marketing, but [we] have built a usability test lab, we can test the usability of the software and improve upon it,” Genovese said. “
That includes revamping the GUI to make it friendlier for novices, and installing e-commerce hooks, including credit card and security functions, to make software Web-ready, he added.
“It depends on what you need,” explained Catharine Devlin, president of Devlin, a subsidiary of Envoy. “The first thing we do is assess your application, then test it in our usability lab and give you recommendations for improving it from a user perspective – it’s functionality, its appearance, its messaging. Then we can…Web-enable it and market it.”
Eventually, Genovese said visitors to Appstreet.com can expect to find a wide variety of applications posted there, including tools related to business and e-commerce, decision support and sales and accounting, among others. So far, at
least 10 companies from the U.S. and Canada have approached Appstreet.com for help with Web-enablement.
While software vendors are capable of renting applications from their own sites, Genovese said Appstreet can give them something they can’t buy – site traffic. And Envoy, which has signed a marketing agreement in the past with IBM Corp. to sell its Decision Room software to vertical markets, said IBM is also ready to partner with a company on Appstreet.com.
But, like other emerging IT trends, the concept of software rental has earned lots of press and popular support, but few proven results. Though the future of the ASP market is rosy, how soon users, particularly those in Canada, will start renting their software remains to be seen, according to Cameron Dow, manager of Canadian software research with International Data Corp. (Canada) Ltd. in Toronto.
“This is an unproven concept, in Canada especially,” he said. “There’s no question that this is going to dramatically change the way companies acquire software. The question is, how quickly will this change take place? In our view, we’re quite a number of years out from seeing this adopted widely.”
IDC Canada, which recently conducted a study on ASPs in Canada, said IT users are still concerned about the lack of customization available under the ASP model – in other words, everything they download is vanilla.
“And the reliability of the service is a big question for Canadian companies; they’re accustomed to e-mail today. And we all know how often our ISP goes down,” Dow added.