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Pandesic turns to Pricewaterhouse for momemtum

Despite backing from Intel and SAP and a highly touted debut, the e-commerce software maker hasn't found its niche in what has become a highly competitive business.

Pandesic seemingly had it all when it launched three years ago: wealthy parents in chip giant Intel and software maker SAP, as well as an inside track in the market for e-commerce software.

Yet despite its pedigree and the flurry of fanfare that accompanied its inception, Pandesic has yet to find a profitable niche in what has become a highly competitive business.

To broaden its somewhat limited sales channel and regain some of its lost momentum, Pandesic today inked a joint distribution deal with Big Five consulting house PricewaterhouseCoopers in an effort to sell its software and hosting services to a wider range of customers.

With the alliance, Pandesic and PricewaterhouseCoopers are aiming to generate $1 billion in revenues during the next three years, the two companies said today.

The deal has the potential to jump-start Pandesic, which has yet to live up to its grand entrance, analysts said.

"Pandesic got a lot of attention because SAP and Intel were hot (in 1997)," said Jim Shepherd, an analyst at Boston-based AMR Research. "At that point, there really wasn't anyone doing what they were setting out to do...It looked good and (what they were offering) sounded good."

However, the company "still hasn't generated a lot of money," Shepherd said.

With Pandesic, Intel and software giant SAP hoped to cash in early on a fast-growing market. The reality is that Pandesic has struggled to meet profit targets and has experienced a management shake-up amid disappointing sales. The company says it has roughly 100 customers.

"Pandesic was overshadowed from a hype perspective," Shepherd said. "It turned out what Pandesic had to sell was not as complete as people thought it would be. A lot of the (software) was re-worked (SAP back-office) R/3 software. It wasn't as cool and Web-centric as the hot new products that were coming out" from companies such as Ariba or BroadVision, he said.

Initially, Pandesic provided a packaged comprised of business applications from SAP, Intel-based PC hardware, Web site management and support to quickly get small and midsized companies operating on the Web. At the time, only a few companies were offering a so-called one-stop shop to help build and host Web sites.

Eventually, Pandesic broadened its offerings to provide e-commerce software that allows companies to conduct more complicated transactions with their suppliers and partners over the Web. The company also jumped on the application service provider (ASP) trend, offering hosted applications and services.

Shepherd said that while the PricewaterhouseCoopers deal should help raise Pandesic's profile, several newer e-commerce firms, considered to be more hip to the Internet, have sprung up during the past three years. Though Pandesic has been able to reap the benefits and resources from its large, more established parent companies, many customers favor smaller firms offering similar products and services.

Today's deal makes PricewaterhouseCoopers the preferred systems integration and consulting provider for Pandesic's e-commerce products to joint customers. In turn, Pandesic gains another avenue for potential sales and new customers.

"(This deal) gives (Pandesic) an even more complete offering and...an opportunity to go after Fortune 1000 companies" and expand its existing customer base, Shepherd said.