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Intuit, start-up rent 'app-on-tap'

Intuit is expanding its software rentals to small businesses, joining start-up Upshot.com to offer a sales-force automation package for $1 a day per user.

Intuit is expanding its software rentals to small businesses, joining start-up Upshot.com to offer a sales-force automation package for $1 a day per user.

On Monday, Intuit and UpShot.com will begin promoting the subscription service, which provides software to help sales reps and managers do their work.

Intuit and Upshot.com's partnership is part of a broader trend of renting software to small- or mid-sized companies that can't afford to buy, install, and maintain complicated enterprise software packages.

"The Internet is changing the market as it opens up new opportunities for small businesses, and companies like Intuit are moving to meet that need. With the Internet, there are now new ways to deliver tools to small business," said Cary Masatsugu, vice president of Intuit's Internet small business group. He noted that Intuit already has 5 million small-business customers.

"[Intuit's] bringing interactive services and e-commerce down to the businesses that previously had no access to them because they had zero IT departments," said e-commerce analyst Vernon Keenan of KeenanVision. Most companies with fewer than 100 employees lack a sophisticated computing staff, he noted.

By adding e-services targeted to the small-business users of its QuickBooks accounting software, Intuit gains Internet revenues from the marketing deal. For UpShot, which already sells the same Web-based software, the revenue-sharing deal gives it a jump start.

"If Upshot didn't have Intuit, I would rate it as having no chance," said Keenan. Tim Bajarin, president of consulting firm Creative Strategies adds: "Intuit gets an online application that adds value to its existing site."

Intuit already offers an online payroll service for small businesses, and since February it has promoted MySoftware's Internet prospecting service, MyProspects, an online direct marketing service for sales leads. On the consumer side, Intuit lets taxpayers prepare their returns online by renting the software.

The trend of companies running their applications off site through application service providers has picked up steam in the last year. But most ASPs simply rent the standard software that a software company is selling, according to Ray Valdes, research director at Gartner Group.

"This is one of what I expect to be a new wave [of applications] written from the ground up to run from external providers and shared hosting situations," he said. He mentioned BizTone.com, which is developing a hosted version of enterprise resource planning (ERP) software, as another example.

Upshot.com will maintain and update the sales software but will use hosting service Exodus to run the server farm. That allows Upshot.com to change its applications regularly, rather than waiting for a new major release.

Upshot.com's focus on small companies is somewhat unusual in the ASP market, which has mainly targeted mid-sized businesses, but Upshot chief executive Keith Raffel says larger companies--Hewlett-Packard is beta testing the rental service--have shown interest too. Some want to host the application on their site but have Upshot maintain and update it.