ASP pioneer heads West in hosting push

The company next week will announce a three-year application hosting deal with Mountain View, Calif.-based software maker Sagent Technology as part of a broader strategy to extend its hosting services nationally. Interpath, based in North Carolina, has concentrated so far on the Southeast region of the United States, providing application hosting services to businesses such as Hitachi, Ericsson, Blue Cross/Blue Shield and Virginia Power.

While not necessary, analysts say a national presence for Interpath could help the ASP establish a strong foothold in a potentially huge market.

"This is a step in the right direction," said Bill Martorelli, an analyst at Hurwitz Group. "They're often viewed as a regional player...This is certainly attractive (for them). It's hard enough to find an ASP customer (anywhere) without being limited to a geographic niche."

Under the ASP model, customers pay monthly to have their software hosted and maintained by a service provider. Typically, the company pays for the software license up front and forms a three-year maintenance agreement with their ASP, ridding them of having to deal with software upgrades or technical problems.

Interpath entered the market early alongside Corio and USinternetworking, but the market has since spurred attention from a number of companies, which has expanded the competitive landscape. PC hardware makers such as Gateway and Dell, telecommunications firms including AT&T, and giant software makers SAP and Oracle are all trying to get a piece of the action in a market analysts say could be worth $23 billion by 2003.

"We've been working hard on expanding our business to a national business," said Michael Fox, interim chief executive officer at Interpath. "(ASP) is an emerging market. We're still in the early stages, but we're seeing a lot of customer activity and interest in the marketplace, a lot of momentum and potential."

Martorelli added, "Everybody's getting into the act...At this point, every customer win is a significant event."

As part of the deal, Interpath said it will remotely host and manage SAP's human resources application for Sagent, which is also currently a partner of Interpath rival USi. Interpath partner IBM Global Services will implement and provide support services for SAP's software that will reside on servers from Sun Microsystems, another Interpath partner.

Fox said Sagent's employees will be able to access and modify data using the Internet for all of their human resources requirements, such as employee benefits, health benefits and other personnel needs. He added that Interpath will initially host the application for 500 users but said that number is expected to grow to 2,000 users in the next two years.

Interpath said services have already begun at Sagent, and the company will be up and running within 60 days.