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PeopleSoft makes an investment in Corio

The enterprise software firm makes an equity investment in Corio, a startup application service provider, and agrees to a joint research and development deal.

Enterprise software firm Peoplesoft is making an equity investment in Corio, a startup application service provider.

In addition to the investment, the companies today said they've also inked a joint research and development deal, and will market and sell services together to eliminate overlap between the two firms, a spokesperson said.

Pleasanton, California-based PeopleSoft also named Corio a preferred long-term vendor. That means Redwood City, California-based Corio, which is dependent on its partner vendors for the applications it rents to its customers, will have a stable agreement with PeopleSoft for at least five years, the company said.

Corio offers its customers packaged financial, manufacturing, and human resource software from PeopleSoft, and hosts those applications in data centers run by Exodus Communications and other centers.

The privately held company has been a PeopleSoft-certified outsourcing partner since November. Corio also partners with supply chain firm Flextronics, and Internet management company Marimba.

Headed by former ADP electronic services executive Ron Clarke, Corio is targeting mid-sized companies that can't afford to invest thousands of dollars in buying and supporting business applications. Instead, those businesses pay a fee to Corio, which then manages applications for them as customers access software via the Internet or leased line.

Among Corio's competitors is Annapolis, Maryland-based Usinternetworking, which went public last week.

Like Corio, Usinternetworking also provides Internet-based access to applications from PeopleSoft, and separately with e-commerce vendor BroadVision, and customer management software maker Siebel Systems.

The application service provider (ASP) market also includes much bigger players, such as USWeb/CKS and EDS, a firm that has a large outsourcing deal with PeopleSoft rival SAP.

Framingham, Massachusetts-based research firm International Data Corporation expects spending in the high-end ASP market to reach $2 billion by 2003.