US accounting software vendor Peachtree is the latest and probably most significant entrant in the application hosting market.
The Atlanta-based subsidiary of the Sage Group this week launched ePeachtree, a Web-based accounting suite that users can rent for $9.99 a month.
The software rental model allows small businesses to get accounts and business reporting systems up and running with no capital outlay and none of the headaches associated with software and network configuration.
The system lets customers access their financial application from any computer connected to the Internet, allowing them to order new stock from a customer's site, or to enter expense information while waiting at the airport. "You could even check your financial information while on vacation," Peachtree advises.
The company is promoting ePeachtree with free 90-day trial offers, with the fee rising to $9.99 per month thereafter. The license fee allows a named accountant to access the client's data and additional users cost $4.99 per month.
Peachtree is following the footsteps of accounting application service providers (ASPs) NetLedger (backed by Oracle CEO Larry Ellison) and eLedger, but unlike these start-ups Peachtree already has a large customer base.
"The new insurgents like Netledger and eLedger haven't worked out that deploying an accounting ASP is easy, supporting it is not so straightforward," Sage Group business development manager Andrew Buckley told AccountingWEB. "You need to offer the after-sales support that any mission-critical software package requires. That's where we think our expertise in the accounting and payroll market will come to bear."
Buckley said that with ePeachtree, Sage was "dipping its toe" into the ASP market. "We're gauging what level of user interest there is and what pricing and user models work," he said.
Web-hosted accounting systems are more likely to appeal to entry-level businesses than established software users, Buckley predicted. "There is unlikely to be a wholesale migration of exsiting users of desktop software in the short to long term," he said.
"People have a lot of time and experience invested in their packages. By and large they're performing very well and meeting their needs. There are also issues about having core business data hosted elsewhere."
The ePeachtree system looks like it will be the prototype for the rest of the group's ASP offerings - which are one of its stated strategic objectives. But the different local ingredients and business models still need work. "We're going to look and see how ePeachtree works and see the extent to which we can use its components for a common global platform," said Buckley.
"With the traditional desktop business, we have very different products in each market, which reflect different accounting practices, business rules and legislative environments. To a large extent, having different offerings is going to be true for hosted products too."