Not Just Another Pretty SaaS

It probably says a lot about the state of the IT software market that eProject, a rejuvenated software-as-a-service (SaaS) vendor of project management applications, is considered by some as a viable challenger to Salesforce.com. eProject had $16 million in revenues this year, while Salesforce , expects to generate as much as $720 million at the end of fiscal 2008.

But eProject has somewhat unintentionally created a marketplace for other SaaS vendors that could compete directly with Saleforce.com’s AppExchange.

In addition to its core project management applications, eProject hosts a free application exchange that allows its customers to swap applications they’ve developed themselves using a wizard-based user interface.

The applications could be logical extensions of the core eProject software;

for instance, the IT department of one customer has built a tool linking its

bug reporting application to its development environment.

Or they could be applications, such as product lifecycle management, that

are completely unrelated to core eProject tools.

Tim Low, director of marketing at eProject, told internetnews.com

that he’s seen instances where customers have sold their applications to

other customers via the eLounge on eProject’s collaboration platform.

“To tell you the truth, it’s not something we envisioned when we launched

the eLounge,” he said.

Low noted that eProject doesn’t currently broker or charge a fee for this

marketplace, but acknowledged that the company is exploring this

possibility.

Martin Schneider, an analyst with the451 Group, compared this platform to

both SourceForge, which is an open source community for sharing applications

and code, and AppExchange — the difference being that code on SourceForge

is free while Salesforce.com charges vendors for their presence on the

exchange.

“They’ve taken their cue from Salesforce,” Schneider told

internetnews.com.

If it chose to become an intermediary in the process, eProject would have a

lot of applications to hawk; some customers have already uploaded over a

hundred separate applications for other eProject users to borrow, trade or buy.

Mark Levitt, who follows collaborative computing and the enterprise workplace for IDC, noted that other SaaS vendors are likely to follow suit.

“I expect to see lots of AppExchange-like marketplaces,” he told

internetnews.com.

This type of environment is potentially appealing to small and mid-size

companies with relatively small IT staffs. But given that IT budgets in general are tightening, an ecosystem of SaaS applications may also be appealing to enterprise-level companies.

“Even larger companies may not want to run all these applications on

premises,” noted Schneider.

Levitt predicted that there will be tens of such platforms available by the

end of 2007.

In addition to providing a convenient and familiar environment in which

customers can shop for extensions to their core applications, vendors like

eProject can vet the third-parties, thus helping customers feel more

confident about the vendors with whom they sign on.

“They can trust the applications and not have to check each one out

individually,” said Levitt.

Simple SaaS aggregators like Jamcracker don’t offer this service, he added.

Levitt also noted that more change is likely if and when software giants Microsoft  or Oracle  decide to get in the game in a serious way.

“The other shoe will drop when we see larger application vendors decide what

they’re going to do,” he said.

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