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NetLedger Says It Will Survive

Following yesterday's announcement that accounting ASP eLedger would shut down its service and sell its source code to all takers, the CEO of small business accounting and services ASP NetLedger Inc. insists that his company will not suffer the same fate.

"The pure accounting ASP is a dead end. There's just not enough of a value proposition to go beyond what people are using now. It's not enough to grow a sustainable business," Evan Goldberg, president and CEO of NetLedger Inc., told InternetNews. "We figured this out a long time ago, and we've been adding in new capabilities beyond accounting for several versions now."

NetLedger's product offering, now in version 6.0, includes accounting, payroll, online bill paying, Web store, CRM, HR and customer support – available separately or in an integrated application called NetLedger 1 System.

eLedger, one of the first Web accounting systems for small businesses, announced Tuesday that it will shut down its ASP service effective May 31, blaming an insufficient adoption rate and inability to secure funding.

"It's a tough environment to try to raise money. There are a lot of companies with ideas and code, but not a lot of customers, that have hit the skids," Goldberg said. "We have solid financial backing, as shown by our latest round of funding."

NetLedger announced April 5 that it had secured $30 million of funding from its existing investors, including Oracle CEO Larry Ellison and StarVest Partners L.P.

But the company is definitely not spending indiscriminately, Goldberg said. "Like everyone else, we're doing more with less. We're making sure we spend money at the right time so we'll be around at the time this whole thing explodes. It's going to be gigantic."

Lee Mellinger, eLedger's president and CEO, predicted that NetLedger would follow in the footsteps of eLedger. "I don't see the pure Web-based accounting systems surviving through to the point where ASP accounting is widely adopted. The companies that will be in it in the end are Microsoft, Intuit and Peachtree. I think NetLedger is surviving on time borrowed from Larry Ellison," he said.

"They'll be left standing, but NetLedger will be standing as well," Goldberg said. "We believe their entry into the ASP space can only help accelerate the adoption rate, and the rising tide will only raise NetLedger higher. Their adoption of the ASP model means that it's the model of the future."

Goldberg also took the barb about Ellison with a grain of salt. "Larry is outspoken in his belief in our company, and that's a good thing. He's a believer in this technology just as much as these companies (Microsoft, Intuit and Peachtree)."

Both Mellinger and Goldberg agree that eLedger's demise doesn't reflect any kind of failure in the ASP model. Mellinger called the ASP model a superior method of deploying financial applications, that "will ultimately be the method of choice."

"If you believe that companies will adopt this way of doing business in a streamlined way, it will have to be by the ASP model," Goldberg said. "One of the most exciting things to happen is the change in emphasis from point ASP solutions to integrated ASP solutions. It's been going on for a long time at the higher end. Once the companies at the other end get a taste of it, they're not going to want to let it go."

"In a year or so, when NetLedger is continuing to go strong, you're not going to be hearing these stories – You'll hear about the survivors. We're making sure we won't be going out in a flash before our time has come."