New Canadian service offers business apps online for hourly fee

Ottawa-based Wrapped Apps Corp. is extending a service that helps software vendors convert existing applications to the software as a service model.

The move illustrates the emergence of a market for SaaS middlemen who help developers offer applications on an as-needed basis.

Wrapped Apps has helped software developers convert enterprise software products to run as SaaS applications for about five years, says Gordon Graham, the company’s director of marketing. Its new ElastX initiative will make applications from shareware developers and small independent software vendors (ISVs) available through online marketplaces for an hourly fee.

“The payment model that we’ve devised is kind of like the pay-as-you-go cell phone,” Graham says. “You put $25 into your account, and then every app in the library is available to you immediately.”

Wrapped Apps plans to work with popular shareware download sites to offer “run it now” buttons allowing users to launch online versions of shareware applications without downloading and pay for the time they use. “We’re going to be kind of like the kiosk in the department store,” Graham says.

Software developers won’t pay up front to make their applications SaaS-capable. Wrapped Apps will take a share of revenue from online use of the software.

The idea is getting some good reviews from shareware authors and small developers. Michael (Dr. File Finder) Callahan, chairman of the Shareware Industry Awards Foundation, says he is “really impressed” with the concept and a demo he was given of Wrapped Apps’ process for preparing applications for SaaS use.

“It’ll give shareware authors a chance to take their application and make it available as an online application,” he says.

He notes though that many shareware developers are not well informed about the potential of SaaS yet.

British blogger Tim Haughton sees SaaS as a promising opportunity that ElastX can open up for small software vendors. Haughton, who writes the blog The Agile Micro ISV and is the founder of software developer Agibunto, says the SaaS model will let small developers charge modest fees of those who use their applications once or twice while still collecting more from heavy users.

He doesn’t plan to use Wrapped Apps’ offering to SaaSify the personal document management system Agibunto is developing, though. He says the software needs to work with the desktop operating system to manage documents resident on the PC, and while this could be done with SaaS it would not work with Wrapped Apps’ approach of wrapping the code in an online interface.

For many small ISV’s though, “the idea of being able to have access to a whole new revenue stream without having to do any work at all – it’s a no-brainer. There’s no point in not doing it,” Haughton says.

Graham says Wrapped Apps sees itself providing a platform for the “long tail” (Wired magazine editor Chris Anderson’s term for products aimed at small market niches yet made viable by low-cost online delivery models) of software applications.

Wrapped Apps is not alone in offering software developers a way to SaaSify their wares. Salesforce.com, whose nine-year-old sales-force automation tools make it arguably the poster child for SaaS, launched a service called Force.com last fall that helps both customers and ISVs put applications online.

Salesforce also has an online application store called AppExchange to help ISVs offer their software to customers. Ariel Kelman, senior director of platform product marketing at Salesforce in San Francisco, says ISVs have developed more than 800 applications on Force.com since it went live last year and the company’s customers have built more than 69,000 to run on the online platform for their own use.

Wrapped Apps’ approach differs from Salesforce’s. Developers create purpose-built Force.com applications online, with about 80 per cent of the work done by pointing and clicking and only unique parts of the application requiring coding, says Kelman.

Wrapped Apps takes existing software and “wraps” it with the necessary components for online delivery, and then provides hosting and services – such as online billing – to make it work.

Major software vendors such as Microsoft Corp., SAP AG and Oracle Corp. are all exploring relationships with independent software vendors who would make online applications available through the large companies’ platforms, says Vinay Nair, research manager for application software at International Data Corp. (Canada) Ltd. in Toronto. The approach is sometimes called platform as a service.

These companies could be positioned to play a central role in the software industry as the balance shifts from packaged software to online delivery.

“Microsoft has always had a strong position because they own the desktop,” Nair says, “and I think many companies feel that there are positions up for grabs now in this new computing era.”

Some liken the SaaS delivery platform to the operating system. “I think the operating system parallel is appropriate,” Kelman says. “For the SaaS industry, what we’re providing is a ubiquitous platform.”

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