ELabor.com Has High ASPirations for Plan
At first glance eLabor.com’s new business plan may seem a bit unusual: Develop and market software--but do not package it, do not ship it through conventional distribution channels, and do not install it on buyers’ computers.
But executives at the software company say that plan could more than double the firm’s size and poise the private company for an initial public offering by next year’s first quarter.
ELabor.com, a developer and distributor of work-force management software--applications that help companies keep track of time cards and long-term projects--is offering its software through the Internet. In doing so, the company has sidestepped the need to package its software, ship it and install it on clients’ computer networks.
The move has put the firm in the throes of a burgeoning market in which companies called application service providers (ASPs) charge clients to access software remotely through high-speed data lines.
The 17-year-old company, which was formerly known as jeTech Data Systems, has historically sold specialized labor-management software that is installed on a company’s computer network. The firm will continue to distribute its software that way. But now it will also provide software that runs on eLabor.com’s Web servers, instead of the network at a client company’s headquarters.
That means companies don’t have to install the software on their own computers nor do they need to pay computer experts to keep it working. Rather, employees need only open a Web browser such as Netscape to “punch” the time clock, check how much vacation time they have or swap a shift with a co-worker.
“You get all of the benefits of the application itself, but you don’t have any of the headaches behind it,” said Michael Edell, eLabor.com’s co-founder, president and chief executive. The software “no longer is a product. It really becomes a service.”
ELabor.com has attracted roughly 20 companies to the ASP software package since it began selling the product in January, Edell said. Clients who use eLabor.com software through the Internet pay a monthly fee. Edell estimates the cost at around $2,000 to $4,000 a month, but fees vary depending on the size of the client company, he said.
For the money, companies get access to a software package they can customize to keep track of schedules, allow employees to arrange for days off, and manage independent contractors and long-term projects. There are other perks. For example, employees can set up message boards where softball games are scheduled and ideas discussed.
But are ASPs just another Web gimmick or are they the wave of the future for distributing software?
“This looks like a very viable model,” said Jack Kyser, chief economist at the Los Angeles County Economic Corp., which monitors Ventura County business trends. “It’s getting very, very difficult to manage all of your employee issues. Anything that helps [companies] operate more efficiently is going to be very, very valuable.”
Edell is counting on it.
ELabor has raised a combined $23.5 million since 1998. He would not disclose the company’s profits or losses. The recently acquired funding will be used in part to buy several small companies, the names of which Edell would not disclose. He returned last week from an East Coast trip that could lay the groundwork for eLabor.com to acquire two small firms, which could add new features to the eLabor software package.
In a similar move, eLabor bought three small companies last year--including one that will allow it to provide project-management software over the Internet.
Meanwhile, the company is preparing to launch a marketing plan to attract a new stable of clients to the ASP service. Accessing eLabor software through the Internet is cheaper than buying it, said Mark Friedman, the company’s chief operating officer. So, launching the ASP division of eLabor opens a huge market of mid-sized businesses that couldn’t afford the company’s products in the past.
“It’s an important strategy for us,” he said. Conversely, attracting some of eLabor’s long-standing clients to the Web-based system may be difficult. ELabor still distributes software using traditional methods to large clients such as Sony. The software is expensive, and firms that recently upgraded their employee-management applications aren’t eager to switch to eLabor’s Web-based services.
For example, Jeff Schimmer, director of information systems at Sony Disc Manufacturing in Springfield, Ore., spent the last year installing eLabor software on the networks of four Sony facilities throughout the country. After that effort, he’s not ready to switch to the ASP service yet.
“We’d really have to cost justify it, and I don’t know that we can do that right now,” he said.
Edell plans to offer incentives for traditional clients such as Sony to switch to ASP.
Schimmer is so impressed with what he’s seen of the ASP system that he wishes it had launched sooner. “If we were doing this two years ago and they had their product then, we’d save a lot of money on payroll and all those kinds of things,” he said. “It’s a great idea.”
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