ORLANDO -- SSA Global is ratcheting up plans to offer its enterprise software as hosted application services in a bid to attract new customers and to offer existing clients lower-cost of ownership alternatives to standard licensing arrangements, company executives told Managing Automation yesterday at SSA's annual user conference here. The initiative, which has been incubating for the last year, includes approximately eight projects that are testing the feasibility of hosting and delivering application services within core ERP and key product extensions to customers using SSA infrastructure, according to company chairman and CEO Mike Greenough. Discussions have in fact reached the point that SSA executives are scheduled to gather at company headquarters in Chicago next week to discuss packaging, according to Ross Garrity, executive vice president of global operations. SSA is already quietly testing the application services waters with its Transportation Management System (TMS), Greenough said, in an interview. Moreover, the company recognized $50 million in its recently completed fiscal 2005 from what Greenough termed "non-traditional" software delivery -- a code phrase for hosted applications that may or may not be paid for on a license basis. Mid-market companies, particularly those run by entrepreneurs or sole proprietors, are seeking alternatives to software licensing arrangements, Greenough said. "They are smart -- you need to give them [other] options,' he said, pointing to the significant customer cost advantages of the software as a service (SaaS) model, which carries a monthly, per-seat subscription fee and reduces the need for dedicated personnel and infrastructure. Greenough said a SaaS strategy would also enable SSA to move downstream (the average selling price of SSA software is $100,000) and build market share -- a key pillar of the company's growth-by-acquisition strategy. "We see it [primarily] as an opportunity to grow business rather than replace business," he explained. Without providing specifics, Greenough said the initiative could be launched with minimal cost after establishing a workable pricing structure, since SSA has available data center bandwidth which could be adapted to applications hosting. "Our products are capable of doing it -- short of a [dedicated] billing system," added SSA chief technology officer Cory Eaves, who said embracing a SaaS model presented few technical challenges given the availability of off-the-shelf virtualization packages that enable developers to deliver one instance of software from multiple application servers. "We have the data center and web-based products -- the real question is to get the business model right. The focus now is on how to do it." Offering its transportation management system as a hosted application service has provided SSA with some proof of concept insights, Eaves noted. Customers use this application, in part, to identify and track the flow of goods handled by their logistics partners. "We have all the large [logistics companies] integrated into the system so when a customer signs with a new one they don't have to worry about integrating [systems] with them," he said. Customers apprised of the SaaS initiative were curious to hear more, but, not surprisingly, were intrigued by potential cost-of-ownership benefits. "This is a new [technology] cycle; [SSA] will have to prove that it is cost effective," noted Nancy Schoeben, chairperson of SSAU, an independent 600-organization user group. "Companies will be cautious." The recent resurgence of SaaS after the crash and burn of the application service provider (ASP) model earlier in the decade is contributing to the wariness. Times have changed, however, noted SSA's Garrity during his keynote address, in which he pointed to 90%-plus reductions in the cost of computers and disk storage and nearly a 50% reduction in communications -- not to mention business users' growing comfort with web-based applications. Don't be surprised, Garrity said, if SSA partners with IT outsourcing and business process management specialists to build the critical mass necessary to make its SaaS offering economical for both the vendor and user companies. The success of Salesforce.com and the determined pursuit of SaaS by other vendors big and small has also changed the competitive imperative, observers noted. SaaS enterprise applications players include companies such as NetSuite, which offers an integrated suite of hosted CRM and ERP applications, and Intacct, which provides financial accounting packages and recently announced tight integrations with PLM purveyor Arena Solutions and Salesforce.com. The Salesforce integration targets companies that want to manage customer interaction from opportunity through order placement and revenue recognition. SAP is rumored to be experimenting with an on-demand version of its mySAP CRM, while Oracle already provides hosted applications as part of its "on-demand' initiative, but on a licensed basis. Integration, along with security, are challenges which could limit SaaS's appeal to larger companies, particularly those that frequently roll-up financials across multiple locations, and conduct business in multiple currencies. "Customization is [even] more difficult," Eaves pointed out. Nevertheless, Eaves pointed to core ERP and CRM functionality as possible SaaS offerings. CRM application services from soon-to-be-acquired Epiphany is a "logical candidate" for inclusion in SSA's SaaS strategy, Eaves said, given its web services foundation in J2EE. Moreover, he said SSA ERP LN -- the company's Unix and Windows enterprise applications platform -- is "absolutely a possibility" because of its scalability, browser interface and ability to use XML to move data. Like previous ERP extensions in supply chain, customer relationship and corporate performance management, Greenough envisions a try-and-buy approach in which customers could get access to hosted applications as part of their maintenance agreements. If SSA moves forward with a SaaS approach, Greenough said the company will likely go into the market with a big bang by blending organic capabilities with acquired technologies and best practices. "If you know my track record, you know I don't like to do things one off," he promised.