Web Firm Enters New Market

A local technology firm, after striking a deal with Columbia’s Sequoia Software Corp., is entering the lucrative applications service provider industry and potentially starting a new company.

E.magination network llc, a Baltimore Web development and interactive design firm, has leased its LiveFluence application to Sequoia Software.

The deal, which involves Sequoia Software paying initial fees of $1,500 for each of the 15 licensing agreements, marks e.magination’s first major deal for its applications service provider division.

“It’s a division now and it could turn into a new business,” said Brian Ocheltree, CEO of e.magination, which recorded about $7 million in sales in 1999 and is on pace to top $12 million this year.

The applications service provider industry is currently worth $300 million. Boston-based IDC, a technology research firm, projects the industry will generate more than $7 billion by 2004. Other research groups put that figure even higher.

The Yankee Group, a Boston research group, projects the industry will generate $11 billion by 2002.

ASP market

“Talk to anyone these days and they will tell you they want to be an ASP,” said Jason Goldberg, an analyst with Global Ventures in Phoenix, Ariz. “And there are reasons why that’s the case — they’re called dollars.”

The ASP model basically allows software to be leased from the host company for a monthly fee. Annapolis-based USinternetworking Inc. has been credited as one of the first companies to develop a successful ASP business model.

LiveFluence, which is a customer-relations application hosted by e.magination, allows users to interact with customers on a one-to-one basis in real time over the Internet.

Because the application is Web-based, users can access it from anywhere as long as they have access to the Internet.

As Ocheltree explained, companies will no longer be bound geographically when it comes to recruiting customer support staff.

Rick Faint, chief executive officer of Sequoia Software, said e.magination’s product will enhance the company’s customer service quite a bit. Sequoia Software will pay e.magination $150 per month for each user.

“LiveFluence gives Sequoia an easy to use, cost-effective tool for serving the needs of our customers who use the Web to communicate with our support personnel,” Faint said.

The deal with Sequoia makes sense for e.magination on a couple levels. The fact that Sequoia Software develops Internet portals for business-to-business clients using extensible markup language (XML) is a definite advantage, Ocheltree said.

“These guys are pioneers in XML,” Ocheltree said. “They not only will be using our applications to help them with customer support, but they will be acting as a reseller.”

Potential clients

Other local clients who are using LiveFluence and reselling it include SkynetWeb Ltd., of Baltimore, and e.ssociation llc, a Baltimore company with ties to e.magination.

Ocheltree declined to say how much any of the deals are worth for the 110-employee firm.

Ocheltree said e.magination has other deals in the works with potential clients and resellers — even one that would take them to Asia.

“We’re working with a firm to launch LiveFluence in [South] Korea,” he said. “The application would be the same, but in Korean.”

With the international ASP market expected to explode, according to industry research, timing appears to be in favor of e.magination’s movement into the sector.