Customers want results, not applications

Some of the fastest-growing on-demand providers, especially those serving the small business market, are using software to deliver complete business services rather than just applications. The combination of an on-demand software infrastructure with real-world processes allows these companies to deliver business services much faster and more cheaply than conventional methods.

One example is VistaPrint, which made its Nasdaq market debut last Friday (ticker: VPRT), and which came 7th in this year's Deloitte New England Fast 50 ranking having grown 1,989% over the past five years. The company provides graphic design services and customized printed products, mostly business cards, stationery and brochures, for small businesses of 10 or fewer employees. This excerpt from its pre-IPO SEC filing summarizes how the business works:

"We have standardized, automated and integrated the entire graphic design and print process, from design conceptualization to product shipment. Customers visiting our websites can use our graphic design software to easily create and order full-color, personalized, professional-looking printed products, without any prior graphic design training or experience ... Our proprietary, Internet-based order processing systems receive and store thousands of individual print jobs on a daily basis and, using complex algorithms, efficiently aggregate multiple individual print jobs for printing as a single press-run. By combining this order aggregation technology with our computer integrated print manufacturing facilities, we are able to significantly reduce the costs and inefficiencies associated with traditional short run printing and can provide customized finished products in as few as three days from design to delivery."

This is a different take on how to use software than simply creating applications. Software is core to the success of VistaPrint's business, but it is part of a complete, end-to-end integrated service that delivers a finished result.

Another company in the same vein that has just priced its IPO is WebSite Pros, which is in the business of providing websites to small businesses. Originally, it thought that meant offering professional site building and hosting as an on-demand service. But in recent years, it has discovered that there's more money in providing on-going services that help small businesses generate leads through their websites. Its customer base didn't want a website just for the sake of having one; they wanted one that actually produced results.

The company's fixed-price site-building service is still important for getting new customers online, but most of its revenues now come from monthly subscriptions to its website marketing and visibility services. These are highly automated, software-based services, but as with VistaPrint, what matters to customers is the way it has put those services together to deliver an end result.