FreeMarkets takes a run at ASP field

FreeMarkets, a provider of business-to-business exchanges, unveiled software that companies can rent in order to build and operate private marketplaces.

FreeMarkets, a provider of business-to-business exchanges, on Thursday unveiled software that companies can rent in order to build and operate private marketplaces.

Hosted by FreeMarkets, QuickSource is a set of applications that enable a company to create and manage such a marketplace on its own, rather than handing over those responsibilities to a third party.

Would your company use a online marketplace?YES

The new offering marks a change of pace for Pittsburgh-based FreeMarkets, which usually functions as that third party. With QuickSource, the company is taking on the role of an application service provider (ASP), renting software to customers on a subscription basis--and thus providing an alternative to its traditional line of business.

FreeMarkets has been making moves to broaden its portfolio and provide more than just marketplace-enabling technology and services. Last week, it acquired collaborative e-commerce maker Adexa for approximately $340 million.

Online marketplaces, also known as exchanges, come in two forms. Businesses can set up private versions to buy products from their supplier partners, and they can participate in public marketplaces that are open to other companies in their industries, from high-tech to automotive to fishing.

The ASP concept, meanwhile, has caught on among businesses that find the services provided to be an attractive alternative to installing and maintaining software themselves.

The ASP model isn't for everyone, however. Many providers have run into trouble, with most having a hard time honing their business models so they can reach near-term profits and increase their customer base.

That said, analysts consider the business-to-business market fertile ground for ASPs, as marketplaces look to ditch the cost of managing the software and to add services to their sites.