JamCracker
By Melanie Warner

(FORTUNE Magazine) – Software portal for midsized companies HQ: Sunnyvale, Calif. Founded: 1999 Sales: N.A. Employees: 190 Stock: Privately held Address: www.jamcracker.com

In K.B. Chandrasekhar's idealized vision of the future, the modern corporation will own no software. It will all be rented from some other company and housed inside a giant, humming server farm. Part one of this vision is Exodus Communications, the company Chandrasekhar, who goes by "Chandra," founded in 1995 to run these server farms. Part two is JamCracker, a startup Chandra, 40, launched this year.

The idea for JamCracker is this: Just as companies outsource management of the equipment that runs their Website, Chandra believes companies will also want to outsource much of the software they use in their IT operations. A corporate customer would pay JamCracker a monthly fee to manage its software and make application programs available to employees over the Internet.

Chandra plans to offer programs from a new class of software company called application service providers, or ASPs, which charge monthly fees for software rather than selling a license for a lump sum. When employees open a Web browser and sign onto the JamCracker portal, they will find all the applications they need--from e-mail and expense reports to spreadsheets and more complicated software--in one place. JamCracker has cut deals with about a dozen ASPs, saving customers the headache of managing each relationship separately.

Chandra, a native of India who came to the U.S. in 1990, is aiming his IT-department-in-a-box at midsized companies, or what he calls the "unfortunate 5,000." He's steering clear of small businesses, which don't need much software, and of large companies, which already have complex software systems of their own. Medium-sized businesses, on the other hand, often have trouble hiring capable people to manage their growing IT operations.

The biggest risk for Chandra is that JamCracker may be too early. So far it has ten customers, whose monthly fees range from $60 to $200 per employee, depending on the number of applications to which they have access. Despite the fact that Valley executives have been talking up software outsourcing for some time, International Data Corp., of Framingham, Mass., estimates that the size of the market last year was just $300 million. "The world is definitely going this way, but it's not moving as quickly as some people would lead everybody to believe," says Clare Gillan, an analyst at IDC. That's okay, says Chandra: "High risk, high reward has always been my motto." Indeed, when Chandra started Exodus no one thought companies would want to outsource their Web servers. Now the market for data centers is $3.7 billion. And Chandra's net worth is a cool $630 million.

--Melanie Warner