SA software company PeoplePlus believes too many local companies are paying for business software services they don’t need. It wants to change this flaw that it thinks exists with free basic online human resources (HR) and payroll software. Premium features are available for a fee.

It’s a new approach for enterprise software companies, which typically sell full-featured packaged software to their business clients. PeoplePlus says the bulk of customers will still benefit from the free offerings alone.

Wired magazine editor Chris Anderson — author of The Long Tail and Free, both of which talk about the “freemium” model — gave PeoplePlus a plug during a presentation at a leadership summit in Sandton last week, saying that as IT services move online, “freemium is becoming the default model for all business-to-business services”.

PeoplePlus’s free offerings include the ability to manage employee HR information as well as leave and disciplinary administration. It can also store training information and details of which employees have completed which training courses, and subscribers can use it to recruit staff via the PeopleFind website. It offers a document manager and the ability to manage payroll and produce pay slips, too.

The application is aimed squarely at business users and is compliant with SA Revenue Service (Sars) regulations.

Richard Baird, a strategic adviser to PeoplePlus, says competitors are reluctant to release Web-based services for fear of “cannabalising” existing revenue streams.

Baird says users can add or remove premium features from month to month. There’s no need for a long-term contract, he says.

The first of PeoplePlus’s premium offerings allows users to generate HR reports, such as forms that need to be submitted automatically to Sars.

Other premium products generate employment equity reports, performance appraisals, help manage workflows for professional staff and even create workplace skills plans, which can lead to rebates from the taxman.

The service has been in pilot for the past four months, but has already received more than 400 sign-ups.

But will it make money, especially given that most of the basic services are available for free? Baird thinks so. “Even if only 5% of users pay for the additional features, that doesn’t mean the other 95% are totally unprofitable.”

The free users create other sorts of value, like word-of-mouth marketing about the service, he says. — Craig Wilson, TechCentral