The News & Observer
Frank Norton, Staff Writer

Kent Hudson and Lee Prevost see big dollars in helping schools run more like big businesses. From tracking inventory to setting budgets and maintenance schedules, educators worldwide are under increasing pressure to upgrade their management systems with software that can reduce overhead.

"We're in the business of improving the economics of the educational system," said Hudson, who co-founded SchoolDude with Prevost in a two-bedroom apartment eight years ago.

The business partners moved into a bigger headquarters -- 30,000 square feet in Cary -- in November and oversee 130 employees. Hudson expects to have 150 by the end of the year and projects sales to rise 37 percent to $18.5 million this year.

Prevost said the company is making money; it's privately owned and does not disclose profit details.

"The biggest challenge we have is the adoption rate of new technology," Hudson said, referring to the sometimes sluggish pace of change in the public sector. "So we have a lot of room to grow."

About 60 percent of new SchoolDude customers still use e-mail and paper files to record, store and get access to data. Many schools and school districts can't afford to buy and maintain information-technology systems.

That's where SchoolDude is trying to make its mark. The company essentially leases any combination of its 14 school-management applications via the Web, an increasingly popular distribution model known as software-as-a-service. The Web-based model appeals to organizations with tight budgets, because many don't want the added expense of buying hardware, licensing and installing software on desktops or servers and paying information-technology experts to maintain it.

More are opting to rent business software tailored to their needs on a monthly, quarterly or annual basis.

"For a lot of public-sector organizations like schools, the core mission in life is not to grow a big IT department," said Laurie McCabe, a software analyst with market research firm AMI Partners. "This allows the organization to get what it needs without having to make big and risky investments."

Worldwide, the software-as-a-service market is projected to more than double from an estimated $5.1 billion in 2007 to $11.5 billion in 2011, according to research firm Gartner. Much of that growth will come from small businesses and the public sector, traditionally underserved markets for business software, analysts say.

Salesforce.com has made a big name in the sector. Local software companies Smart Online and iContact of Durham also use Web-based software models.

For SchoolDude, public outcry over federal budget management and pressure on educators to raise accountability standards are a potential bonanza. The same goes for private-school and higher-education markets.

SchoolDude -- which bills itself as a purveyor of low-cost, easy-to-use software -- has about 3,000 clients in the U.S., Canada, Australia, Austria, Germany, Great Britain, India and Mexico.

But there are potentially 17,000 more in the United States alone, said Prevost, who is president. He said business accountability standards established with the federal No Child Left Behind law continue to fuel sales to clients with 50 to 150,000 students. And competitors, which include IBM, Altiris, Micromain and Eagle, are either smaller in the breadth of services offered or do not cater specifically to the education market.

Local SchoolDude customers include Peace College, St. Mary's School, Ravenscroft School, Durham Academy and the Wake and Chatham county school systems. One of the company's largest clients is the Department of Defense Education Activity, which manages military-base schools worldwide.

New Mexico moved its education system to SchoolDude software in 2006. SchoolDude is working on a similar plan for Arkansas, where Kent and Prevost are making a proposal today to the state Department of Education.

"It's all part of the democratization of software," Prevost said.

This article was originally published by the News & Observer.

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