SAP adds to its application-hosting menu

The company on Monday said it is expanding its direct-hosting menu with new services and has named technology heavyweights Hewlett-Packard and Electronic Data Systems (EDS) as its preferred data center providers.

With those two companies as preferred providers, SAP will offer its customers a range of new services including hosting for software implementation and online marketplaces. As part of the agreement, HP and EDS also will provide SAP customers with a range of data center operations such as storage on demand, business recovery services and Web security.

A number of technology providers, including SAP rivals PeopleSoft and Oracle, have placed their bets on application hosting, hoping to cash in on a nascent market that analysts say could be worth $23 billion in the next two years.

Application service providers (ASPs) provide remote access to enterprise software, typically for the price of a monthly subscription. ASPs have maintained that customers can save a hefty percentage in up-front costs by renting software applications rather than buying them.

The overall ASP market is currently in flux, with many players still fine-tuning their business models and figuring out ways to quickly achieve profitability goals. Some ASPs have gone out of business in an earlier wave of consolidation. Analysts have said that, despite a shaky market, ASPs remain a promising and intriguing model.

SAP, which already offers its software via a typical ASP model through providers including Corio, eOnline and Qwest Cyber Solutions, said it wants to give customers the flexibility to choose one of its partners or to go through SAP itself to help them host, manage and maintain SAP business applications.

The company's mySAP.com suite includes core enterprise software that automates a customer's financial, human resources and manufacturing functions, as well as other applications that handle a company's customer call center, marketing efforts, online procurement and supply-chain needs.

As preferred data center providers, HP and EDS, both of which have a long history hosting SAP applications, will assist the German company on different application-hosting fronts. EDS said it will offer data center services to SAP customers for application hosting and implementation hosting of mySAP.com products. HP said it will provide data center capabilities to support the hosting of SAP's CRM (customer relationship management) and supply-chain management software, along with hosting online marketplaces using the Windows NT operating system.

Through its ASP certified partner program, SAP boasts 150 customers, totaling about 77,000 users accessing SAP's software via a hosted model.