PeopleSoft introduces hosting offering

PeopleSoft rolled out a range of application hosting and management services Monday, saying that companies are looking to offload day-to-day software management and free up their IT staffs to focus on other tasks.

The Pleasanton, Calif., company added to its hosted software offerings the applications it acquired through its recent J.D. Edwards & Co. buyout, now known as PeopleSoft’s EnterpriseOne and World product lines. It also introduced new service levels for all of its hosted services, dubbed “value,” “enhanced,” and “ultimate.”

The plans offer varying customer-service response and uptime guarantees, ranging from 99.5% promised availability for the value plan through 99.9% availability for the ultimate plan. The value plan is aimed at companies with less than $1 billion in annual revenue, while the ultimate plan is intended to support global organizations with thousands of employees, said Bill Henry, vice president of marketing and strategy for PeopleSoft Global Services.

PeopleSoft offers application hosting services both directly and through several resellers. The new service level plans apply only to services purchased directly from PeopleSoft, Henry said. Pricing varies widely, but Henry estimated that a simple, single application hosting package would start around $10,000 per month. PeopleSoft is also now offering remote management for customers that want to keep their applications and servers in their own data centers, providing them with maintenance such as applying patches and database administration.

PeopleSoft’s expansion of its hosting services comes amid an expected uptick in the applications management market. IDC forecasts that worldwide application management revenue will grow to more than $20 billion by 2007, from $12.1 billion last year. A number of small but vocal dedicated application service providers have been winning business in the lower end of the CRM market from traditional vendors such as PeopleSoft and Siebel Systems, which recently unveiled its own tailored hosted software service.

Companies are increasingly looking to avoid large up-front costs and improve applications performance, while dealing with pared down IT staffs, a combination of factors which will help drive the hosting market, IDC said. “We’ve seen a huge growth rate around hosting,” Henry said. PeopleSoft now has about 60 customers using its hosted services, he said.

Unlike Siebel, though, PeopleSoft does not plan to create new lower-cost applications or services customized for hosting. While the market segment is growing quickly, it remains a small percentage of PeopleSoft’s overall business, according to company executives.