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SAP, HP Bundle Up Managed Service

SAP and HP are bundling their best-known products into a new managed service, the companies said today.

The platform is a combination of SAP's MySAP ERP platform running on top of HP's Adaptive Enterprise. The pact is targeted at mid-sized companies that pull in between $100 million and $1 billion in annual revenue.

Starting at $325 per user per month, SAP and HP said they will install a VPN client for the managed service, which includes software and implementation services from SAP, as well as maintenance and end-user training, support, functional management and application management.

As the data center provider, HP said it will take care of operations, infrastructure hosting, storage-on-demand, business recovery solutions, managed Web solutions and security. HP said its infrastructure for the SAP partnership runs on Microsoft SQL Server and NT, because the company wanted to offer an easy comfort zone first. HP is also considering expanding its per-user model relationship with SAP to run on HP's morphing Utility Data Center (UDC).

"Typically most of these customers are working on limited IT resources, and they may be making an investment in other areas than infrastructure," Gary Fromer, a senior vice president with SAP America told internetnews.com.

"They also have a specific comfort zone. They want to dial into the system and run their businesses. This solution is not just for back-end or client devices. Some of these customers are using devices that read information and transmit that to the database, such as a food scale or RF [scanner] gun."

SAP and HP already have a working relationship, such as their alliance in 2002 on business portals.

David Booth, a senior vice president in the Enterprise Customer Segment for HP, was especially quick to defend HP's pricing model against Sun's current utility pricing model.

"Our solution was jointly developed and is not another me-too, low-end generic modeling infrastructure offered at a discount. Nor is this a niche offering," Booth said.

Likewise, Fromer said the current battle between Oracle and PeopleSoft was incidental because SAP already has the lead in the ERP marketplace, adding that his competition's turmoil only puts SAP in a stronger position.

Posturing aside, analysts like Mike Gilpin, a vice president and research director at Forrester Research, suggest that the greatest potential value lies in management automation, especially in lowering cost of ownership, in the indirect costs of configuration and administration. However, he said his sense of the demand for this kind of offering, more utility pricing oriented, is that it is not strong.

"I don't think that when most potential customers of this kind of offering add up the various pricing options that they see the per-user pricing as being as attractive as they might have hoped," Gilpin told internetnews.com. "I do occasionally see companies that are in unusual businesses with very elastic demand for workload looking at how new pricing models could help them. But that's the exception rather than the rule."

Fellow Forrester analyst Randy Heffner also said the announcement is significant given SAP's track record.

"SAP has a good program of partnering with hardware vendors and certifying high-end server features for interaction with SAP's software," Heffner said. "I don't have the specifics on certifications related to adaptive computing, but I would expect that if they are not there already, that SAP and HP are working on them."

SAP and HP estimate they already have 300,000 customers running on the joint service in early contracts with customers such as Implico GmbH for oil and gas fuel distribution, GEMS, Inc. for technical service providers and Bristlecone for high tech devices.