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PeopleSoft Expands Hosting Offerings

Enterprise software provider PeopleSoft Inc. on Monday announced an expansion of its application hosting and management services to include a new pricing structure and the availability of hosting for all of its product lines.

"It's really an expansion of our retail business," Bill Henry, VP Marketing and Strategy, PeopleSoft Global Services, told ASPnews. "We're continuing to invest more money, more energy, and more leadership in growing our hosting business. We see this market as a very high-growth market."

The new PeopleSoft Hosting portfolio includes PeopleSoft Enterprise, which has been offered as a hosted product since 1999, as well as former J.D. Edwards products PeopleSoft EnterpriseOne and PeopleSoft World. PeopleSoft Hosting now offers three levels of service, enabling customers to select the solution that best suits the needs of their organizations.

The Value offering provides customers with a service level agreement that delivers 99.5 percent availability and can support up to 100 concurrent users. In addition to the benefits delivered by the Value service, the Enhanced service offers customers expanded hours of operation for customizations and unique enhancements. The Enhanced service level also offers 99.5 percent availability and can support up to 300 concurrent users. The Ultimate solution offers the highest level of service, reliability, support and performance. Ultimate can be tailored to meet the most robust requirements with up to 99.9 percent availability and 24x7 support.

This is an expansion of a long-term partnership with HP that is now in its second year. "We're bringing to the table the best of what HP offers, which is their experience running a large, complex, mission-critical datacenter. We're leveraging the best of what PeopleSoft offers, which is the deep application experience and the ability to make customers successful with the application management services. We're putting those together to have a world-class solution for our customers," Henry said.

In addition, PeopleSoft now offers a Remote Hosting option, for PeopleSoft customers who prefer to keep their applications and servers onsite. Customers maintain their own IT infrastructure, while PeopleSoft provides application maintenance support such as applying patches, proactive performance tuning, and database administration.

"We have more and more customers coming to us, asking us for help managing their applications. They've had their IT staff cut back significantly over the last couple of years. They're looking to go out and devote their IT staff to driving their business ahead and investing in things that will help them lead their industry rather than having the bulk of their IT resources spent maintaining their legacy applications," Henry said. "Many of our customers are looking for application management, and more than 50 percent are interested in exploring the full hosting capability."

While PeopleSoft Enterprise has been available as a hosted product since 1999, the latest offerings bring new value to the table, Henry said. By taking the intellectual property built up by hosting the applications for four years, PeopleSoft was able to streamline and reduce the cost structure of providing the services. The new services will be roughly 10 to 15 percent less expensive than previous offerings, he said.

Also, the new configurations give customers more choice about the right level of performance and support required for their business. "We're trying to give the customers the ability to pick and choose what capabilities they need so they can have the least expensive solution that's able to deliver on their requirements," Henry said.

PeopleSoft Hosting became part of PeopleSoft Global Services in the second quarter of this year, as part of the integration with J.D. Edwards. A hosted offering will be a crucial tool to help customers upgrade from former J.D. Edwards products to current releases, Henry said.

"Some of the former J.D. Edwards customers, for example, who are on the World platform, would be going from there to Enterprise One 8.9, which is the current release. There's a pretty significant technology change there. The availability of hosting as a tool so they don't need a big investment in IT hardware, they don't have to go out and improve their IT capabilities in-house to be able to support this," he said. "What it does is make it easier for customers to take advantage of the new functionality that's available in Enterprise One 8.9."

This evolution of its hosted portfolio reflects an increase in customer demand for a hosted option. Customers want help to run their applications more efficiently, to get more out of the applications on an ongoing basis, Henry said. From a financial standpoint, this type of product will be useful in expanding the scope of service offerings and driving a larger recurring revenue base for the services business, he said.

"Application hosting has evolved from the domain of early adopters into a mainstream strategy for companies looking to focus on innovation and offload day-to-day software application management," said Amy Mizoras Konary, program manager for software pricing, licensing and delivery at IDC. "Companies need to optimize IT staff around critical business activities. A vendor that can provide reliable services and single-source accountability can help maximize the potential benefits of hosting, including cost savings and risk reduction."

While Henry expects the PeopleSoft Hosting portfolio to outgrow the rest of the Services business, and to continue to increase in importance and prominence, it is by no means seen as the only way PeopleSoft will deliver its software in the future.

"I think the hosting capability is a very valuable tool that has a specific role to play with customers. It's sort of like building a house -- you need a saw to cut the wood, you need a hammer to drive the nails -- you need different tools for different purposes. I see a great opportunity for entities who can offer a variety of those tools and have their Business Development team working with the customer to figure out how to use all those tools to create the best solution for the customer," he said.

"I think this thought that everybody is going to want to host, that it's going to sweep the world is highly optimistic. But to be able to go in and help the CIO understand how this helps their business and how it helps to improve performance that they need to drive in their business, that's where the opportunity is."