Peoplesoft partners with ASP to provide software-as-service

PeopleSoft Inc. on Monday announced a new partnership with application service provider (ASP) Surebridge Inc. to offer hosted solutions geared towards small- to medium-sized businesses (SMBs), a move one industry watcher says will give the company a much stronger position in the software-as-service market.

PeopleSoft Canada Inc.’s Peter Smith, regional vice-president, PeopleSoft Global Services, said with the partnership customers will have a client manager assigned to them, that will understand their environment and unique needs. Customers will also have access to a 24×7 help desk and a self-service Web portal, where they can access information including the performance of the hosted service against the service level agreement (SLA), visibility into accounting and invoicing as well as system availability.

Users can select one of three different levels of service — Value, Enhanced or Ultimate. The Value SLA guarantees users 99.5 per cent availability, while the Enhanced SLA offers customers 99.5 per cent availability plus expanded hours of operation and additional applications. The Ultimate option guarantees up to 99.9 per cent availability.

In addition to the hosted offerings via Surebridge based in Lexington, Mass., users can also elect a remote hosting program directly from PeopleSoft whereby the user keeps control of its own network, but PeopleSoft manages the application, Smith said.

Ted Chamberlin, principal analyst, communications at Gartner Inc. in Stanford, Conn. said large independent software vendors (ISVs), with the exception of Oracle Corp., have been slow to enter the ASP market. This, to be fair, includes not only Pleasanton, Calif.-based PeopleSoft, but its competitors such as SAP AG, and Siebel Systems Inc., he said.

Chamberlin explained that the software-as-service model is gaining momentum in the market and that customers are getting used to buying things as a service.

“Our clients don’t want a big up-front fee for software, have to integrate it, and not use some [components],” he said. “Our clients like the fact they can buy something on a per-use basis.”

Chamberlin said PeopleSoft has had its own software services arm, but it was not very well put together, and added that PeopleSoft was smart to choose a partner like Surebridge because it is well-established in the SMB market — an area where the company has less traction.

“[Surebridge’s] sales folks are well-trained to deal with the needs of the small business, which are much different than the large enterprise,” he explained. “So it will actually make the transition a lot easier for [PeopleSoft]. If PeopleSoft tried to do it on its own it would fail miserably.”

Surebridge will have the ability to manage the database, storage and hardware for SMBs and for users of PeopleSoft’s applications under the Enterprise and Enterprise ONE umbrella. PeopleSoft’s Enterprise applications are geared towards financial, government, education, health care and other services industries. It is also ideally suited for large, company-wide functions such as human resources, finance, IT, procurement, marketing, services and sales across all industries, the company said. Its Enterprise ONE applications are the products from the former J.D. Edwards and Co., which PeopleSoft acquired last year. These products are suited towards organizaitons that manufacture, construct, distribute, service, or manage products or physical assets.

Chamberlin said that Surebridge can also offer customers products from its other application partners.

“If you go to the PeopleSoft service model, you’re going to have to eat all its dog food,” he explained. “You don’t have the option of piecing together a best-of-breed solution.”

Even though this might initially seem to be a disadvantage to PeopleSoft, Chamberlin said that clients generally have already decided which application they want first, and then decide on the service.

“I think in the enterprise world, it’s known that SAP has the best SCM software, it’s known that Oracle has the best financial software, and that PeopleSoft has the best HR HCM software. I think a lot of clients already have the determination that they’re buying the application first and then they’re buying the service,” he said. “I think it’s a slight risk, but I think it’s going to be negligible.”

What’s more important, he added, is that PeopleSoft is opening up another market that was pretty much closed off to its products. In addition, it will open up a new option to its clients who want to save money by moving operations outside, something he said that is usually considered when a company is upgrading. However, he said the software-as-service model won’t destroy the traditional way companies sell their software — in a shrink-wrapped CD — because there will always be “server huggers”, or companies that like to keep everything in-house.

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