SAP have announced a managed software service for mid-sized companies from $325 a month. It says it will help firm avoid the complexity of in-house installations.

The managed service offers pre-packaged bundles of software aimed at specific markets such as consumer goods and hi-tech device manufacturers, and runs off server and storage hardware in the data centres of SAP partner HP. HP also provides security and other technical support and services.

SAP has offered hosted applications only to very large companies with specific requirements in the past, explained Bill McDermott, CEO and president of SAP America.

Now though, each customer gets a dedicated server in an HP data centre. "A lot of customers in small to medium-size businesses told me they don't like the one-to-many hosting model where their data is managed in an open environment," McDermott said. "They want a one-to-one relationship."

Gary Walden, SAP project manager at refiner C&H Sugar, said that if a single monthly pricing scheme had been available a year ago when his company was negotiating with SAP for a hosted service, "we would have looked at it very hard" as a way to save money. It has used a full suite of hosted SAP applications since March, after it shut down a mainframe-based system.

The C&H hosted systems contract separately priced-out implementation and consulting fees, among other things, Walden said. Nevertheless, the hosting service has helped boost C&H's efficiency without having to add extra IT support staff around the clock, he said.

On the other hand, for a large company like Halliburton, the new SAP offering sparks no interest at all, said IT Vice President Mike Perroni. The energy and construction services provider currently runs SAP R/3 hosted by an HP data centre and technical staff. "We fall into the large market," he said. "We only have one instance of SAP, and it's big."

Amy Konary, an analyst at Framingham said SAP separates itself from the pack by bundling the applications to service specific industries. Most likely, the managed offering will appeal to large SAP shops interested in extending the software to subsidiaries or regional offices, she said.