As part of its aggressive strategy to target the mid-market, SAP last week announced the introduction of a hosted ERP offering in the US with an eye to expanding the service to other parts of the world including Australia.

SAP has teamed with Hewlett-Packard to offer the hosted service which includes applications, maintenance, services and support for a monthly fee.

The offering is squarely aimed at mid-sized companies which have limited IT resources and want predictable software costs.

Unlike other hosted offerings, customers will end up owning the software licences through an SAP finance program which can span three to five years.

SAP Australia director of small to medium business, Tim Cavill, said if the hosted offering proves successful it will be expanded to other regions including Australia.

"In Australia we're not undertaking it at this point; we're doing other things with HP, including some cooperative activities aimed at the mid-market. We just have other priorities at the moment," Cavill said.

He was confident that SAP, as the first movers to provide such an offering would be successful, adding that the business solutions market is going through "one of the most amazing periods in history".

SAP rivals including Oracle and Microsoft were unwilling to disclose their plans for a similar offering both here or in the US.

In fact an Oracle spokeswoman said the company did not want to comment on SAP's new offering at all and senior company executives were unavailable.

However, Microsoft business solutions product manager Yolanda Delport said SAP, like Microsoft, recognizes that the mid-market is underserved and the hosted offering is an attempt to meet that need.

"Microsoft believes that many of the ERP products available on the market today are not suited to meet the needs of resource-constrained, mid-sized companies," Delport said.

"We've recognized the needs of mid-market customers and that is why we are working hard to deliver offerings that meet those needs."

Delport said it's hard to predict whether the partnership between SAP and HP is indicative of where the market is heading.

"It's hard to predict a trend based on one partnership, but I think we are a maturing industry and there are a number of business models to be tried and tested," Delport said.