FRAMINGHAM (03/07/2000) - As expected, PeopleSoft Inc. today announced the details of a plan to offer application hosting services to users of its business software.
The Pleasanton, Calif.-based vendor had said last week that the plan was finally ready to be unveiled, six months after PeopleSoft executives first mentioned that they intended to get into the hosting business.
PeopleSoft's move comes two weeks after SAP AG, the leading vendor of enterprise resource planning (ERP) software, announced that it's setting up a new hosting company. Denver-based J. D. Edwards & Co. also announced an application hosting plan in January, and Oracle Corp. began hosting its applications last year.
PeopleSoft is initially offering to run its finance, human resources and online procurement software for users. Other applications, such as its customer relationship management software, will be added during the second half of the year, the company said.
Two users have signed up for the hosting service so far: GroceryWorks.com Inc., an online grocer based in Dallas, and Stratum Med Inc., a medical practice management firm in Urbana, Ill.
Deepak Gupta, general manager of PeopleSoft's hosting unit, said users will still have to buy the software and pay implementation costs upfront. Once the applications are installed, he added, the monthly hosting fees will range from $3 to $700 for each end user, depending on how frequently they use the software.
Hosting contracts will typically run for three years, but Gupta said customers will be able to opt out for any reason after 18 months. "We want customers, not hostages," he said.
Until now, PeopleSoft has relied on outsourcing firms and application service providers to host its applications for users who don't want to run the software themselves. It previously signed deals to work with 11 hosting firms.
Craig Conway, PeopleSoft's CEO, said the vendor will continue to sign more deals of that sort, in addition to launching its own hosting service. Within three years, Conway said, PeopleSoft expects nearly 50% of its new software license revenue to come from users who want to have their applications hosted.