PeopleSoft aims hosting services at midmarket

PeopleSoft has created a portfolio of hosting and application management services for midmarket customers.

PeopleSoft has created a portfolio of hosting and application management services for midmarket customers.

The hosting service, initially only available in the US, will give customers who license PeopleSoft's software access to storage, database and hardware at a lower cost than its traditional hosted services aimed at large enterprises.

"We're delivering a completely different offering," said Bill Henry, vice-president of marketing and strategy for the company's global hosting services.

"This is built specifically to meet the needs of the midmarket. We chose to use some lower-cost technologies that meet midmarket needs but might not scale to meet the needs of the largest corporations," he said.

Among the differences between the midmarket offering and the upmarket offering are disc-attached storage instead of a storage area network, and the use of a Microsoft SQL Server database instead of an Oracle database. These infrastructure differences result in lower overheads which can be passed on to the customer.

Price sensitivity is high among midmarket customers of CRM software, and PeopleSoft will have to bring prices to within the range of $65 to $70 per user a month if it is to compete for this market, said Gartner CRM analyst Jim Davies.

Unlike other suppliers, who price their products according to the number of "seats" required, PeopleSoft has, to date, calculated its pricing on a "value-based strategy, based on a complex algorithm to do with the number of employees, the revenues of the company - and that probably makes it too expensive for the midmarket", he said.

PeopleSoft's move does not necessarily suggest prices will fall across the CRM marketplace, said DC analyst Bill Clough. PeopleSoft is quite a new player in the hosted CRM market with relatively high prices, and would be looking at how to change that.

Three levels of service are available to the midmarket; Value, Enhanced and Ultimate. Value proposition guarantees 99.5% availability and limited access to support services. Enhanced also offers 99.5% availability, but includes more applications and gives access to the helpdesk for longer hours. The Ultimate service gives 99.9% availability and 24-hour helpdesk support.

Surebridge will provide the hosting services for PeopleSoft.

The service will be expanded to Europe, the Middle East and Africa later this year.

Gillian Law writes for IDG News Service

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