27 October 2004 German software giant SAP is preparing to launch a subscription-based version for its enterprise software, showing that even the most complex business applications can be delivered as a service.

SAP will partner with Hewlett Packard (HP) to jointly market and sell SAP’s business applications for a monthly fee of £325 per user, which includes installation and maintenance costs.

SAP has to date resisted joining the market for “pay-as-you-go” software, despite the success of companies such as Salesforce.com.

“The new pay-by-the-month programme is not technically subscription software,” said Gary Former, senior vice president of hosting at SAP. “SAP is merely spreading out the cost of its software through a special three-to-five year financing arrangement.”

According to Former, at the end of the five-year period, customers will owe no further payments to SAP. “They can also choose to cancel the hosting contract with HP at this point,” he added.

SAP and HP plan to market the new programs to medium-to-large sized businesses – specifically targeting those whose annual revenue is less than $1 billion.

The packages will incorporate accounting software and order processing software. The companies plan to make bespoke versions of the new products available to oil and gas companies, high-tech device makers, computer services firms and food companies.