Update: SAP christens its hosted ERP suite Business ByDesign

SAP has christened its suite of hosted ERP software for the midmarket SAP Business ByDesign and said it will be available initially in the U.S. and Germany, with the U.K., France and China to follow soon after.

Pricing for the service in the U.S. starts at $149 per user per month for a minimum of 25 users, including services and support, SAP said. Customers also pay $54 per month for each group of five "efficiency users," or casual users who access the software only to fill out expense reports and purchase confirmations, for example.

SAP CEO Henning Kagermann presented the first demonstration of the product, formerly known by its code name A1S, at an event in New York Wednesday morning, calling it "the most important announcement I have made in my career."

SAP has said it will invest €300 million to €400 million (about $400 million to $550 million) by the end of 2008 to support the introduction of the service, including a consumer marketing campaign on the Web to alter the perception of SAP as a provider of software for big businesses.

SAP Business ByDesign aims to offer the gamut of ERP (enterprise resource planning) capabilities in a service affordable and simple enough for use by businesses with 100 employees to 500 employees, Kagermann said. The capabilities include manufacturing, purchasing, accounting, sales and marketing and human resources.

The software is live today at 20 customers in Germany and the U.S., including a small aircraft manufacturer, a manufacturer of air fresheners, a technology consulting company and a company that offers packaging and distribution services to pharmaceutical companies.

It still wasn't entirely clear from SAP's statement when the average business will be able to sign up for the service, but a safe bet for most countries appears to be 2008.

SAP is "currently engaging with pilot customers" in the U.S. and Germany and "validating" the product with customers in the U.K., France and China, it said in a statement. Next year it will offer the service in additional markets including Australia and India in the Asia-Pacific; Italy, the Netherlands, the Nordic region and Spain in Europe; Canada and Mexico in the Americas; and South Africa. Other countries will follow in 2009.

The company has said it hopes to open a new market for ERP among companies that rely today on spreadsheets and other individual programs to run their businesses, and were put off ERP in the past by its price and complexity. Analysts say the challenge will be to offer a product that's easy for companies to configure but which meets the needs of their individual business.

Rivals in the market include NetSuite, which is majority-owned by Oracle CEO Larry Ellison; Microsoft, which is in the process of rolling out a hosted version of its Dynamics CRM software, and many smaller companies operating in local markets.

Businesses' two main concerns about hosted services are the security of their data and the reliability of the service, or, put another way, the ability to access their data at all times, said Bo Lykkegaard, a research manager with IDC in Denmark.