ERP outsourcing market flourishes

ERP outsourcing market flourishes

Hewlett-Packard is offering IT outsourcing services that will manage the day-to-day operations of Baan's ERP (enterprise resource planning) software suite.

The outsourcing services will cover Baan's entire ERP product range, according to Phiroze Petigura, HP's ERP program manager.

The BaanERP suite includes manufacturing, finance, project, distribution and tools components.

Users of BaanERP software will continue to purchase the licence from Baan and the hardware from other vendors, Petigura said. HP manages the integrated systems and implements a management tool set to keep the ERP system running.

Fitted to suit

Services are fitted to suit the individual customer's infrastructure, he added.

IT outsourcing services allow customers to bring their systems faster to production, Petigura said. Other benefits of the services include cost savings compared to companies who maintain these services themselves and freeing up internal IS department resources to focus on mission-critical projects, he said.

Competing companies that provide similar IT outsourcing services include IBM, Compaq and Computer Sciences Corporation (CSC).

Within ERP outsourcing, HP focuses on the IT infrastructure, as opposed to the application side of ERP, according to public relations specialist David Barnes. HP has built its ERP outsourcing services experience primarily on SAP and is now extending that competency to other ERP apps like Baan, PeopleSoft and Oracle, Barnes claims.

"We cut our teeth on SAP; Baan is a relatively new service - we've got about eight pilots running to date," Petigura added.

There are different models for outsourcing IT services, such as total outsourcing of a company's IT needs, or partial outsourcing which is HP's method.

In HP's case, the company takes over the day-to-day operations, running particular aspects of the data centre - a function normally performed by the customer, Petigura said. The services are maintained one of two ways, said Petigura.

HP's preferred method is to have the hardware and the software installed at the customer's site, while HP manages the system remotely. This is the most cost effective for HP.

The second option is that HP hosts the system and software licence and runs applications back to the customer's business site or units that need the software.

HP is primarily selling its IT outsourcing services to larger enterprise companies, who have long been open to outsourcing, Petigura said.

But the company is also beginning to see some interest in outsourcing from mid-tier companies.

"It took some time for outsourcing to be accepted, primarily due to cultural resistance, people's jobs and so forth," Petigura said. "Now it is clear that the impact is not really that drastic. People doing company operations are now doing something else."

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