SAP jumped on the software-as-a-service bandwagon today, announcing a new program that allows channel partners to offer its midmarket industry-specific software suite on a subscription basis.

Partners participating in the SAP Business All-in-One fast-start program can now be certified by SAP to provide application management and hosting services for SAP Business All-in-One solutions. SAP Business All-in-One is SAP’s suite of vertical applications aimed at midsize customers and one of its primary indirect channel vehicles. These business-focused applications come preconfigured for specific industries.

The subscription program is available to customers on a two-, three- or four-year fixed-rate contract basis. To date, four partners have become eligible subscription providers: Ciber, intelligence, Optimal Solutions and RunE2E. In a statement, SAP officials said this option will spur sales among customers that had, in the recession, put a lid on additional capital expenditures, including hardware and on-premises software packages.

"In these tough economic times, it's definitely not lack of need or desire slowing down SAP implementations among midsize companies," said Elliott Garofalo, senior vice president of the SME Practice at Optimal Solutions, in Irving, Texas. “The problem is closely guarded capital expenditures.”

Optimal Solutions has developed a SaaS program called FlexChoice Advantage that rolls what would be the expenses associated with software licensing, hardware purchases, implementation and management of SAP Business All-in-One into a monthly fixed rate for customers. Optimal customizes the software to the end user’s specifications, then hosts the applications offsite.

SAP, with its direct-sales enterprise heritage, has struggled to crack into smaller customer segments, where it has relied on channel partners. The SaaS alternative could position the company to better compete against other cloud-based applications vendors that offer CRM and ERP, such as SugarCRM, Salesforce.com and Microsoft.