SAP has sold its hosted applications business to T-Systems, the IT arm of Deutsche Telekom.

The deal covers around 90 SAP customers and does not include the transfer of staff or assets. The two companies hope to complete early next month if they get the go ahead from the competition authorities.

Olaf Heyden, T-Systems head of ICT operations, said, "The takeover of SAP external hosting business fits precisely to T-Systems' global SAP strategy.”

T-Systems is on a roll after winning a global contract with tyre manufacturing giant Continental to operate its entire SAP estate on a pay for use basis. Other T-Systems customers include Shell and MAN.

Ray Wang, Enterprise Strategy partner at Altimeter Group, said, “It makes sense for SAP to get out of the general hosting business. It requires tremendous scale and capital to ultimately compete with the Googles and Amazon's of the world.”

Phil Carnelley, analyst at TechMarketView however, described the move as surprising. “On the one hand we commend SAP for ‘sticking to its knitting’ - an example that a lot of companies could learn from.”

The timing of the move was a surprise; said Carnelley. “At a time when its new license revenues have nosedived, the comforting annuity-based nature of apps management - a sector of the market which our forecasts show is still growing albeit only around three per cent - is something one would think SAP would like to keep in the background.”

It appears that the move does not include any of SAP’s current or future software-as-a-service (SaaS) offerings, such as BusinessByDesign and CRM on demand.