SAP positioned well to succeed in SRM space

SAP AG'S planned move into the SRM (supplier relationship management) market may affect its strategic partner Commerce One Inc., while at the same time turning up the heat on competing players such as Ariba Inc. and i2 Technologies Inc., according to analysts.

SAP confirmed this week that it will release an SRM solution, but did not provide further details. Launching an SRM solution would make SAP a direct competitor of partner Commerce One, which this month announced a strategic sourcing product, which is often a core SRM technology.

"SAP has pretty much gotten the intellectual property they've needed from Commerce One (through their partnership)," said David Yockelson, an analyst at Meta Group Inc. "SAP learned what it had to, did a fair amount of work to build out its own procurement capability, ... and is happy to go on its merry way selling its own stuff."

Deals that feature SAP and Commerce One "arm and arm" will likely decrease in the future, Yockelson added. "As an SAP customer, you no longer have to have a Commerce One product in the mix."

According to an SAP spokesman, "(Commerce One) definitely will continue to be a strong partner in the integration technology space."

The spokesman declined to comment, however, on the future of joint development and marketing of Enterprise Buyer, the procurement product, or MarketSet, the joint marketplace solution. "We will definitely continue to work with them for joint development on future products," the spokesman said.

A Commerce One spokeswoman said, "SAP and Commerce One do remain deep partners, and our work together continues to progress and develop based on the requirements of our customers."

Louis Columbus, an analyst at AMR Research Inc., said the biggest impact of SAP's SRM product release would not be to Commerce One but to Ariba and i2 Technologies. That is because as an ERP vendor, SAP will have an instant competitive advantage over both Ariba and i2 in the SRM arena, he said.

"The fact that the data needed to drive SRM is already in the R/3 architecture makes SAP well positioned to do what it does best, which is sell into its installed base," Columbus said. "Yet, SAP will need to make the SRM launch effective at competing in new accounts that have other ERP systems as their base for this product to be a market leader."

In addition, SAP will need to prove they can integrate SRM into the other processes, including product life cycle management and supply-chain planning, Columbus added.

SAP's SRM solution will focus on evaluating, enabling, and engaging in SRM, he said. The evaluation piece will feature supply strategy development, supplier qualification, and contract negotiation and management while the enablement portion of the solution will feature content management and supplier self-service. Finally, the engagement piece of the solution will include self- service procurement, plan-driven procurement, and supplier relationship monitoring, he said.

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