Deal reflects SAP strategy shift

SAP's plan to invest in and team up with online marketplace software developer Commerce One is seen by analysts as proof positive of a major business strategy shift on the part of the German applications vendor.

The sales and joint development deal with Commerce One indicates "that SAP has crossed the divide of buy vs build, which is significant", said David Alschuler, an analyst at Aberdeen Group. Until recently, he added, SAP had come down firmly on the side of developing virtually all the applications it sells.

But that's now changing, and the agreement with Commerce One - which includes a planned $US250 million investment by SAP in the business-to-business e-commerce vendor over the next three years - expands on a trend started earlier this year in which SAP is reaching out for help from other software makers.

For example, SAP last month announced that it would resell call centre management software developed by Nortel Networks' Clarify division. Also in May, at the European version of the Sapphire conference, SAP announced an open integration strategy under which it will incorporate and support other vendors' software as part of its Internet-based applications framework.

As part of the latest deal, SAP plans to resell Commerce One's MarketSite Portal software along with its applications. The two companies also agreed to jointly develop a set of XML-based online procurement and business-to-business exchange applications.

SAP has developed its own software for online exchanges and Internet-based procurement, but mostly it has watched from the sidelines as rivals such as Commerce One, Ariba and Oracle announced deals to set up business-to-business marketplaces in various industries. But some observers said the combination of SAP and Commerce One should be a potent one.

For example, Alschuler said research by Aberdeen Group shows that Commerce One has signed on about twice as many customers for its online marketplace software as both Ariba and Oracle have for their respective applications.

The deal announced last week puts SAP in a leadership position in that market, he added.

Meta Group issued a report saying that the range of functionality promised by SAP and Commerce One "will be difficult to match" by other vendors, provided that the two companies deliver on what they're promising.

The SAP and Commerce One team is likely to battle it out with Oracle and a group including Ariba, IBM and i2 Technologies for the top spot in the online exchange business, the report added.

SAP also used the opening day of Sapphire to announce what co-founder Hasso Plattner billed as the company's biggest software contract to date - a deal to implement its software for 230,000 end users at R/3 user Nestle in Vevey, Switzerland.

SAP and Nestle officials said applications will be installed at more than 500 Nestle facilities worldwide. Nestle employees will be able to access the applications via the company's intranet and through the Internet using SAP's end-user portal software.

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