SAP Looks to Stake Ground in Silicon Valley

SAN MATEO (03/16/2000) - SAP AG is hoping to break new ground with a Silicon Valley-based subsidiary, SAPMarkets, unveiled Wednesday, that will help the ERP (enterprise resource planning) giant makes its presence felt in the Internet-based b-to-b marketplace.

The new subsidiary is the culmination of SAP's efforts for e-marketplaces begun last year, said Peter Graf, chief marketing officer for SAPMarkets, to be based in Palo Alto, Calif. All existing and new vertical and horizontal marketplaces will be managed via SAPMarkets, the creation of which "has been an option for a long time," Graf said.

With an initial investment of $500 million from its parent company, SAPMarkets will open its doors in May with 200 employees. Hasso Plattner, co-chairman and CEO of SAP, will take the helm as interim CEO.

"We based this very close to where the music plays," said Graf, referring to the Silicon Valley location. All current and future arrangements will be handled via SAPMarkets, and SAP will be actively searching for a CEO from "outside of SAP," he said. "We want to execute and deliver at Internet speed."

The staff roster is expected to double to 400, he said.

The move makes a lot of sense for SAP, said David Burdick, an analyst with the Gartner Group, a market research firm based in Stamford, Conn. SAP is clearly trying to show that it is more than a traditional software company, "perceived as being from the old school, old technology economy," Burdick said.

The Internet has compelled SAP to move beyond its ERP roots. "This is not a campaign to protect its turf," Burdick said. While SAP has "a lot of intellectual capital" among its North American and European customers, growth in the conventional ERP market is flat. "ERP has moved from the center of the universe to a node in the universe," he said.

SAP AG, with headquarters in Walldorf, Germany, is at

Eugene Grygo is an InfoWorld senior editor.

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