Intel, SAP form Pandesic e-commerce company

SAP America and Intel are forming a 50/50 joint venture that will sell an Internet-based electronic commerce package initially in the US, and globally within a year. The new company, Pandesic LLC, and its partners will offer e-commerce hardware and software packages to merchants, officials say. The products will cover all aspects of e-commerce business, including: marketing; order processing and fulfillment; inventory management; pricing; payment and tax processing; and shipping and logistics. But analyusts say some questions still linger over the venture

SAP America and Intel are forming a 50/50 joint venture that will sell an Internet-based electronic commerce package initially in the US, and globally within a year.

The new company, Pandesic LLC, and its partners will offer e-commerce hardware and software packages to merchants, officials say. The products will cover all aspects of e-commerce business, including: marketing; order processing and fulfillment; inventory management; pricing; payment and tax processing; and shipping and logistics.

Billed as a one-of-a-kind, end-to-end solution, the Pandesic Internet package encompasses hardware, software, installation, support, systems maintenance, and upgrade services. Pricing will be set using a transaction-based model, said Harold Hughes Jr., chairman of Pandesic.

Pandesic will charge customers an unspecified sign-up fee, establish their specific system requirements, and promise to get a complete e-commerce system up and running within a matter of weeks, says Bryan Plug, CEO of Pandesic.

While SAP is contributing its flagship R/3 business application to the effort, Intel is bringing its expertise in global logistics management to the party, gained by the chip maker over the past four years during its own SAP connection makes some analysts scepticalimplementation of R/3, says Craig Barrett, Intel president and COO.

While some industry watchers say the Pandesic offer appears to be attractive to small and medium-size businesses interested in conducting commerce on the Web, other analysts said they are skeptical that an entire supply chain would want to buy into e-commerce systems largely based on R/3.

"It's a good value proposition," says Henry Morris, an analyst with IDC. "This should be attractive to the retailer wanting to sell products after hours on the Web, or to the merchant or manufacturer that wants to establish a direct sales channel."

Backed and financed by the world's largest chip maker and business application developer, Pandesic should become a potent force in the e-commerce market, one analyst says.

"If I were in the business of selling merchant servers I would be really nervous," said Jim Shepherd, vice president of Advanced Manufacturing Research in Boston. "Pandesic comes to market with a very comprehensive set of software and services. There is a terrifying juggernaut coming that has a huge market presence, and with SAP's and Intel's budget they are in a position to force their solution to be an industry standard."

However, one analyst cautions that Pandesic's solution depends mainly on "proprietary SAP technology," which many small businesses may not want to get involved in.

"This basically requires the use of proprietary SAP technology through all aspects of the supply chain," said Bruce Guptill, research director for e-commerce at GartnerGroup. "It means businesses have to have formal and established relationships and need to know how a trading partner is doing business. I don't know of any retailer that wants consumers to know what they have in stock," he said, reacting to Pandesic's product demonstration, which showed a customer accessing a merchant's inventory information using a Web browser.

"It is nice SAP and Intel realise that there is a future in e-commerce, but until we see products working, this is nothing but an announcement of direction," Guptill says.

Guptill adds that Pandesic is late to the rapidly expanding e-commerce market, and needs to extend its limited reseller channel and provide very accurate transaction reporting and monitoring systems for a transaction-fee pricing model to work.

While Intel via Pandesic is interested in growing the market for Pentium-based servers, SAP will gain new customers, especially in the small and medium-size business market, said Paul Wahl, CEO of SAP America and a board member of its parent company, SAP AG.

Users of Pandesic will never know they are using R/3 systems as back-end transaction engines, since access to R/3 is established using Web browsers, Wahl said.

He added that while it would be good for Pandesic if all parties involved in a particular e-commerce transaction - including suppliers, merchants, manufacturers - were using the same Pandesic system, it is not a requirement for the application to work. R/3 supports a number of EDI formats, allowing a supplier to use an established EDI system to interface with the Pandesic systems over the Internet, Wahl says.

Aside from R/3, a Pandesic system will typically incorporate Windows NT, SQL Server, Internet Information Server and Active Page Server, Pentium-based servers made by Compaq. and Hewlett-Packard, tax software made by Taxware International, and CyberCash's namesake Internet payment system.

For now, United Parcel Service will be Pandesic's shipping vendor, offering access to its parcel tracking system. Citibank will offer its global currency, cash and credit card management services as part of the Pandesic solution. In the future Pandesic will work with other companies to supply shipping and transaction services, officials say.

Under agreements with Pandesic, Inacomp, of Omaha, Nebraska, will function as the authorised distributor for the e-commerce package, while the Internet strategy and consulting firm USWeb Corp., of Santa Clara, California, will act as systems integrator.

The joint SAP-Intel venture company, Pandesic LLC, pending regulatory approval will be equally funded by the two companies, employ about 50 people and be based in Sunnyvale, California. Initially Pandesic will do business in the U.S., but plans to expand into international markets in less than a year, officials say.

Harold Hughes Jr., Intel vice president and director of planning and logistics and former chief financial officer, has been named chairman of Pandesic. Bryan Plug, executive vice president of SAP America, will serve as president and CEO. Staffing will initially be made up of employees of SAP and Intel.

The company has a Web site, which can be accessed at http://www.pandesic.com/.

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