SAP taps Commerce One for 'net push

Although most perceived SAP AG's announcement last week that it will be working closely with Commerce One as a bold move, many participants at the SAP Sapphire 2000 user conference in Las Vegas had questions about how SAP will be able to pull off what is regarded as a major integration project.

The buy-side focused trading exchange suite, due by year's end and as yet unnamed, is acknowledged by all sides to pose a major engineering challenge that will require the formidable resources of SAP and Commerce One. Backing up its efforts, SAP, based in Walldorf, Germany, will purchase approximately $250 million worth of stock in Commerce One and will share royalties with the Pleasanton, Calif.-based company during the next three years.

Commerce One will also get "a lot more credibility in the marketplace," said Mark Hoffman, chairman of the board and CEO of Commerce One. Industry analysts concurred, saying that the e-marketplace vendor will benefit from the cash infusion as well as the access to SAP's customer base.

Engineers from Commerce One and SAP will have to build a platform that includes Commerce One's MarketSite portal and its accompanying Exchange Operating System, Auction Services, and Content Engine, and SAP's with APO (advanced planning and optimization) for supply-chain management, product life-cycle management, and business information warehousing.

The embrace of a major third-party player further underscores SAP's best-of-breed approach in contrast to competitor Oracle's pre-integrated, Internet-based, one-stop shopping pitch for its ERP (enterprise resource planning) suite. But the SAP approach will be limited best-of-breed, said Hasso Plattner, co-chairman and CEO of SAP, who cautioned that SAP will be very selective.

To help users connect via trading exchanges, Commerce One and SAP will splice together Commerce One's XML Common Business Library (xCBL), an XML variant for grafting buying and selling applications, with the SAP Business Application Programming Interfaces (BAPIs), which link non-SAP software to the SAP environment.

Without offering many details, Plattner also said that CRM (customer relationship management) will play a key role in the product suite to come, and SAP is still at work on a CRM offering. "We have not abandoned any internal projects," Plattner said.

SAP appears to have turned a corner in the lucrative e-procurement realm because will be a stronger offering as a result of the deal, said David Monroe, an analyst at Plant-Wide Research, based in North Billerica, Mass. "They now have more than one piece of the jigsaw puzzle," Monroe said.

Still, a road map is needed to show how SAP will provide quick integration into and out of SAP installations that are almost always customized, said Kimberly Knickle, an analyst at AMR Research, based in Boston. "I can't get a straight answer on the integration issue," Knickle said. However, she said she can foresee linkage into the EAI (enterprise application integration) offerings of WebMethods coming from this collaboration. The WebMethods technology is often used in conjunction with Commerce One installations, Knickle pointed out.

The agreement will have clear benefits for the buy-side, said Randy Covill, another analyst at AMR Research. "I do think it's exciting for Commerce One customers with SAP," Covill said. "It will give them a nice connection to trading exchanges."

The major hurdle ahead will be whether SAP can automate company-to-company links across a digital trading exchange, Covill said. "This really is cutting-edge technology," he said.

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