Technology Evaluation Centers

SAP - A Humble Giant From The Reality Land? Part 1: Alliances

P.J. Jakovljevic - 7/30/2001

Part 1: Alliances
P.J. Jakovljevic - July 30, 2001

Event Summary 

During its international e-business conference, SAPPHIRE, on June 12--15, SAP AG (NYSE: SAP), the leading provider of business software solutions, released a spate of upbeat announcements in its effort to portray itself as a reformed vendor of choice for all aspects of e-Business, including planning and collaboration. As an illustration thereof, SAP cited that its flagship mySAP.com suite has met with remarkable success in the market. SAP reached a major milestone in 2000 when the number of licensed users of its mySAP.com platform reached 1 million. Since then, more than 3 million additional users have reportedly licensed mySAP.com.

About This Note: This is a five-part note covering the announcements at the SAPPHIRE conference, the market impact of those announcements, the challenges SAP faces, and user recommendations. Part Five will contain links to the previous parts.

Alliances and Partnerships 

Striving to shed the image of a stodgy, partnership-unfriendly behemoth, SAP has announced a number of alliances, including:

  • IBM Corporation

  • Palm, Inc.

  • Commerce One

Alliance with IBM

Possibly the most remarkable was an expansion of the long-standing global strategic alliance with IBM Corporation (NYSE: IBM). SAP and IBM are expanding their relationship with significant investments on both sides, to cover the entire mySAP.com e-business platform. As part of the agreement, IBM will license and integrate technology from SAP Portals, Inc., a subsidiary of SAP AG, for IBM's WebSphere Portal Server, providing customers with shared access from their desktops to a wide array of applications and information across all industries.

In turn, SAPMarkets, Inc.,another subsidiary of SAP AG, is licensing WebSphere for projects and development in helping businesses harness the Internet. IBM has more than 5,000 consultants helping more than 1,900 companies across the world in their SAP projects, which are among the leading partner-driven sources of business for IBM. In recognizing the further growth in demand for mySAP.com, IBM Global Services is retraining a significant portion of its consulting practice to more completely cover the entire mySAP.com e-business platform.

In addition, SAP has certified IBM as an SAP Global Hosting Partner, and consequently IBM Global Services will extend Application Management Services offerings to its portfolio of SAP services to help customers deploy mySAP.com e-business applications. With these latest developments, IBM and SAP have forged relationships across all their major brand offerings. The commitment of IBM product brands, including DB2 Universal Database, WebSphere, Lotus, Tivoli, eServer pSeries, iSeries, xSeries and zSeries, IBM Storage Products, IBM business consulting and information technology services, and IBM Global Financing, underscores the 20-year relationship leading up to the announcement.

Agreement with Palm 

SAP and Palm, Inc. (NASDAQ: PALM) announced a global technology agreement that will extend the reach of mySAP.com e-business solutions to mobile users through Palm handheld computers. The two companies agree to jointly sell this solution to enterprises, and to develop a comprehensive SAP and Palm enterprise mobility solution on the Palm OS. Using mySAP.com solutions on Palm handhelds, mobile workers will be able to access enterprise portals, customer relationship management (CRM), supply chain management (SCM), business intelligence (BI) and other e-business applications.

Palm and mySAP Mobile Business showcased Palm VIIx wireless handhelds by providing them to SAPPHIRE attendees, preloaded with online surveys plus mySAP Mobile Business, event scheduling and live messaging applications. As a result, with more than 8,000 attendees, SAPPHIRE 2001 Orlando was the largest company-sponsored, wireless-enabled e-business conference in the world.

Commerce One Partnership 

Its, now proverbial partnership with Commerce One (NYSE: CMRC) is even stronger. In June SAP invested an extra $225 million in Commerce One, bringing its stake to 20%. The deal is scheduled to go through before the end of August. The agreement also includes SAP gaining the right to buy a limited amount of additional shares of Commerce One common stock in the future and the right to have representation on the Commerce One board.

Inevitably, the move fueled rumors that SAP is slowly positioning itself to buy the e-commerce software vendor. Since the two vendors partnered over a year ago, rumors have flown that SAP would eventually buy Commerce One owing to SAP's past tactic of partnering with another vendor until it could build the software itself or in the case of smaller vendors, simply assimilate the vendor to gain its specific expertise. However, this time SAP insists it is not interested in buying Commerce One and it wants Commerce One to remain independent to reinforce its new openness and partner-friendly image. On the other hand, SAP also needs Commerce One to survive because it has no Internet market place product without Commerce One's partnership. Therefore, as part of the increased investment, SAP pledged to limit its stake to 23% and not to attempt a takeover without approval by the Commerce One board.

This concludes Part One of a five-part note on recent developments covered by the SAPPHIRE e-business conference. Part Two will cover the Expanding Functionality of SAP.