SAP Bolsters NetWeaver's MDM Capabilities Part Four: SAP and A2i

SAP As Convergence Point

SAP NetWeaver, has become the main pillar of SAP AG's (NYSE: SAP) strategy to remake itself into a platform vendor. With this and mySAP Business Suite, the broadest suite of enterprise applications in the market, SAP will sell possibly everything from application servers via middleware to Web services (envisioned, in SAP's case, to orchestrate business processes by means of packaged composite applications across and/or atop existing systems). In mid July, SAP announced that it has acquired substantially all of A2i, Inc a Los Angeles, California-based (US), privately held software company, which, since has 1993 developed and marketed xCat, the platform for enterprise-wide product content management (PCM) and cross-media catalog publishing, but with the touted simplicity and accessibility of desktop applications.

Given its leadership position and the resulting clout in the market, SAP's decision on any technology carries a significant weight. To that end, having a company with the stature of SAP complementing its SAP Master Data Management (SAP MDM) product with a PCM platform that provides more than traditional product information management (PIM) capabilities of bringing together, in a single place, all the information needed to bring a product to market, is likely to increase the PCM concept's awareness, validate the space, and speed up its ever-growing adoption of late.

The likes of SAP will gladly serve as a convergence point that would bring ECM within collaborative business processes. Even now the SAP Records Management (SAP RM) component of SAP NetWeaver offers more than tools, as it has predefined industry specific records management layouts and scenarios, such as SAP Public Sector Records Management, mySAP Financials Dispute Management, and mySAP CRM Case Management. Also, SAP's business processes (and even processes outside SAP applications) can share content gathered at any SAP NetWeaver layer through open standards. For example, participants can publish BI content in the SAP KM repository, which then enables KM objects to exploit all SAP KM services, like subscriptions, discussions, collaboration, information aggregation, etc., and the documents associated with BI, business processes, and product models. Also, through the collaboration engine, cFolders, users can make the analytic model available to participating teams without requiring them to open a SAP BW developer workbench or have to study the metadata or databases.

For that reason, the A2i acquisition will in the short term bring together two complementary e-commerce products that should help retailers, manufacturers and suppliers manage and sell their products to other companies and customers online. Namely, as also seen with recent Click Commerce's acquisitions of Allegis and bTrade (see Click Commerce Acquires Allegis), the Comergent's acquisition of Profile Systems, the merger of QRS with Inovis (see Inovis Delves into PIM by Snatching QRS) following the earlier fallout between QRS and JDA (see Not All Acquisitions Happen: JDA and QRS), in addition to that of GXS with HAHT Commerce (respectively), and the partnership of The Kodiak Group and Cleo Communications, it is apparent that the retail-focused SAP offerings should have a broader value proposition when bundled with the A2i PCM technology. A2i PCM technology helps companies record the correct product data and push it throughout the channel to avoid, for example, overstocking or under-stocking of often incorrect product data. In other words, SAP gains PIM software, which aggregates and organizes item-related data from multiple application sources, and data synchronization/syndication tools, which let manufacturers and suppliers synchronize items with retail partners through the UCCnet foundation service.

Given Wal-Mart's requirements for its suppliers to meet data sharing regulations passed by UCCNet and given many vendors' endeavors in addressing UCCNet's compliance, one can discern one major up-sell and cross-sell rationale behind the acquisition. From the perspective of manufacturers, data synchronization is an important part of keeping up good relationships with retailers like Wal-Mart, and one solution is internal data integration via a catalog product such as xCat offered by A2i, with the GDS capability expected in the coming fall.

However, for the above ECM/PCM "bigger picture" discussion, SAP is interested not only in GDS, but also in the greater value of PCM, with tie-ins for trade promotions management, marketing resource management, financial applications, CRM applications, solutions dealing with product design, and even sourcing and procurement. None of these can be dealt with successfully without knowing what and from whom one is buying. However, without PCM functionality delivered in unison with PLM solutions, changes to product information outside of the catalog do not automatically update the catalog, since PLM should control product content throughout its life cycle, ensuring that all product content is current and accurate wherever it exists within the organization and its supply chain.

This is Part Four of a five-part note.

Parts One and Two detailed the event summary.

Part Three discussed the market impact.

Part Five will cover challenges and make user recommendations.

The A2i Advantage

To that end, A2i's xCat utility extends beyond mere product data, since users can define any kind of data on the A2i system. Founded in 1993, A2i (standing for "analog to interactive") initially designed and built turnkey electronic catalogs, which were first delivered on CD-ROMs. The Internet explosion has allowed the company to diversify to more robust Web-based delivery. In 1996, it acquired Israel-based Nova-ArtMedia, which further expanded its functional and developing capabilities. Unlike many peers that begun with paper catalogs and then moved into interactive media, A2i added paper publishing capabilities well after its on-line credentials have been established. The company has been profitable in serving industrial manufacturers and distributors like General Electric (GE) Consumer and Industrial, Becton, Dickinson & Company, Rubbermaid and Airgas, among several dozen customers.

A2i's xCat product has been acclaimed by users as a high-performing, comprehensive system for creating, aggregating, normalizing, cleansing, structuring, distributing, syndicating, and publishing product content that work in a variety of media including paper print, web, and CD-ROM. As said earlier on, one of the reasons why e-commerce was slow in taking off was that companies did not have the product content and the publishing tools to make it useful on an ongoing basis (such as, through the ability to continually change offerings, modify offerings, accommodate alterations to different markets).

Collecting content is difficult and expensive, given that not only do enterprises need a process for collecting content, but they also need the tools in which to place and structure the content properly. Poorly structured content cannot be published on paper and cannot be Web-enabled either. That has been A2i's focus—creating a system that allows users to structure content in a way that it can be used repeatedly. Further, since it is such an expensive process, users need to be able to leverage that investment across multiple media and to be able to publish to the Web in a fast, rich, and searchable way—in terms of not just transactional data, but also parametric information that makes it possible to search by product relationship.

To do that, xCat combines several functions, including a front end to an SQL-based database, a data mining and presentation tool, a table creation and formatting tool, media management and consolidation tools, and a catalog creation tool. The product's often lauded strengths are fast and easy searching capabilities across concocted catalogs from various suppliers with differing naming conventions, units of measure (UOMs), and terminology, in a way that lets users run a search and get reliable results. Searching for product data gets a boost with truly international search engine that automatically converts between over forty physical dimensions. The product's import and export capabilities are also solid, with connections to Adobe InDesign and Quark XPress.

SAP Strategy

SAP hereby maintains its focus on solving "down-to-earth" business problems and on positioning itself as a strategic partner to its customers. Particularly during these times of risk-averse customers, SAP's aura of a stalwart vendor and its prudent approaches to solving customers' business problems have become even more attractive and assuring both to its huge customer base and to new prospects. The company has, by and large made the right strategic decisions—it has embarked on making its proverbially unwieldy R/3 ERP product more granular and open. It has also delivered attractive ERP-adjacent components that harness its latest technology foundations, given the demand has been moving from the center to the outskirts of any enterprise, and interest in solutions that promote collaborative communication throughout the entire value chain is ever-rising.

SAP is by no means the only vendor trying to oblige enterprises in their mindset of increasingly seeking business process-oriented interoperable applications. It is no longer enough to just capture all the data in the same place, since applications are increasingly required to automate the traditional manual processes that utilize these data, such as mortgage or insurance policy application processes. However, hardly any of its direct peers can, at this stage, claim the content and multilayer comprehensiveness of SAP NetWeaver, nor the ability to wholeheartedly embrace both .NET and J2EE frameworks at several levels of integration.

Initial Web-enablement efforts of many ERP vendors have not been based on open standards, meaning that building Java wrappers does not bring much business value unless the processes can support runtime, configurable business processes consisting of many services. SAP NetWeaver, to that end, is not only a J2EE-compliant business application, but also a platform upon which users can stack other key technologies needed to architect, model, design, implement, deploy, and monitor service-oriented business solutions. SAP even offers some key enterprise content management (ECM) components in NetWeaver, including web content management (WCM), content management, database management (DM), archiving, and records management, which are not clearly presented as ECM in the technology stack, but rather remain parts of the overall SAP Integrated Framework for collaborative business processes.

The Integrated Framework is the heart of SAP NetWeaver that drives collaborative business models and processes both within and outside the boundaries of the enterprise. SAP uses this framework to allow its technical components to participate in business activities modeled in SAP XI, which is the process integration framework. Models define not only transactional requirement, but also the integration workflows needed for such as, collaborative business activity monitoring (BAM) or content aggregation and consolidation.

While it may not be very likely SAP will use this technology outline to aggressively pursue PIM, GDS, or PCM markets, it will certainly make the respective niche vendors' jobs of selling into the fertile SAP client base very difficult down the track, when SAP's up-sell and cross-sell capabilities come in earnest. SAP might have conceded to the fact that its customers might not necessarily accept the one-size-fits-all mantra when it comes to its functional applications. However, SAP hopes customers may likely opt for that approach when it comes to the enterprise integration and infrastructure. For this reason, in the long term, these specialist vendors will have to devise an answer to IBM and SAP's superior combination of viability and account control. At least, the few remaining notable competitors to IBM and SAP, such as Oracle, PeopleSoft, SSA Global or Lawson Software, might further entertain their shopping spree.

Nevertheless, given the nascence of the offering, in the short term, SAP and IBM will not affect nor lessen the value proposition of independent vendors in these niches, such as Cardonet, Enigma, ePlus, Aspect (now part of i2 Technologies), GXS, Flow Systems, FullTilt, Pindar, PTC, Requisite, Riversand, SAQQARA, Velosel, and more. Thus, this acquisition, as well as IBM's earlier acquisition of Trigo Technologies signals a tremendous shift in the PIM/GDS market; somewhat simplifies the choices for larger firms seeking a route forward to GDS and streamlined internal product information processes; and notifies RFID pioneers to the need to include data synchronization in their pilots.

This concludes Part Four of a five-part note.

Parts One and Two detailed the event summary.

Part Three discussed the market impact.

Part Five will cover challenges and make user recommendations.