SAP addresses Lacklustre web efforts

On the eve of its biggest annual events, SAP TechEd and SAPphire, the world's largest business applications vendor SAP has reached a crossroads.

Its core customers - conservative with their technology implementations - are just now waking to the reality that the Web is beginning to dominate business. Yet SAP's Web efforts so far have been lackluster compared with both bleeding-edge Internet startups and established companies such as IBM and Hewlett-Packard.

Although SAP will showcase some of its new Web technologies at its developers' and users' shows during the next month, the company's late start has left some wondering whether it can catch up with competitors in its Web integration efforts.

"I don't think they do get the 'Net," said David Dobrin, an analyst at Benchmarking Partners.

"SAP is at least a year behind its main competition, at this point Oracle. The kiss of death would be to become a legacy system. ...I don't see anything to make me think that's not happening."

AP dominates the market for business applications in today's client/server market, but the Internet is starting to transform how business is done, who has access to information and can act on it, and how applications are delivered.

SAP CEO Hasso Plattner seemed to be playing both sides of the street at the launch of SAP's new corporate Internet portal product, System, when he said that it is considered Release 4.6A of R/3 but also represents a parallel development track to R/3 and related client/server applications.

"If the market turns totally Internet," System would take over the leadership from R/3, Plattner said. "I believe - though this is a guess - the transition will be rapid over the next 18 months."

In 1996, SAP began developing an "Internet-ready" architecture, dividing up its enterprise resource planning (ERP) suite, R/3, into mix-and-match components and adding Web interfaces, according to Gunther Tolkmit, senior vice president of worldwide marketing at SAP. But customers were not interested in these new Internet capacities then, he said. "That was probably an indication of the level of maturity of the market," he added.

Instead, customers said they wanted data warehouses, supply-chain planning and optimisation, and customer relationship applications - all of which SAP has started selling as "New Dimensions" applications separate from the R/3 suite.

Only now is the demand for e-commerce applications ripening, Tolkmit said.

And now SAP is lighting a fire under its staff to quickly deliver the Internet strategy, he added. Compared with six months ago, it's truly surprising "how fast we can steer a big ship like SAP... creating entrepreneurship" in this project, he said.

"I'd agree that they weren't first out of the box. However, I'm not sure we needed them to be," said Ed Toben, CIO of Colgate-Palmolive, one of SAP's largest US users. "Until now, (e-commerce) hasn't been top of our list. ...Implementing the basic ERP and working on basic projects is a mouthful (by itself)."

Those projects and ERP implementations form the infrastructure on which to build scalable, reliable Web systems, he said.

SAP first announced System in July. Its multifaceted Internet strategy includes e-commerce, online trading sites, an information portal (, application hosting, and more user-friendly graphical interfaces.

It will rely on Extensible Markup Language as a lingua franca to connect trading partners.

SAP's previous Internet offerings were Web interfaces added during the last two years to its ERP suite, R/3, and a business-to-business Internet procurement application launched earlier this year.

But whether SAP can pull off its new Web focus remains to be seen.

"The strategy is right, the market definition is very good, almost great, but the execution remains to be seen," said Ed Markowitz, an analyst in Cincinnati. .

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