SAP recently rolled out the initial prototype of its end-to-end e-business solution, dubbed mySAP.com. The initiative represents a radical departure from SAP's previous ways of building and packaging software. In short, mySAP.com is SAP's attempt to reinvent itself to better compete in the customer-focused, Internet-driven world of e-business.
It comes as no surprise that SAP wants a fresh start. SAP is feeling the pinch from sagging demand for its products as are other vendors specializing in providing integrated suites of back-office applications. Moreover, SAP R/3 has proven to be so difficult and costly to implement that the firm faces a rising tide of customer hostility.
mySAP.com is an Internet ecosystem in which SAP and non-SAP applications interact in real time to deliver personalized and role-based services to end users on a pay-as-you-need basis. The vision for mySAP.com is a far cry from SAP's monolithic R/3 software that provides back-office integration at a steep price to a company's pocketbook and nonconforming business processes.
The Workplace. mySAP consists of two major elements: mySAP.com Workplace and mySAP.com Marketplace. The Workplace is a corporate portal: a Web-based application that provides corporate employees personalized access to information, applications and services that they need to perform their jobs.
One of the most powerful features of Workplace is that it provides users with a single sign-on to all applications and services. In addition, the drag-and-drop interface lets users transparently navigate both SAP and non-SAP data sources, including Web services and unstructured content.
The Marketplace. In the grand scheme of things, mySAP.com Workplace is simply a launching pad to mySAP.com Marketplace. Marketplace is designed to support business-to-business (B2B) information exchange and transactions, a market that some research firms predict will surpass $93 billion by 2000, nearly three times the size of the ERP market.
mySAP.com Marketplace is the result of some simple financial calculations made by SAP executives after watching the stock prices of Internet portals, such as Yahoo! and AOL, soar into the upper stratosphere. You can imagine the executives thinking, "Well, if AOL is the leading consumer portal, with 18 million subscribers, we can be the leading business portal because we have 12,000 corporate accounts, representing more than 10 million business users and 900 business partners." As for incentives, it's a sure bet SAP would like to duplicate AOL's $93 billion in market capitalization.
The mySAP.com Marketplace will provide a host of services and content aimed at creating a "sticky" site for corporate buyers and sellers to exchange information and conduct business in an automated fashion. For example, there will be a directory of suppliers, a one-step document exchange supporting business transactions, collaborative forecasting, an RFP and RFQ matching service, a distributor/reseller management service, auctions and numerous services offered by third parties. These services will be organized around and tailored to various communities of interest, mostly vertical industries.
A key element of mySAP.com is a new deployment and pricing strategy. Rather than selling monolithic, client/server software packaged into coarse-grained modules, SAP now plans to let customers purchase business scenarios. These scenarios leverage functionality from R/3 modules, SAP New Dimension applications (e.g., front-office programs) and Internet services to support a variety of collaborative, role-based undertakings.
SAP has so far announced about 70 business scenarios for various communities. These include collaborative planning and forecasting, customer service, order fulfillment, selling and catalog, billing and payment, buying and procurement, logistics and production, and human resources self-service.
When customers purchase or upgrade to mySAP.com, they will receive all SAP components on a CD. However, they will only be charged for the components within the business scenarios they deploy and only for the users who use the components. This pricing model is a radical departure from the way SAP and most software vendors have delivered products. Customers benefit by purchasing only the software they need when they need it. They no longer have to purchase and install the next version of R/3 to get the upgrades they really need.
It's clear that SAP is moving into uncharted territory, although it's not alone. Oracle, PeopleSoft and other ERP vendors are also rolling out corporate portals and digital marketplaces. The question is whether SAP can succeed in transforming itself (including its business model, tools and culture) to keep pace with the Internet-driven marketplace and the needs of its customers.
There are several things in SAP's favor:
- Installed base. SAP's 12,000 corporate customers have invested considerable time and money in SAP and may feel compelled to follow SAP into new application areas to reap the full benefit of their initial investments.
- Integration story. The key advantage of implementing SAP and other ERP applications is their ability to integrate internal business processes. SAP is now telling customers that it can extend the benefits of integration to the front office and the extended enterprise. This message will resonate with many.
- New openness. To avoid being left behind in the Internet economy, the company has been forced to shed its "not invented here" attitude. The core parts of its mySAP.com initiative are delivered by third-party software programs that SAP has licensed and is integrating into its SAP Business Framework.
- Scale. SAP's biggest asset is its 5,000 programmers, most of whom reside in Germany and remain loyal to SAP. Although these folks are being stretched by all the new initiatives SAP has announced in the past several years, the group represents a key resource that SAP can use to launch the mySAP.com initiative.
In an effort to steal some of the SAPPHIRE '99 publicity for mySAP.com, Oracle simultaneously announced a framework for building corporate portals. The framework includes a Java-based API for turning any application into a portal component (or portlet) as well as a toolkit for assembling portlets into a portal based on a common template. The template ensures that a company can build multiple interoperable portals that all share the same look and feel. Oracle also has plans for a digital marketplace.
The other leading ERP vendor, PeopleSoft, has also announced a digital marketplace and has begun recruiting third-party application partners to participate. Both Oracle and PeopleSoft plan to begin deploying key portions of their portal initiatives late this year and early next year.
Perhaps SAP's greatest competition comes from a myriad of dot-com companies that offer best-of-breed solutions in many markets that mySAP.com is designed to capture. For example, VerticalNet provides content-oriented portals for 20-plus vertical industries with more to come. VerticalNet and other vertical portal knock-offs are quickly moving from simply providing content and collaborative tools to full-fledged commerce, including auctions, exchanges and catalogs. There are already numerous digital marketplaces that focus on specific vertical industries (e.g., MetalSite.com or Seafood.com) as well as general procurements sites supporting large corporations (e.g., Grainger's OrderZone). In addition, many large banks are developing procurements sites that service small and medium-sized businesses.
Corporate Portal Vendors
There are also dozens of companies vying to dominate the corporate desktop via Web-based portal technology. These include business intelligence, document management, content management and search engine vendors as well as systems integrators that are productizing their integration tools in a portal format. Microsoft has announced its first foray into knowledge management with its Digital Dashboard initiative. Consumer portal vendors Netscape and Yahoo! have also made moves to translate their success into the corporate market.
Battle of the APIs
For mySAP.com to succeed, SAP needs to flesh out its e-business infrastructure and kick start the marketplace by working with third-party developers to write compelling B2B applications using SAP's XML APIs. Despite SAP's considerable financial and programming resources, we suspect that this process will take considerable time.
Ultimately, the company that dominates the portal marketplace both inward-facing corporate portals and outward facing marketplaces will be the one whose portal API becomes a de facto standard. SAP believes its BAPI-enabled XML interfaces will take the day, while Oracle feels its Java-enabled portlets could win. Of course, Microsoft is building its Digital Dashboard on its COM- based APIs. There are many other API variants as well.
The key for these companies is to convince as many of their partners as possible to write to their APIs. Since we're just getting started with corporate portals, it's too early to predict the outcome. However, what's clear is that portals will play a key role in the emerging market for e-business. Portals, in essence, will be the mechanism by which companies connect with and support employees, customers and suppliers over the Web.
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