IBM, SAP Strengthen B-To-B TiesIBM, SAP Strengthen B-To-B Ties

If size matters, then the E-business partnership of SAP AG and IBM surely packs a punch.

IBM and SAP, with 2000 revenue of $88.4 billion and $6.3 billion, respectively, last week expanded a long-standing strategic alliance to encompass SAP's MySAP.com portal and marketplace software. The new deal puts SAP in a position to challenge the dominant players in the market: Ariba Inc. and i2 Technologies Inc.

According to Wolfgang Kemna, chief executive of SAP's U.S. subsidiary, SAP will provide IBM with marketplace, procurement, and supply-chain-management software. Until now, IBM had commissioned such software chiefly from Ariba and i2 when it pitched business for exchanges.

SAP's new-found prominence at IBM is no surprise to analysts. The alliance among Ariba, IBM, and i2, unveiled last year with much fanfare, has faded over time. Harry Tse, a market analyst for the Yankee Group, says the Ariba, IBM, and i2 alliance never produced significant revenue. More important is the sales channel that SAP opens for IBM's middleware, especially WebSphere. IBM middleware accounts for a quarter of its software business, and SAP is committed to WebSphere as a platform of choice for its portal and E-marketplace apps.

Also at its annual user conference last week, SAP revealed enhancements to its Product Life-cycle Management, a Web-based collaboration application. Now, companies can set up virtual teams so their customers can collaborate online with internal departments on product design and deployment. Acterna LLC CIO Dave Bent plans to deploy the new application once Acterna has implemented SAP's enterprise resource planning and customer-relationship-management software throughout the $1.2 billion company, which spans 35 countries.

Bent is trying to unify Acterna, which was created through a series of five acquisitions. He plans to deploy SAP's software in the next 18 months, without customization. After that, Bent will roll out the HR-and life-cycle-management apps. "We're focusing our initial efforts on providing one face to the customer. We expect to see significant product benefits and sales benefits," he says.

To further encourage its growing CRM sales, SAP is trying to make it easier to deploy CRM apps. Version 3.0 of mySAP CRM, due by the end of August, eliminates the need to buy R/3 or other back-office ERP components first.

By the second quarter of next year, SAP will release new supply-chain management software, co-developed with BiosGroup Inc., that incorporates its supply-chain and portal technology with IBM WebSphere and intelligent-business agents that let custom-ers manage supply-chain planning, execution, and logistics in real time and quickly adapt to unforeseen events.

Meanwhile, J.D. Edwards & Co. last week disclosed advanced planning software designed to help companies forecast supply needs and customer demand.

J.D. Edwards also unveiled new apps for its integration server that stitch together business processes. For example, a Web order could automatically trigger a customer invoice, a part of its OneWorld ERP system. The company plans to offer between 140 and 150 of the so-called XBPs, which will include applications for supply-chain collaboration with suppliers. The full collaboration suite isn't expected to ship until the middle of next year.

--with Jennifer Maselli and Steve Konicki