SAP Looks to Integrate

By eweek  |  Posted 2001-06-11

At its upcoming user conference, analysts expect SAP to announce new ways that its enterprise software will link with non-SAP software and across firewalls to outside companies.

"If you look at what SAP has, the greatest need is integration," said Dave Boulanger, an analyst at AMR Research.

Integration is critical to its new portal business, SAP Portals, and as it seeks to build interenterprise links, he said. It also represents a shift that can ripple across a broad range of the business software industry, including other Enterprise Resource Planning (ERP) vendors like Oracle, and integration vendors like Tibco Software and webMethods.

SAP is at the forefront of enterprise software companies, such as People-Soft, that are pursuing integration capabilities, analysts said. SAP is developing technology for this in-house, said Ken Vollmer, an analyst at Giga Information Group. Last week it announced a deal with systems integrator Pricewaterhouse-Coopers aimed at linking SAP and non-SAP technology in public and private exchanges.

This week during its conference, SAP is expected to announce a deal with IBM on this issue. Details of the pact, first reported by The Financial Times but also mentioned by analysts, are sketchy, and SAP officials wouldnt comment.

A deal would certainly raise IBMs profile as the "integration arms merchant" — by further upstaging Ariba and i2 Technologies, Boulanger said.

"The neatest thing would be to declare [IBM] a strategic services provider and use the MQ Series product as an integration between SAP and non-SAP systems," Boulanger said.

While acknowledging integrations importance, SAP said it isnt looking to enter the integration business.

"Today I dont see any indication we want to go after that space," said Michael Heinrich, director of business development at SAPMarkets. "Theres enough work to do in [business-to-business] capabilities."

Analysts were divided over how a SAP-IBM alliance would affect enterprise application integration vendors. "It puts pressure on players in the integration space," Vollmer said. "If an ERP vendor has its own system for tying them together, theres less need for webMethods or a Vitria [Technology]."

AMRs Boulanger differed, saying it would heighten their importance. "In some areas they will compete, but in some cases it makes the value proposition for Tibco, etcetera, more valuable."

The integration work also supports a broader strategy. SAP is moving its ERP backbone into a set of component parts. Boulanger believes SAP will transform its software into a set of collaborative modules, each with its own life cycle. That will let customers upgrade piecemeal.

This adds to a growing trend in the ERP industry that could mean trouble for Oracle. "It does turn up the heat considerably, on Oracle in particular," Boulanger said. "The real interesting trend is that SAP, PeopleSoft and also J.D. Edwards and Lawson [Software] are going down the path of breaking the ERP backbone into components. Weve seen indications from all vendors except Oracle."

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