SAP AG Buys Portal Player

Acquisition of TopTier will help out the software giant's integration work.

In another step in its plan to build market-leading positions in enterprise portal, supply chain management and customer relationship management software, German software giant SAP AG has said it will buy TopTier Software Inc.

A partner of SAP since 1999, TopTier develops enterprise information portal software and related integration products.

TopTiers technology, which is already integrated to some degree with the mySAP enterprise portal, will be used to integrate applications beyond those developed by SAP, according to company officials.

The acquisition will provide SAP with an engineering staff experienced in the portal market as well as a decent installed base of enterprise customers, including the likes of DaimlerChrysler AG, Hewlett-Packard Co., Universal Studios Inc. and Wells Fargo Bank.

TopTier also has deals with another ERP (enterprise resource planning) developer, Baan Co., as well as with i2 Technologies Inc., which offers e-business and marketplace software.

SAP, of Waldorf, Germany, initially moved to broaden its footprint last year with a joint product development agreement penned with e-marketplace infrastructure provider Commerce One Inc., of Pleasanton, Calif.

The companies have since developed two joint products, MarketSet and Enterprise Buyer. MarketSet offers an open architecture and integrated business services for design, planning, procurement and analysis. Enterprise Buyer supports the full range of e-procurement, from indirect goods and services to direct production materials.

SAP, for its part, still needs an integrator to sit across disparate systems in a private marketplace. That is a space TopTier, of San Jose, Calif., plays nicely to, according to a recent report from Boston-based AMR Research Inc.

In addition, the purchase of TopTier puts SAP in line with ERP competitors such as Oracle Corp. and PeopleSoft Inc., which already have heavy investments in portal strategies.

Under the terms of the agreement, SAP will acquire all the outstanding shares of TopTier for approximately $400 million in cash. The price was high by SAP standards. But, in addition to adding strategically significant software, it may block SAPs ERP rival Baan and e-marketplace rival i2 from taking any further advantage of TopTier technology.

"Four hundred million dollars could have been the price to get TopTier off the market and SAP into the market," the AMR report said.

The TopTier purchase seems to mark a shift in SAPs approach to acquisitions.

"Not only is SAP buying strategic technology, but it is acknowledging other systems do exist," the AMR report concluded. "It could mark the beginning of an SAP buying spree."