SAP Combining Its Portals, Markets Units

SAP's combined subsidiary will deliver integration technology and collaborative applications through the mySAP Technology offering. It will license the technology to SAP as well as to other companies.

SAP AG announced this morning that it plans to combine its two subsidiaries, SAP Markets Inc. and SAP Portals Inc., into one company.

The new company, still unnamed, will deliver integration technology and collaborative applications through the mySAP Technology offering SAP announced last fall.

That technology brings together three elements for conducting business-to-business electronic transactions using a single platform: SAPs portal technology, its exchange integration technology developed with Commerce One Inc. and an application server that combines support for Java 2 Enterprise Edition and SAPs proprietary ABAP programming language.

SAP announced the move to combine the subsidiaries this morning at the same time it was announcing respectable financial results for the fourth quarter of 2002.

The new subsidiary will have the charter of licensing mySAP Technology to SAP as well as to other companies for distribution with third-party software offerings, according to officials.

Shai Agassi, former CEO of portal maker Top Tier Software Inc., will head the new subsidiary. SAP purchased Top Tier last March for its enterprise information portal software and relation integration products technology. Since then Agassi has been the head of mySAP Portals.

Hasso Plattner, currently CEO of SAP Markets, will serve as chairman of the board of the combined company.

According to Plattner, who is also the co-chairman, CEO and co-founder of SAP AG, of Walldorf, Germany, the decision to combine the two subsidiaries came about because customers are increasingly requesting solutions that incorporate both SAP Markets and SAP Portals software.

"By centralizing these initiatives in one entity and leveraging our relationship with Commerce One, we will continue to aggressively pursue business outside the SAP customer base and increase deployment of these technologies in non-SAP environments," said Plattner in a press release.

SAP AG began a partnership with Commerce One 20 months ago whereby the two companies jointly develop Commerce Ones MarketSet technology that provides integrated business services for design, planning, procurement and analysis.

Additionally, SAP and Commerce One jointly developed and marketed the Enterprise Buyer e-marketplace onramp technology.

As recently as last week, the two companys relationship was called into question when SAP said it would no longer use the Enterprise Buyer name, and would separately develop and market the enterprise edition of Enterprise Buyer under the mySAP SRM solution.

Commerce One folded the desktop edition of Enterprise Buyer into its Collaborative Procurement solution.

Industry insiders speculated the division signaled the demise of the SAP–Commerce One relationship. Given the emphasis the new company will have on enhancing the relationship with Commerce One, that now seems less imminent.

SAP owns 20 percent of Commerce One.

Mark Hoffman, CEO of Commerce One in Pleasanton, Calif., said his company now has a dedicated partner that offers integration technologies and collaborative applications – offerings that will broaden Commerce Ones footprint and potential customer base.

Combined, SAP Portals and SAP Markets have more than 5,000 customers.

The new subsidiary will have its headquarters in Palo Alto, Calif., with offices in New York, Chicago and Houston, as well as France, Germany, Great Britain, Israel and Singapore. It will employ more than 1,700 worldwide.

SAP reported a fourth quarter 2001 profit of 319 million euros ($282 million) on revenues of 2.3 billion euros ($2 billion). That was a 7 percent increase in revenue over the same quarter of 2000 but a 13 percent decrease in income.

For the full year 2001, SAP posted a profit of 581 million euros ($513 million) on sales of 7.3 billion euros ($6.4 billion). Again, overall sales rose from the previous year but net income dropped slightly.

In looking ahead, SAP warned that 2002 would be a challenging year. The company expects 15 percent revenue growth this year with stronger software sales not anticipated until the second half of the year. SAP expects its operating margins to improve to at least 21 percent during the year, excluding some charges.

Additional reporting by John S. McCright.