SAP, Commerce One Relationship Strained

A brouhaha is growing over the decision by SAG AG and Commerce One Inc. to change the name of their Enterprise Buyer e-procurement solution.

A brouhaha is growing over the decision by SAG AG and Commerce One Inc. to go their separate ways on e-procurement software.

Although published reports have suggested that the two companies, which have had a joint development and marketing relationship since 1999, have severed relations, the facts seem to lie somewhere in the middle.

The two companies acknowledged this week that they have decided to change the name of their Enterprise Buyer e-procurement solution, which was developed and sold by both.

In an official statement released yesterday, both Commerce One and SAP said their relationship will continue to move forward with strategic developments in marketplaces and business-to-business integration.

The ruckus appears to be more over the branding of Enterprise Buyer.

Before the partnership was created between SAP and Commerce One both companies had developed "onramp" software to marketplaces. A decision was made to name both products Enterprise Buyer, though SAP would market its version as "Professional edition" and Commerce One would call its "Desktop edition."

The Professional edition of Enterprise Buyer concentrates on the procurement of direct goods, or those materials that go into products a company sells. It also provides a control point for the purchase of indirect goods, like office supplies.

The Desktop edition, more of an indirect e-procurement play, allows individual employees and departments to purchase goods online.

As the products and their respective target audience evolved, according to officials, both companies quietly agreed to retire the Enterprise Buyer moniker.

Now, the Professional Edition of Enterprise Buyer is part of the mySAP SRM solution, which is maintained by SAP Markets and sold by it and its parent company SAP AG.

The Desktop Edition has been folded into Commerce Ones Collaborative Procurement solution.

Under the hood of the marketing agreement that resulted in this split over Enterprise Buyer naming is an apparent riff over competitive software offerings.

The Enterprise Buyer name change follows the launch of the Commerce One Source supplier relationship management suite in December 2001 - weeks before the launch of SAPMarkets competing mySAP SRM suite.

Analysts agree theres more to name change than meets the eye.

"End users should still be concerned about the strained alliance [between SAP and Commerce One]," wrote Pierre Mitchell in an AMR Research Inc. Report published today. "You just cant expect a normal relationship where the two firms compete on two major application segments, e-procurement and e-sourcing, yet bravely try to collaborate on a Private Trading Exchange (PTX) platform, which has had limited success and has an uncertain joint future."

Mitchells advice: Until the situation is resolved – either through outright acquisition or divorce – companies should decouple the applications, limit implementations and look to competitive applications.