This spring, the company intends to publish a software development kit to help outside application providers tap into its products. At the same time, it will outline plans to create a partner network, or "community process," to shape programs built around its NetWeaver infrastructure software, company executives said.
The strategy represents a bold shift for SAP, a 33-year-old business with 25,000 customers. Rather than building all of its software itself, the company will provide a development platform and rely on other software vendors and its corporate customers to influence the direction of its products, said George Paolini, the company's senior vice president of platform ecosystem development.
Rather than build all its software itself, SAP will promote community development and turn its NetWeaver middleware into an open platform.
The move could generate revenue for SAP and increase its influence in the software industry. But the German giant has yet to prove it can be a beneficial partner, analysts say.
"(SAP) really is intent on becoming a full-blown platform player in the industry," Paolini said. "We think the next big wave really is a platform for business processes, and this will be it."
Analysts say that middleware platforms will be one of the most contentious battlegrounds in the coming years, which is partly why, the infrastructure software that underpins SAP's packaged applications, is so strategic to the German software behemoth.
Corporate customers are expected to spend a great deal of money on such infrastructure software and tools for creating new applications in a more flexible and cost-effective way.
With its NetWeaver platform initiative, SAP hopes to spur revenue by getting third parties to add to the catalog of products tied to its software. The company's suite of packaged applications is already widely installed among large and midsize corporations. More add-ons, and the simpler upgrade process promised by NetWeaver, are vital to driving futures sales, according to analysts.
To help make NetWeaver a viable platform, SAP hired Paolini, a former Borland Software and Sun Microsystems executive, in January.
His task is to establish a forum where independent software vendors and customers from different industries will improve on the current NetWeaver lineup, using procedures similar to those used by the Java Community Process or theopen-source foundation. In this vision, software vendors will base their products on NetWeaver and customers could lobby for new features.
Despite the company's stated dedication to a partner "ecosystem" around NetWeaver, SAP faces a number of challenges in pulling off its vision, analysts said.
Opening up its software for others to build potentially competitive products is a major cultural change for SAP. In addition, the company does not have a track record of sustaining long-term partnerships with independent software vendors, company observers said.
"It's a very radical, extremely different approach to the whole software world," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting. "SAP can develop all the great technology in the world, but they have got to get their partnership chops in line--that's where the rubber meets the road."
in 2002, NetWeaver is Java-based middleware that runs MySAP programs, presents information through a Web browser to desktop PCs and links to other systems. All of SAP's business applications are now built on top of NetWeaver, the company said.
To make it easier to share data between SAP applications and other systems, NetWeaver uses industry-standard protocols called Web services to expose data and transactions. Traditionally, SAP's products have had proprietary application programming interfaces, or APIs, that require specialized skills and tools.
With its planned software development kit, the company will make the capabilities of SAP's application suite available to other software companies. The SAP application features can be presented via Web services interfaces. The company has catalogued about 1,200 services that can be accessed and combined with other services.
This provides a blueprint for all the business processes that can be automated through SAP software. The company calls this blueprint the Enterprise Services Architecture, or ESA.
The first services to be published in the spring will be commonly used tasks already in the SAP system, such as a financial program for tracking the time between a purchase order receipt and actual payment, Paolini said. Over time, SAP intends to publish more of these services and create a repository to be used by third parties.
SAP will also provide its own Java-based tools to software developers, Paolini said. The company is a member of the Eclipse open-source tools foundation.
One goal of the Enterprise Service Architecture effort is to make SAP's products more widely used in its customers' installations, said Bruce Richardson, an analyst at AMR Research. "Opening it up is a subtle way to get customers to begin investing again."
In theory, ESA will provide a more flexible software infrastructure, called a, for SAP's applications and make it easier to make changes, he said.
"SAP has to figure a way to manage upgrades," Richardson said. "Today, it's like when a lightbulb goes off in your house, you'd have to replace all of the wiring."
Eventually, SAP would like its customers to regularly go to its portal application to get to business information, much as many people use Microsoft Office every day, Richardson said.
But he also noted that there are "many mysteries" in SAP's ecosystem approach, including how much it will cost third parties to access its services and what any eventual certification process will entail.
Partnerships have not always gone smoothly in the past for SAP, and industry observers are waiting to see how the company will handle the challenges involved in this effort.
As the Walldorf, Germany-based company pushes more aggressively into the software infrastructure market, it is increasingly bumping heads with large industry players--some of which are important partners.
IBM's WebSphere software and BEA Systems' WebLogic suite provide the same software plumbing functions as NetWeaver, although they are not SAP-specific. Similarly, Microsoft--another--provides a .Net-based system for building applications that use data and functions from SAP applications.
In the past, the German software maker has formed partnerships, only to end up competing with those same companies later. For example, it once had relationships with supply-chain-software company i2 Technologies and procurement vendor Commerce One, but SAP dissolved these after it began making competing products, Richardson noted.
"It's pretty hard to be a software company and not compete with SAP. Culturally, that's just how they think," said Rod Favaron, president and CEO of Lombardi Software, a small, independent maker of tools for business process management.
However, Favaron and other partners noted that SAP appears to be changing its stance by offering application makers and developers more technical and marketing resources.
In the past, SAP has been "partner-unfriendly," said Randy Hawkins, director of strategic alliances at Serena Software, which provides change management tools. But the German company's efforts to open up its software and foster relationships with other application providers has helped Serena sell to SAP customers moving to NetWeaver, Serena executives said.
"They have got a very large installed base--it's almost a whole economy in and of itself," said Mark Manzo, senior director of strategic alliances at Serena.
The NetWeaver community process should be a good way to scale up SAP's existing program for independent software vendors, Manzo said.
Paolini acknowledges that opening up to the outside world poses some thorny issues for both SAP and its partners. The company intends to get feedback from other industry players as it builds a larger NetWeaver network.
"In an open platform, the risk is you do need to work with competitors and you do have to accept there will be competition--perhaps even with our own products," Paolini said. "But the idea is that you grow the pie for everyone."