Tech Industry

SAP pushes Web services plan

The business software maker recruits Microsoft and IBM as part of a new initiative to simplify how companies build their business systems.

Software maker SAP on Thursday recruited Microsoft and IBM as part of a new initiative to simplify how companies build their business systems.

SAP introduced a new bundle of products called NetWeaver, which will become the foundation many of the company's future products. NetWeaver packages some previously available SAP software--including Web portal and data analysis applications, and application-server software--with new tools for Web services-based software development.

One of the key features of NetWeaver, according to SAP, is that it allows SAP customers to use software development and middleware tools from IBM and Microsoft for development and customization. The German company said NetWeaver will work with a range of software, including IBM's Java-based WebSphere and a variety of Microsoft .Net products, such as BizTalk Server and Visual Basic .Net.

The three partners will jointly staff support centers to assist customers in using their products, according to SAP.

The German company said the links between NetWeaver and Microsoft's and IBM's popular development products will make it easier for programmers to integrate SAP's business-management applications with custom-built software programmed in Java and Microsoft's .Net tools.

NetWeaver "really applies Web services at an enterprise scale," said Hasso Plattner, co-founder and co-chairman of SAP. "With this position, we are flexible, we can play in both camps," he said, referring to the software's support for .Net technology and for its rival Java.

In contrast, SAP competitor Siebel Systems has aligned itself more closely to the Microsoft .Net camp, agreeing last fall to tie its customer relationship management software to Microsoft's .Net infrastructure.

SAP board member Shai Agassi, speaking at a press conference in New York, said the initiative is a major technological shift for the business software maker. "This is the future of our company in the next five to 10 years," Agassi said.

However, at least one analyst viewed the initiative as more of a marketing maneuver than an introduction of significant new technology--at least in the short term.

"This is stuff they've already got," said Josh Greenbaum, an analyst at Enterprise Applications Consulting.

Analysts also noted that while SAP appears to be getting closer to IBM and Microsoft, it is actually becoming increasingly competitive with them.

Microsoft competes with SAP in the business applications market, through its acquisitions of business software companies Great Plains Software and Navision. And on the IBM side, SAP is starting to tread one of IBM's strongholds--the market for application-server software--by selling its own product. IBM is also muscling in on the packaged applications market with tools and services for building custom Web-based software.

"SAP is trying to cut off a potential competitive battle with (IBM and Microsoft) and open up itself to the software development community," Greenbaum added. "The whole...strategy is getting other software vendors and independent developers excited about having an infrastructure on which to deploy next-generation applications."

Extending xApps
As part of the initiative announced Thursday, SAP is developing one new product, called Master Data Management, a data integration tool. SAP said it will be available by September.

In the longer term, however, SAP said it plans to use NetWeaver as a vehicle for a new line of applications it's developing called xApps. The xApps concept was introduced last June and new products began shipping late last year. In order to use xApps, customers will also have to buy NetWeaver, the company said.

The xApps are supposed to be more compatible with business applications other than R/3, SAP's monolithic collection of accounting, human resources, sales and manufacturing applications. xApps incorporate Web services technology, an emerging set of Internet protocols touted by nearly every business software maker as the future of the industry. They are also supposed to offer SAP customers smaller chunks of software that are less of a hassle to set up than traditional business applications, such as R/3.

Many of the xApps SAP is developing are focused on business functions that R/3 doesn't already address, Agassi said. For instance, one is designed to help companies formulate and launch new products and services, accelerating the process through better electronic coordination. Another is designed to help stitch together different business systems in the event of a merger or acquisition.

The question remains whether or not businesses, many of which have clamped down on IT spending in the dull economy, will open their pocketbooks for these products. NetWeaver can cost SAP customers as much as several tens of thousands of dollars, depending on their licensing arrangement, Agassi said.

One IT buyer has decided to wait it out on the sidelines because none of the xApps he's seen looks tempting enough. He was also under the impression that the cost of adopting xApps would exceed a million dollars.

"If there were an xApp that was critical to our business, that could give us incentive," said Mike Perroni, IT director at energy giant Halliburton, an SAP IT shop. "But I just can't justify spending millions of dollars on that now."

SAP's new technology initiative is leaving some customers nonplussed, said one analyst. "The initial feedback is that there is a bit of confusion," said Jon Derome of the Yankee Group.

In addition to the confusion caused by changing product names, complex licensing scenarios and product interdependencies, Perroni said SAP's consulting and software partners are starting to call every and any product an xApp, further compounding the problem.

SAP envisions selling as many as 200 different xApps products some day. However, it offers only a few today, and only a dozen or so of nearly 19,000 SAP customers have purchased any. The software maker plans on releasing more xApps this year.

SAP, like software rivals Siebel Systems and PeopleSoft, has launched numerous initiatives over the years to make its products more interoperable and easier to configure. The company's goal is to reduce reliance on IT consultants to customize its products. With technology spending still sluggish, many companies have drastically curtailed their spending on consulting, and on business software in general.

Fees for business software consulting engagements can cost customers millions of dollars--more than three to four times the license fees for the software itself, in some instances.

Many software companies have turned to Web services in an effort to improve the interoperability of their products.

SAP, based in Walldorf, Germany, is among the largest makers of corporate software in the world with an estimated $7.7 billion in sales last year.