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Pandesic CEO to step down

In a split over strategy, the CEO of Pandesic, the e-commerce joint venture of Intel and SAP, will leave the company next month.

In a split over strategy, the CEO of Pandesic, the e-commerce joint venture of Intel (INTC) and German software giant SAP, will leave the company next month.

Bryan Plug is considering a return to SAP, which expressed continued

Bryan Plug
Bryan Plug
support for the project, after his view, that Pandesic should accelerate its global activities, lost out. The resignation occurred shortly after SAP executives expressed concern last month about how slowly the service has rolled out.

Former Intel executive Harold Hughes, currently Pandesic's chairman, will take over Plug's duties as the company focuses on the North American market. Plans to open a European office next month have been delayed until later this year or 1999.

"One of the differences of opinion was how quickly we should expand internationally. The board was of the opinion that we needed to focus more on the United States," Hughes said in an interview. Plug had urged a strong push into Europe now.

"Pandesic will be around for a long time," Hughes said, countering suggestions that SAP may be pulling back from the joint venture. "SAP is very committed to Pandesic."

Pandesic is not the only e-commerce venture to go through a management shakeup this week. Connect (CNKT) announced yesterday that CEO Gordon Bridges will return to his position as chairman, dropping the CEO title that goes to former executive vice president Craig Norris. Bridges had been chairman until a year ago when Connect's chief executive quit after a revenue shortfall.

Bart Foster, Connect's executive vice president of sales and marketing, also is leaving to pursue other interests.

David Baltaxe, analyst with Current Analysis, thinks SAP's talk at CEBit foreshadowed today's announcement.

"You've got to look at what SAP executives said at CEBit, that they were

Harold Hughes
Harold Hughes
somewhat disappointed in the return and the activity seen at Pandesic," he said.

From its launch in August 1997, Pandesic's focus on a turnkey Internet commerce service for smaller companies has puzzled e-commerce analysts, largely because SAP's core business is highly complex enterprise software for very large organizations.

The goal was to get merchants on the Web for start-up fees of around $25,000, then take 1 to 6 percent of revenue as a transaction fee.

Pandesic's service includes marketing, order processing, fulfillment, inventory pricing, materials management, tax calculations, payment processing, shipping, logistics, financial reporting, and vendor payments that stem from Web transactions.

Pandesic, which has about 100 employees, initially focused on consumer-oriented Web storefronts because managing that was simpler than the business-to-business space, Hughes said at the time.

Hughes said Pandesic has found that working with small, fast-growing Web storefronts "becomes a pretty intense partnership very quickly. To make them successful, you have to solve lot of their problems. We found it hard to say 'No' to them, given that our success depended on their success."

Baltaxe also noted that competition is heating up in the small- and mid-sized business segment where Pandesic is focused.

He cited recent announcements of packaged e-commerce solutions from Compaq, which will bundle e-commerce software with its servers for the small-business market and Encanto Networks, which offers a Web server appliance for small companies.

Pandesic is not SAP's only e-commerce activity. It has invested in Commerce One, which is running a service to automate routine purchases by linking back-end systems of businesses and their suppliers, thus making them more efficient.

Pandesic is not the first e-commerce joint venture to experience growing pains. Late last year Netscape bought out GE Information Systems in Actra, their e-commerce joint venture. Actra has been absorbed into Netscape.

Intel is an investor in CNET: The Computer Network.