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SAP debuts private-exchange strategy

The German software giant trumpets new efforts to tie its Internet-based management software to private exchanges.

German software giant SAP on Monday trumpeted new efforts to tie its Internet-based business-management software to e-commerce exchanges.

The company announced a new strategy to zero in on the development and support of online private exchanges. Through SAPMarkets, a subsidiary that focuses on creating Internet exchanges, SAP said it will provide the software and integration services to help companies form private exchanges with their suppliers and partners.

The company released the news at its annual European customer conference, taking place this week in Lisbon, Portugal.

SAP one year ago inked a joint development deal with Commerce One to build online exchanges through SAPMarkets.

Although online marketplaces have gotten off to a slow start, analysts still see the market growing from $131 billion in 1999 to more than $7.3 trillion by 2004. Private exchanges, in particular, are expected to experience the bulk of the projected growth, prompting many software companies to target the area.

Businesses set up private exchanges to trade goods and services with their own partners, suppliers and customers as a way to help reduce costs and simplify transactions. SAP rivals Oracle, Ariba, i2 Technologies and others have all been moving further into private exchanges despite recent economic difficulties.

SAP is one of the few software companies that did not miss earnings targets or warn of weaker financial results ahead. The company, whose software helps clients manage a wide range of business activities including their financials, payroll, manufacturing and marketing needs, last week reported first-quarter earnings that met analysts' estimates, and did not revise targets for the coming quarters.

SAP's new strategy to fuel the development of private exchanges will incorporate the company's software that automates and handles order fulfillment, customer service, supply chain, logistics, sales and procurement.

SAP also on Monday detailed new supply-chain management software as part of its Net-based suite. Supply-chain management applications help manage a company's inventory and product-demand cycles.

SAP said it is adding an event-management application to its offering, to help businesses respond faster to problems with an order or a supplier and automatically send responses to routine problems. SAP is also making available today its line of supply-chain software via a corporate portal, with the goal of helping a company's complete roster of suppliers and partners gain access to that type of information from one place.

Corporate portals recently became a major focus for SAP. Earlier this month, the company formed a partnership with Internet giant Yahoo and created a new subsidiary, SAP Portals, dedicated to the creation of Web portals designed for the use within businesses.

In other news, SAP announced the latest version of its suite of customer-relationship management (CRM) software--applications that handle a company's sales force, marketing efforts and customer-service activities. Included in the new version are improved ways to access CRM data from several mobile devices.

Additionally, SAP announced its intentions to release SAP R/3 Enterprise, the newest version of its core business-management software, in an effort to help companies still operating primarily on a R/3 system to gradually upgrade to a Net-based back-end system. R/3 is SAP's flagship product that automates a company's back-office functions, such as accounts payable/receivable, human resources and manufacturing.

The new version of R/3 is slated to be released in the second quarter of 2002.