here is the sap news: SAP to Announce Deals to Create
At Least Ten Business Portals
By NEAL E. BOUDETTE
Staff Reporter of THE WALL STREET JOURNAL
interactive.wsj.com
SAP AG says it is about to gain some important ground in the race to supply software for business-to-business commerce on the Internet.
By the end of the year, the German company expects to announce agreements to create at least 10 business portals to handle communications and transactions between major global companies and their suppliers, SAP Co-Chief Executive Hasso Plattner said in an interview.
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One of the portals will host an online marketplace for German chemical companies, he said. Bayer AG, BASF AG, Hoechst AG and others will be able to buy nonproduction supplies such as office products, Mr. Plattner said. He declined to give additional details because not all the agreements are complete, but promised they would include big corporations in Europe and the U.S.
Leaning back in a chair at his estate in the hills north of Heidelberg, Mr. Plattner said, "Industry is starting to come to us."
SAP dominates the $20 billion (19.76 billion euros) market for software that runs companies' internal processes like manufacturing and purchasing. But in the case of e-commerce software, the company has failed to take the lead and has fallen behind such scrappy start-ups as Ariba Inc. and i2 Technologies Inc., both of the U.S.
Although the company's e-commerce software, mySAP.com (www.mysap.com), is now shipping, its late arrival has taken a toll. In October, SAP was shut out when Ford Motor Co. selected rival Oracle Corp. and General Motors Corp. went with Commerce One Inc. for portals that will eventually host billions of dollars in business between the car makers and their suppliers.
The Commerce One Choice
"There's a lot of promises not getting realized out there and we wanted to go with somebody who is doing transactions now. Commerce One is doing transactions," said Alan Turfe, executive director of the trading-exchange initiative at GM, which gave some consideration to mySAP.com.
Mr. Plattner insisted the situation is about to change. "There are at least 10 major marketplace deals that will be out by the end of the year," he said. Last week, Hewlett-Packard Co. signed a $36 million deal to use a portion of mySAP.com for purchasing transactions.
In some of the deals, SAP will operate the portal for groups of companies in specific industries and take a slice of the revenue, giving the company a continuing revenue stream. Mr. Plattner declined to estimate the value of the contracts, but said in five years the e-commerce business could make up to 10% to 20% of its total revenue.
Setting aside the share price's monthlong run that culminated Friday in a 10% gain to 534.50 euros, SAP sure could use the good news. Until this spurt, its growth had stalled as companies turn away software investments from optimizing internal operations and toward building Internet links to suppliers and customers.
Meantime, scores of U.S. employees have defected to rivals and dot-com start-ups dangling stock options, something SAP does not yet offer.
Then in October, SAP's name was tarnished when Hershey Foods Corp. and Whirlpool Corp. suffered shipment delays after starting up computer systems based on several software products, including SAP's flagship R/3 program. Mr. Plattner said the hiccups at Hershey and Whirlpool were typical for large automation projects and have been resolved. "Both are now reference accounts for us," he said, "but this kind of publicity hurts."
Troubled Launches
To identify the causes when things go awry, and to help prevent repeat problems, SAP is trying to form a board of industry experts to investigate troubled launches. Mr. Plattner said the board would be similar to the National Transportation Safety Board in the U.S., which investigates the causes of plane crashes.
SAP expects International Business Machines Corp., Microsoft Corp. and Andersen Consulting, which combine to sell products and offer services in the U.S., to participate. The board will focus on SAP implementations first, but Mr. Plattner hopes to get competitors involved. "The industry needs this," he said.
SAP itself desperately needs a stock-option plan. It hasn't offered one because German shareholder and tax laws make option plans difficult and expensive. Last week, the company said it will ask shareholders on Jan. 18 to approve a plan to award up to 6.5 million options to about 1,100 managers out of its work force of 22,000 people.
But in Germany, where a single determined shareholder could stop an option plan, approval is hardly assured. "I am confident a majority will understand the need for options. I'm not confident there will be no one obnoxious who wants to block it," Mr. Plattner said.
Without options, SAP has been almost defenseless as dozens of employees have bolted SAP America Inc. this year for companies like i2 and Ariba, fast-growing suppliers of e-commerce software. One competitor alone, Siebel Systems Inc., has taken at least 27 SAP America executives in the past 12 months, the Germany company said.
Fallout Played Down
Mr. Plattner played down any fallout from the defections. "Long term, no impact. Short term -- yes, if somebody who was about to close a deal, then it's a problem. Profitability suffers because there's a heavy impact on costs. But I believe, even if somebody very good leaves, there are at least two people ready to take his spot."
But a lawsuit filed by SAP America in September against Siebel alleges that the San Mateo, Calif., company's "predatory hiring" has damaged SAP's business. Mr. Plattner said he hoped the suit would halt what the lawsuit called Siebel's "pirating" of SAP employees. He declined to say what SAP sought in damages, saying that would "be up to the court, or the jury."
The lawsuit does not allege Siebel has acquired documents, computer disks or other sensitive property belonging to SAP. But Mr. Plattner said he is concerned because three of the former employees -- Andrew Zoldan, Alex Ott and Narina Sippy -- participated in high-level strategy meetings before departing.
Mr. Zoldan, who was head of SAP's "New Dimension" products and now is working on Internet applications at Siebel, declined to comment when reached by telephone. Mr. Ott could not be reached. Ms. Sippy did not return phone messages. Mr. Ott was head of SAP's Latin American sales and is now Siebel's European sales chief. Ms. Sippy worked in public relations at SAP and is now in Siebel's marketing department.
Mr. Plattner said the fourth quarter would show no softness due to staff turnover. Overall the quarterly results depend on whether SAP can close some major deals before the end of the year. "If we get all that are in the pipeline, there is upside," he said. Previously SAP said full-year revenue should grow 15% to 20% with profitability lower.
Write to Neal E. Boudette at neal.boudette@wsj.com |
