SAP Goes After Internet Big Time

Another software giant has stepped up to the plate hoping to knock in an e-commerce home run. But some analysts say even if it hits one out of the park — it could be too little too late.

Waldorf, Germany-based SAP AG, the fourth-largest software firm in the world, fired off a string of dazzling announcements last week at an annual European conference held in Nice, France. According to Reuters, SAP co-chief executive Hasso Plattner summed up the company’s new strategy with one sentence: “We are going Internet big time.”

This “big time” will include creating its own Internet portal that will provide an interactive online directory linking corporate buyers with suppliers of a variety of goods including computers, e-commerce software, office supplies — and even travel services.

SAP also said it would start selling a lower-priced version of its enterprise software that automates, then links basic “back-office” operations, such as manufacturing and shipping.

But critics of SAP — which pumped out over $3.5 billion in revenue last year — argue this may not be enough for a company that has been so slow to develop competitive e-commerce software that can be used over the Internet. They point to rival Oracle Corp. as an example of a company that’s adapted by already bringing such web-enabled products to market.

Meanwhile, SAP has been blaming its customers’ preoccupation with fixing their Y2K problems for its drop in enterprise software sales. But some industry experts say they could be flattened even more by a recent Internet phenomenon: Application Service Providers.

New ASPs such as Annapolis, Maryland-based USinternetworking are popping up all over the country. They lease expensive enterprise software to small and large companies, for a fraction of what it would cost to buy such high-end e-commerce applications from SAP.

Concerns about using a sometimes-unstable Internet as a permanent platform, plus the probability that current software packages being leased will quickly become obsolete have — so far — held ASPs in check. But if these issues are ever resolved then what?

What do you think? Let’s talk about it.

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