SAP's new Marketplace?

SAP is to split off its mySAP.com divisions, consolidating them into a new business called SAPMarkets.

The launch of the new venture, due in May, will mark a massive change in SAP's corporate philosophy.

Take your partnersSAP is providing 500 million euros in funding, and initially the company will be a subsidiary of the SAP group. SAP spokesman Prashanth Narasimha suggested that the new company will actively look for new partners.

"SAPMarkets requires a very different structure - a very different way of development. We know we need partnerships," he said. Earlier reports suggested that SAP is considering options including launching SAPMarkets as an independent business unity onto the US stock markets.

The only firm management announcement is that Hasso Plattner, co-chair of SAP, will take the position of interim chief executive, but insiders said the company wants to attract an outsider to the chief executive slot, preferably one with start-up experience.

One insider said: "For SAPMarkets to compete effectively, it needs management that has no SAP legacy and a strong B2B focus."

Others tipped for top positions are recent appointees Ajit Nazre and Peter Graf, both of whom are said to be Plattner favourites. Nazre is currently Plattner's assistant, while Graf is widely credited for formulating the mySAP.com initiative.

Narasimha confirmed that the idea came out of SAP's Palo Alto labs, but denied industry gossip that Plattner is using this as a vehicle for bringing the powerful German development group to heel. Analysts have long held the view that the cultural divide between a strong engineering focus in SAP's Walldorf HQ and the more agile units in America and Bangalore, have hindered SAP's ability to compete effectively in the newly emerging internet markets.

That sector is dominated by Ariba, CommerceOne and Oracle. "When we've met with SAP engineers in the past, the whole body language is one of resistance," said Dave Boulanger, director of AMR Research's SAP advisory unit. "SAP is not losing confidence in Walldorf, we see it as a natural development," responded Narasimha.

Hidden agendaBut there may be other reasons for the move. SAP has struggled to remain competitive, and its ability to continue growing at double digit rates looks doubtful. If SAPMarkets is a success, then SAP could make a large profit from a flotation. A representative at UK based industry analysts TBC Research, said: "It's a good way for them to make money on the back of the internet market bandwagon."

From a product perspective, the move marks a sea change in SAP's core philosophy of being the provider of business process integration software. "Times have changed, and success comes from recognising that looser integration to back-end processes is what's needed today," said Narasimha.