SAP takes on Oracle in the internet applications space

SAP's flurry of internet related announcements over the last couple of weeks have been welcomed by analysts as a much needed first step to upping the ante against arch rival Oracle in the web space.

The German vendor has been much criticised to date for missing the internet boat, but is now attempting to aggressively reposition itself as a web-centric applications supplier and steal a march on Oracle, which has been marketing itself heavily in this space for some time.

As a result, SAP last week trumpeted the fact that it was joining forces with Robert Bosch, Continental, INA Walzlager Scheffler and ZF Friedrichshafen to create a collaborative marketplace for selling components to car manufacturers and to improve communications within the automotive industry.

This week at Sapphire America, it also revealed that Nestl‚ had licensed the vendor's mySAP.com Workplace portal, which will be used by all of its 230,000 employees.

This was followed by the announcement that it was taking a $250m equity stake in ecommerce infrastructure supplier, CommerceOne. The stake is intended to seal a pact whereby CommerceOne, which has established a strong position in vertical markets such as automotive, aerospace and energy, will integrate its technology with SAP's supply chain, customer relationship management and business intelligence applications.

CommerceOne is, however, also working with Oracle to build a marketplace to try and improve the buying efficiencies of automotive manufacturers, including Ford, General Motors and DaimlerChrysler. Covisint, the renamed Ford AutoXchange, is currently talking to the SAP consortium about integrating the two marketplaces.

When Mark Hoffman, CommerceOne's chief executive was asked how the SAP partnership was likely to affect the Oracle relationship, he said: "The space we're going after will comprise between 25 and 30 key verticals and yes, this provides an opportunity to bring applications to the automotive exchange."

Oracle keeps its cool
But Oracle professed to being unfazed by SAP's announcements. Phil Wood, who leads Oracle UK's ecommerce initiatives, downplayed its rival's move, saying that Oracle partnered with CommerceOne on the Covisint project alone and had no other dealings with it.

And Oracle has made it plain that it wants the Covisint deal to itself, although it is prepared to continue working with CommerceOne for the time being. Mark Jarvis, Oracle's head of marketing, said: "Of course we'd like to see Oracle throughout."

But Wood was also sceptical about SAP and CommerceOne's ability to provide the promised gamut of collaborative applications that cover areas ranging from design to execution through to fulfilment.

"SAP talks about collaborating, but has it admitted defeat on its applications or will we see a new suite rising from the ashes of current development efforts? Is it an alliance to plug gaps? We'll have to see how it works out," he said.

He continued: "That's a bloody tall order. If it thinks this is hard work, then it pales into insignificance if one is talking about engineering design collaboration. It's an area none of us have been into before, it will be a long time coming."

And Wood claimed he was confident that Oracle would continue to win both mind and market share for its 11i applications and said he welcomed the opportunity to compete. "I don't think anyone wants to see Oracle ending up in a dominant position. It's good there is a strong competitor in the marketplace," he added.

Oracle alone with its old ERP message
But analysts are not so sure Oracle will continue to lead the game in the same way it has for the last year. Pollard said: "This leaves Oracle standing alone with the old ERP [enterprise resource planning] style message of the one stop shop approach. It will be interesting to see whether it can sustain that message."

And SAP executives appear much more upbeat than they have been for two years. Chris Larsen, head of SAP Markets' field operations, said: "We've delivered and the buzz is back."

Pollard agreed: "This is good news and is exactly the right thing for SAP to do at this time. It moves it two rungs up the ladder and is a recognition of time to market over engineering excellence."

But while industry analysts believe that SAP's internet rebirth creates a new competitive landscape, the vendor and Oracle agree on one point - that the marketplaces of tomorrow will require more rather than less integration work.

As Plattner said: "No single supplier can expect to do it all - it just isn't feasible," a sentiment with which Oracle's Wood - for once - agrees.