SAP’s Strength

Fortune writes about SAP and how it has grown to be in a strong position in the business applications business with nearly 20,000 customers. Here’s a brief on how SAP turned things around:

First SAP paid $574 million for a 20% stake in Commerce One, a California startup that wrote software for Internet-based B2B marketplaces. Then it spent $400 million for Top Tier, an Israeli software company that had developed a portal compatible with SAP business applications. With Top Tier came its precocious CEO, Shai Agassi, 34, who has become Plattner’s heir apparent as SAP’s tech visionary.

Bolstered by its acquisitions, SAP has developed Net-based applications that have moved it from the back office to the front. To compete with Siebel, which pioneered customer-relationship-management software, SAP began selling its own CRM products in 2000. It moved into supply-chain software, competing with i2. One by one, SAP took on startups, which were writing software that used Net standards to bring new computer and communications power to corporate tasks. As customers increasingly demanded one-stop shopping, SAP gained market share. “Two years ago SAP’s product wasn’t there,” says Mohammed Moawalla, a software analyst at Goldman Sachs in London. “Now they’ve got it.”

Agassi is pushing SAP further on the technology front. He has insisted that SAP make its applications compatible with the underlying web-services software produced by Microsoft, IBM, and others. He has also mapped out new products called xApps, meant to combine bits of software from a human-resources application, say, with those from a financial application. Such a package could, for instance, make it easier to plan how many people to lay off in an acquisitionsomething Ellison might find handy should he succeed in buying PeopleSoft. “Because of the Internet, we can do things we never could do before,” says Agassi. “Before we spanned a sliver of the enterprise. Now I can span the entire enterprise.”


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Rajesh Jain

An Entrepreneur based in Mumbai, India.