/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsSiobhan Kennedy
NEW YORK: German software giant SAP AG on Tuesday said it will deliver its
business software as Web services, making SAP the latest major technology firm
to embrace a trend that allows businesses to connect computer systems more
easily than before.
But Europe's largest software maker faces stiff competition from giant rivals
Microsoft Corp., International Business Machines Corp., Oracle Corp., and BEA
Systems Inc.
SAP said it would introduce a new version of its application server - the
underlying technology upon which software applications are built - that will
enable companies to build Web services using SAP's own technology or Java.
Java, the programming language developed by Sun Microsystems Inc., is popular
with developers because it can run on almost any computer system.
"We're going to see an immediate increase in ... sales revenue as a
result of these announcements," Hasso Plattner, SAP's chairman and chief
executive told Reuters, adding SAP had already signed a new customer for its
customer relationship management facing software off the back of Tuesday's
technology announcement.
"This will definitely help us in CRM against Siebel," Plattner
added.
SAP's move, announced ahead of its TechEd software developers conference in
Los Angeles on Tuesday, is seen by many as a blow to rival Microsoft's fledgling
.Net Internet strategy, which aims to develop Web services in the same way, but
using Microsoft's own software programming language.
"That SAP is putting so much emphasis on this announcement reveals their
belief that integration software is the gatekeeper for the next major wave of
applications growth," George Gilbert, an analyst with Credit Suisse First
Boston, said in a research note to clients on Tuesday.
Customers want Java
SAP said it would not provide its customers with the ability to develop .Net
applications from scratch, but it insisted it would provide connectivity,
through Web services, to .Net applications.
"That's what our customers told us they wanted, so that's what we
did," said Peter Graf, vice president of marketing, SAPMarkets, Inc., the
division set up by SAP to focus on online marketplaces and integration.
"We're not for or against anybody," Graf told Reuters in an
interview last week ahead of the announcement.
Separately, Microsoft on Tuesday also made its latest push into Web services
by announcing new technology to help suppliers get their products available on
line. The idea is for buyers to access suppliers as if they were Web services on
the Internet, in the same way they might access portions of SAP's applications
to carry out specific tasks.
The idea of linking applications across multiple companies is not new. An
entire industry, led by companies such as IBM, webMethods Inc. and TIBCO
Software Inc., has evolved over the last five to six years specifically to do
this.
SAP's shares closed up 2.7 per cent at 126.70 euros on Germany's DAX stock
exchange. In the US, the company's shares closed up almost 6 per cent, or $1.60
at $29.11 on the New York Stock Exchange, off their year high of $53.15.
Web services still very new
The idea of linking applications across multiple companies is not new. An entire
industry, led by companies such as IBM, webMethods Inc. and TIBCO Software Inc.,
has evolved over the last five to six years specifically to do this.
New or not, Web Services is the latest industry buzzword, endorsed by the
leading Internet standards organizations, for achieving that same aim.
The idea is to unlock the vast amounts of corporate data that exist and
repackage it as smaller applications that can then be combined with other
applications and sold as services over the Internet.
Web services can perform simple tasks, such as online insurance quotes or
credit checks. But those services can also be combined and personalized to carry
out more complex business tasks, such as managing purchasing contracts with
suppliers over the Web.
SAP will make all its existing and future business applications available as
Web services, Graf said. And both SAP's online exchange product and portal
software, which provides users with a Yahoo! style Internet access to their
applications, will also support Web services.
"The whole concept of Web services is still very new," said Lance
Travis, an analyst with industry research firm AMR Research, noting that it
would be several years until the technology is in full use. "But this is
SAP saying 'We're going to make it a lot easier for you to do than we have done
in the past.'"
The strategy also makes sense for SAP financially, because the company can
capture revenue from its 14,000-strong base of business customers sales which
might otherwise have gone to an integration company such as webMethods or TIBCO,
said Joshua Greenbaum, principal consultant at Enterprise Applications
Consulting in Daly City, California.
"Having said that, SAP needs to execute the strategy," Greenbaum
said, adding that a lot of SAP's Web services technology will not be available
until June or July next year.
"They have to prove that they can be as good an integration company as
webMethods and as good an application server vendor as IBM or BEA, and that's a
tall order," Greenbaum added.
(C) Reuters Limited.