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IBM and SAP Bring Process Integration to the Mid-Market

Analysis of News Events
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Over the last two months, IBM and SAP have been launching campaigns to help mid-market companies integrate their business processes on an end-to-end basis. While the vendors have long been partners with each other, their new campaigns could strain their relationship. Though the two IT giants see eye-to-eye on many issues, they have different visions for how companies in general and SAP customers in particular should integrate their business processes.

It all began in late January, when SAP announced a bold initiative to expand the capabilities of its NetWeaver family of products. As many SAP customers know, NetWeaver is a middleware platform that allows users of the vendor's flagship product, mySAP ERP, to integrate their other applications with the solution suite. Later this year, SAP will incorporate NetWeaver into the mySAP Business Suite family of applications. In 2006 and 2007, NetWeaver will also become a part of SAP Business One and mySAP All-in-One, the vendor's solutions for smaller firms.

Until now, NetWeaver has been a proprietary platform that focuses on application-to-application integration. Two months ago, however, SAP announced that it will extend various NetWeaver components to create objects that can integrate higher-level business processes across applications. Just as importantly, the software vendor will provide open interfaces to these objects so that independent software vendors (ISVs), systems integrators, and customers can build applications on them. For instance, a systems integrator with expertise in the retail industry could take a NetWeaver procurement object and use it to integrate purchasing processes across SAP and non-SAP systems.

To put the spotlight on its new layer of integration components, SAP is giving it a name--the Business Process Platform. Like NetWeaver, the Business Process Platform will become an integrated part of every SAP application suite by the end of 2007. Moreover, SAP is launching a campaign to recruit ISVs and systems integrators who will build solutions on the Business Process Platform. To make its recruitment drive a success, SAP has hired George Paolini, a former Sun Microsystems executive who managed the Java developer's community, to develop the Business Process Platform partner ecosystem. From statements that Paolini has made, it seems clear that he wants to fashion SAP's partner ecosystem after the developer communities that have formed around Java and the Eclipse development platform.

A Bailiwick for Big Blue?

The Business Process Platform poses something of a dilemma for one of SAP's most important partners, IBM. On the one hand, IBM generates millions of dollars by selling servers that host SAP software and providing the consulting services to install that software. On the other hand, IBM often finds itself at loggerheads with SAP when it comes to NetWeaver. Many NetWeaver products compete directly with IBM's WebSphere portfolio of middleware. Moreover, IBM is evolving WebSphere into a platform for business process integration just like SAP is doing with NetWeaver, and IBM is recruiting Business Partners to develop on its platform.

As such, SAP's campaign to create an ecosystem of partners that use NetWeaver and the Business Process Platform presents perils for IBM. That campaign could pit the two partners against each other in a fight for the mind share and development budgets of hundreds of mid-market ISVs and systems integrators. In such a fight, both vendors could find it difficult to maintain the spirit of cooperation that they have fostered with each other over many years.

If such a fight does break out--and let us hope it does not--this analyst will lay odds that IBM gains the upper hand. I base my wager on the fact that IBM, unlike SAP, has spent years creating a corporate culture for partnering with solution providers. Indeed, IBM announced last month that it is launching an initiative to help its partners provide process integration services to mid-market companies. As part of this initiative, industry experts from IBM's Business Consulting Services (BCS) unit will work with regional systems integrators to help mid-market companies overcome process integration challenges. In addition, IBM is working with Business Partners to develop WebSphere-based business integration solutions for over a dozen industries.

By contrast, SAP has a history of not working well with partners. While the company is certainly making a substantive effort to change this state of affairs--notably by hiring channel executives from outside the firm--it still must overcome a "not invented here" mentality that pervades the company. Moreover, SAP is basing much of its partner strategy on a platform of prebuilt application components that is still on the drawing boards. The Business Process Platform bears a striking resemblance to another ambitious community development strategy that never got off the ground--IBM's ill-fated San Francisco Project. As the executives who worked on that project will tell you, getting developers and systems integrators to work together on a repository of basic business objects is like trying to herd cats.

In short, SAP will have its work cut out for it to make its Business Process Platform a success. Given its vast resources and ability to sustain strategies over multiple years, I am fairly certain that it will achieve some success among its own customers. IBM, on the other hand, will do best among customers who rely on multiple vendors for their enterprise applications and have no intention of standardizing on one of them. That will leave thousands of iSeries customers who rely on SAP applications with big decisions to make in the coming years. If you happen to be one of those customers, I suggest that you watch this space closely.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

LEE KROON
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.
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