Like any trend-watcher, I tend to pick out and dwell upon defining moments. Earlier this month, a subtle turn of events occurred in the B2B e-commerce arena that should have set off flashing red lights.
E-business software giant SAP (NYSE: SAP)
(NYSE: SAP) opted out of an
e-procurement software licensing agreement with
beleaguered partner Commerce One (Nasdaq: CMRC), just
days before Commerce One's dismal fourth-quarter earnings report.
It is unclear whether SAP's 20 percent stake in Commerce One will be next on the chopping block. What is clear is that the dissolution of the software pact highlights a prevailing B2B trend: "inside-out" e-business.
Today's companies are looking to shore up
e-business
systems inside the organization and
then extend them outward to trading partners. This
was not the case just a few months ago.
Back in the Day
SAP first linked arms with Commerce One in 2000, aiming to benefit from the then-exploding electronic marketplace arena.
At the time, Commerce One stood atop the promising realm of online exchanges, which let multiple buyers save time and money by transacting with multiple sellers.
Marketers lauded the duo as the "dream team for the new economy."
As we now know, though, old economy principles still rule. And in most industries, the complexity of the purchasing process undermined the value of price-centric marketplaces.
With the precipitous meltdown of e-marketplaces over the past year, Commerce One is piecing together a new survival strategy based largely on enterprise procurement software.
Enterprising Vendors
But Commerce One isn't the only company abandoning e-marketplaces in favor of enterprise-focused applications.
SAP also has its own procurement application, called mySAP Supplier Relationship Management.
With e-marketplace opportunity severely limited, what use does SAP have for Commerce One in the enterprise space?
Not much, as indicated by its decision to disentangle itself from the e-procurement software licensing deal.
SAP at Center Stage
SAP now finds itself enjoying a spotlight that shone almost exclusively on Commerce One and archrival Ariba (Nasdaq: ARBA) during the e-marketplace boom.
After earning its stripes as an ERP vendor, SAP waited in the shadows, making a few friends in the e-marketplace world while still taking care of the complex back-office processes shunned by neophyte online exchanges.
Now, risk-averse companies are increasingly straining to leverage existing in-house technology investments, rather than bringing in new technology.
Positioned Player
SAP couldn't have written a better script. With its
back-office background, the company is perfectly positioned to
build on existing ERP
and other business system
installations and integrate them within the enterprise
and with external business partners.
Indeed, future e-business gains presumably will stem from early-phase partner collaboration made possible by integration technologies like Web Services.
Outside-in forces like e-marketplaces, which often overlook business partner integration issues, now are finding it hard to demonstrate their value.
Role Reversal
I would not be surprised if SAP were to distance itself even further from Commerce One in the coming months.
Even Commerce One's eleventh-hour return to its e-procurement roots does not increase its value to SAP, given SAP's own procurement product.
With the market's renewed focus on enterprise applications and their integration with trading partners' systems, Commerce One needs SAP a lot more than SAP needs Commerce One.
What do you think? Let's talk about it.
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Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.