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SAP entering the B2B fray
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March 15, 2000: 7:49 p.m. ET
German ERP software giant forms new unit for building online marketplaces
By Staff Writer David Kleinbard
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NEW YORK (CNNfn) - The German software giant SAP AG said it will form a new company, called SAPMarkets, to build online marketplaces for business-to-business transactions over the Internet, potentially shaking up that emerging market.
Hasso Plattner, co-chairman and CEO of SAP AG (SAP: Research, Estimates) will serve as the interim CEO of SAPMarkets until a permanent CEO is announced. SAP plans to invest up to 500 million euros ($483 million) in the new company, which will be based in the tech haven of Palo Alto, Calif.
Electronic marketplaces enable companies to buy and sell goods and services, as well as doing collaborative forecasting and engineering. Customers, employees, and suppliers are able to work together in a virtual business environment as if they were one company.
SAP is the dominant player in the rapidly growing field of Enterprise Resource Planning (ERP) software, which connects back office operations, such as manufacturing, financials, and human resources, into one integrated system. Supply chain management applications, a subset of ERP software, enable companies to coordinate their logistics, production, and distribution procedures. SAP competes against PeopleSoft, Oracle, Baan, and J.D. Edwards.
Wednesday's announcement places SAP in more direct competition with the business-to-business electronic commerce companies Ariba (ARBA: Research, Estimates), Commerce One (CMRC: Research, Estimates), and i2 Technologies (ITWO: Research, Estimates).
All of those companies have been high-fliers on Wall Street because their market segment is expected to boom. Forrester Research forecasts that business-to-business electronic commerce will grow from $43 billion in 1998 to $1.3 trillion in 2003, accounting for more than 90% of the dollar value of electronic commerce in the United States.
SAP could intensify competition in the business-to-business electronic commerce market because it has deep pockets and established relationships with thousands of companies around the globe.
Last May, SAP introduced a new division, mySAP.com, to contain its Internet-oriented applications, including online marketplaces. SAPMarkets will complement, rather than replace, mySAP.com, SAP said.
"SAPMarkets combines all of our Internet marketplace activities and resources into a dedicated entity, backed by the industry-leading business and integration expertise of the SAP Group and its ecosystem of customers and partners," SAP's Plattner said. 
-- Click here to send email to David Kleinbard
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SAP
Ariba
Commerce One
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