ERP Vendors Focus on Online Trading Exchanges

ERP players SAP AG and J.D. Edwards are focusing heavily on a huge growth area--online business-to-business marketplaces.

SAP's move involves consolidating all of its current mySAP.com Marketplace offerings within a new company, called SAPMarkets. SAPMarkets will be responsible for all existing and new vertical and horizontal marketplaces. Due to open for business in May, the new subsidiary will be headquartered in Palo Alto, Calif. SAP co-chairman and CEO, Hasso Plattner, will serve as the interim CEO of SAPMarkets until a new CEO is appointed.

Integration is the biggest challenge posed by e-marketplaces, says SAP, which promises to bring to SAPMarkets not only its own integration expertise but also that of its customers and partners.

In a similar move, J.D. Edwards has established a new business unit that will market JDE's applications to online marketplaces. The new unit, headed up by Michael Schmitt, formerly JDE's senior vice president of worldwide sales and marketing, will combine JDE's order fulfillment and supply chain collaboration tools with Ariba's online procurement and business-to-business marketplace software. JDE will also increase its development organization's emphasis on solution integration and interoperability for business-to-business e-commerce.

It's not surprising that ERP vendors are tying their fortunes to online marketplaces. By 2004, electronic marketplaces will account for 53 percent of $2.7 trillion in business-to-business e-commerce, according to a prediction from Cambridge, Mass.-based Forrester Research. E-marketplaces are already fundamentally changing business models. Auto makers like Ford and General Motors have set up trading exchanges to streamline their supply chains and service their suppliers. Many other corporate giants, like Du Pont and Eastman Chemical, have also gotten into the act by setting up trading sites and vertical portals.