SAP weaves an enterprise web

From an ERP giant to an infrastructure vendor—that’s the transformation SAP is attempting to pull off. With its NetWeaver platform, the company wants to be the preferred choice for application integration in the large installed base of SAP customers, says Srikanth R P

NetWeaver takes into consideration all the aspects associated with integration - people, process and information integration, existing SAP R/3 customers can use NetWeaver to lower their total cost of ownership says Atul Sareen

Although SAP is a giant in the ERP space, the company is looking beyond ERP. SAP has made its architecture Web services compliant and it aims to occupy the space between SAP applications and non-SAP applications with NetWeaver. Padman Ramankutty, CEO, Bristlecone calls NetWeaver a classic move from SAP to penetrate the white space where standard enterprise application packages do not reside. The EAI space is a billion dollar business and traditionally other players have made money there at SAP’s expense. The service oriented architecture of NetWeaver means that customers can use this platform to lower their TCO without spending a bomb on integrating SAP and non-SAP applications. Sources at SAP say that NetWeaver today is as important to the company as the three-tier client server architecture that SAP rode on its way to becoming an ERP giant. Today, NetWeaver is the common engine binding together SAP’s ERP, CRM, SCM, SRM and PLM.

NetWeaver and the underlying Enterprise Services Architecture (ESA) are a major part of SAP's message as to why existing R/3 customers should upgrade to the mySAP product line. - Jim Shepherd, AMR Research

Says Atul Sareen, Sales Director, BFSI and Technology, SAP India, “The vision of NetWeaver came about due to the changing landscape of the ERP space. In the 1990s, ERP packages were restricted to internal processes. But as organisations have started interacting with entities outside their traditional boundaries, they faced integration issues with systems which were not run on SAP. As NetWeaver takes into consideration all the aspects associated with integration – people, process and information integration, existing SAP R/3 customers can use NetWeaver to lower their total cost of ownership.”

While an enterprise portal can also be used to do this, the application is useful only when information at all levels is integrated into the system. In the case of NetWeaver, the enterprise portal is integrated with the ERP system. As the system has a plethora of role based templates and business content, tailored content for various industries in various roles is available. Additionally, the business warehouse can be used to access information in unstructured information sources such as text files, PowerPoint presentations and audio files. Indian companies such as Asian Paints, Bajaj Auto and Mahindra and Mahindra are using NetWeaver. It consists of several core components including Enterprise Portal, Business Warehouse, Web application server, Exchange Infrastructure and Master Data Management.

The X factor

The platform also includes a composite application framework and developer studio. The main objective of the framework is to combine existing SAP application components with components developed by third party vendors and create an application that address specific business needs. SAP calls these applications Cross Applications or xApps. xApps can sit on top of existing applications irrespective of the platform or vendor. This means that xApps can be used to pull data from different information sources to help a business user analyse information. For example, in a typical R&D setup whenever there is a problem with a project, the management needs to draw information from different systems to get a project’s status. Depending upon the status of the project, the management can decide to allocate resources which can be stored in anything from a simple Excel sheet to proprietary software. In such scenarios, a xApp could be useful in extracting data from different applications. Whirlpool

uses a xApp called Resource and Portfolio Management to track and manage product development across different product categories. SAP plans to strengthen the market for xApps by certifying applications developed by ISVs.

Says V Chandrasekaran, VP, Solutions & Application Management services, Bristlecone, “While SAP has made significant inroads into the world of providing IT systems for logistics, finance and SCM, most customers have backoffice application systems from other vendors like PeopleSoft or Oracle. However, [maintaining] a mix of these systems has brought in significant challenges. For example, business users face a problem in terms of extracting information from multiple systems and manually tallying it. SAP has taken the leadership in providing the NetWeaver platform to address these business problems. NetWeaver works across multiple application systems and provide a single consistent view of combined information. We believe that large companies have got their base information systems in place, and the next problem to solve is that of breaking application silos.”

Best of both worlds

Customers would definitely like to ease the pains of heterogeneous environments with NetWeaver. - Vivek Shiroor, L&T Infotech

The most significant advantage is the Web application server that allows for integration with two rival camps, Sun’s Java and Microsoft’s .NET. SAP has announced a partnership with Microsoft which will focus on integrating elements of .NET with NetWeaver. With SAP Web Application Server, programmers who are not proficient in Java can still build components using ABAP, while the Web server itself is a 100 percent compliant J2EE server. The NetWeaver platform also includes a business intelligence tool that can be integrated with other SAP products.

Says Vivek Shiroor, Head of SAP SBU, L&T Infotech, “Many customers had built their own solutions which did not have the robustness needed to work in multiple technology or multiple location environments. Customers would definitely like to ease the pains of heterogeneous environments with NetWeaver.”

Another feature which could give SAP a competitive edge is Master Data Management (MDM) services which is SAP’s standardised offering that solves multi-system data integration challenges from diverse organisations. MDM also ensures information integrity across the enterprise. For example, in a large enterprise, a particular class of product could be represented and classified under different categories by different departments. A product like lead refill can be categorised under writing instruments or office supplies. The problem arises when a company wants to drill down into each product category and find out how much it is spending upon that particular product. If the product is classified under different categories, it becomes difficult for the company to know how much it is spending on it. As MDM ensures that data is represented the same way across different enterprises, organisations can improve their spend analysis for product procurement.

Lynchpin to future growth

Looking at NetWeaver’s potential, SAP believes that this platform will form the foundation for its future success. Says Pravin Kulkarni, General Manager, Wipro SAP alliance, Wipro Technologies, “The base ERP market is saturated in mature economies. The opportunities are going to come from areas where ERP penetration is still low or from existing clients who see value due to reduction of the TCO of their existing IT assets. NetWeaver components do the second job very well. The client does not have to bother about integrating disparate systems or dealing with multiple vendors. From SAP’s perspective success around NetWeaver is extremely important to keep its revenue growth and compete well.” Kulkarni also believes that organisations can leverage their skilled SAP resources. Says he, “With NetWeaver, an organisation does not have to start looking for people who have skills in SAS, WebSphere or MQ-Series.”

Apart from solving integration issues, NetWeaver gives SAP an opportunity to convince existing R/3 customers to upgrade to the mySAP product suite. Says Jim Shepherd, Senior Vice President, AMR Research, “NetWeaver and the underlying Enterprise Services Architecture (ESA) are a major part of SAP’s message as to why existing R/3 customers should upgrade to the mySAP product line. NetWeaver also improves SAP’s ability to integrate with third party applications within the client’s own portfolio or to enable e-commerce with suppliers and partners.” With around 600 customers, 1000-plus installations and around 100 wins in 2003 alone – SAP has been growing at a fast rate in India.

Facing off with EAI vendors?

While NetWeaver eases integration issues — this positioning by SAP could keep middleware companies like IBM and BEA out of its installed base. So is SAP taking on traditional EAI giants? Says Jim Shepherd of AMR Research, “We do not believe that SAP is really interested in competing with IBM, BEA and other players in the general EAI market. However, it does want to convince its large customer base to begin using SAP’s tools rather than third party products – at least where the integration involves data or logic within SAP’s applications.”

Agrees Pravin Kulkarni of Wipro, “This is an age of co-petition. For example, if a company has standardised on SAP as its enterprise-wide backbone and all other applications are integrated with the SAP system, it makes sense to go in for NetWeaver as the EAI tool. In these cases, NetWeaver would compete with existing EAI vendors. On the other hand, SAP is working out with competitors such as Microsoft to work out interoperability between .NET and NetWeaver so the client does not have to throw out investments in one to use the other.” As SAP has a dominant market share in the ERP space, analysts expect SAP to make big gains through the NetWeaver platform.

srikanth@expresscomputeronline.com