ORLANDO, Fla. -- SAP executives are establishing a $125 million venture fund meant to boost independent software vendor (ISV) development on the NetWeaver platform.
Speaking to reporters at a press conference, Shai Agassi, president of SAP's product and technology group, said the global fund will help spur the development of composite applications and boost innovation in specific niche areas on the NetWeaver platform for customers.
Currently, SAP counts about 1,000 ISVs actively developing on the NetWeaver platform. SAP has been working to foster development of composite applications on NetWeaver.
"This is about building innovation around NetWeaver, but most of all creating more options for our customers," Agassi said.
Agassi said SAP would conduct two investment rounds and bring in venture firms to support each investment. Each investment would be less than $5 million.
Opening up the platform to encourage development has been a main driver for SAP in recent years. SAP has released a series of development kits to open up the code base to partners and identify the services and products being considered by ISVs in their niche market.
The new fund will open SAP up to some risk as it could invest in development of software that no one uses, said Paul Hamerman, vice president of enterprise applications at Forrester Research Inc. However, the rewards are great as SAP will get some return on investment and a major stake in software that is developed on its platform.
"The goal here is to build an ecosystem and generate revenue," Hamerman said. "Some percentage of the companies SAP invests in will bear fruit and that will generate platform royalties."
John Redmond, vice president of product strategy at Advanced Digital Data Inc., a company that develops software for fuel oil, propane, gasoline and lubricant distributors, said his company is looking for ways to partner and develop software off the NetWeaver platform. Redmond said he is attending Sapphire primarily to find out how he can become a partner ISV.
"Our client base is growing larger, and because of that we are serving more SAP customers," Redmond said. "We're seeing new opportunities."
Over the last year, SAP has been taking steps to foster development on its platform. SAP joined an industry group that unveiled a new programming model for service-oriented architecture (SOA). The model includes new specifications that reduce complexity for developers building applications. It provides developers with a way to unify services regardless of programming language and deployment platform.
SAP also launched an Enterprise Services Community process in April to focus on Web services development for specific industries. As part of the community, ISVs and technology partners can achieve the "ES Ready" qualification for their products through a certification process that ensures the proper utilization, adaptability and compatibility of enterprise services.
The program is initially focusing on the banking industry in addition to advancements in radio frequency identification (RFID) technology and geospatial information.
SAP's CFO Werner Brandt, who will be overseeing the fund, has said that revenue from licensing SAP's enterprise services to partner vendors to develop composite applications will exceed license revenue of mySAP ERP software in the future.