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SAP Portals, Markets merger: Good or bad for customers?

With any luck customers will barely notice the merging of SAP Portals and Markets into one unit later this year.

The merger of SAP Portals and Markets may mean more innovative products and better customer service.

That is the conclusion of some analysts to SAP's announcement last month that it intended to merge the two units into a single unit.

SAP said the unification would not only streamline and empower the new, so far unnamed, company, but would result in more rapid development of integration technologies and collaborative applications.

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That sounds nice, but how will this impact the average SAP customer?

Analysts said the merger-- expected to be complete by the end of the quarter -- means customers should see more product enhancements and other benefits. In the short term, there might be some slight bumps on the road, but going forward it seems like it could be a beneficial move for all parties, analysts said.

SAP Markets is the exchange subsidiary of the SAP world. Since it opened for business in May, 2000, it has focused on selling and buying products, and on providing related business services. SAP Portals is another key subsidiary that joined the SAP ranks just last year, offering enterprise portals, business intelligence and other technologies.

Benefits cited

Gene Phifer, vice president and a research director at Gartner information technology analysts, Plano, Texas, said there are some definite benefits to unifying the two groups together within SAP. By pooling the resources, Shai Agassi, the chief executive officer of the new company, will have a powerful army of developers at his command. As a SAP customer, this means you can look forward to some good product enhancements on the horizon, Phifer said.

The new company will offer a more complete set of solutions and serve a broader scope of users, Phifer said.

"I know the Portals guys have some significant plans in going beyond the current world of Portals, and having Markets as part of that organization is going to enhance the ability to evolve," he said.

Albert Pang, e-commerce software research manager at IDC, Mountain View, Calif., agrees. This will streamline the way users deal with SAP, creating a one-stop-shopping solution rather than making the users chase different sales people with different product lines, he said.

In addition to convenience, gathering the developers under the same umbrella can help prevent compatibility issues, Pang said. In the past, development teams could be somewhat scattered and might not use the same code base. The unification will help standardize the way new products and upgrades are developed. This can decrease the need for time-consuming tweaking when upgrading systems.

Management could be stretched

In the short term, there could be some minor issues because of the sheer size of the merger. The management of the new company will be stretched to its limits, but Phifer said he is very confident in Agassi's abilities.

"Shai [Agassi] has shown through his performance that he can run a large organization and delivers what he commits to," Phifer said. But, he said, Agassi has grown from being a guy who runs a small $20 million dollar company in April last year. He's growing quickly, but since this is such a huge step, it might not go as smoothly as everyone would like, he said.

As the companies and the technologies phase into each other, there will be a lot of retooling. This retooling may cause a slowdown in the delivery of new functionality in the products, Phifer said. Assimilating the infrastructure will take time, and bodies that would otherwise have worked in development might get called in to help. As a result, there is bound to be slippage in some delivery schedules, he said.

Pang sees a brief period of unrest over the next three to six months, when current users should prepare for a slightly bumpier ride. There can be some initial consistency issues, but it's too early to tell how severe they may be, he said.

The move might rock the boat with some partners. Commerce One, i2 Technologies and Siebel are companies that may consider the merger a problem, Phifer said. Going from being a "partner" to a "partner/competitor" is an important shift in terms of openness. Sales people won't share information the same way, and may not bring in the others until later in the process now. But if everybody remains professional about things, it shouldn't hurt customers, he said.

What to look out for

Gartner recommends SAP users continue business as usual, but pay close attention to the future development of the merged subsidiary. One thing to look out for during the next six months is what kind of partnerships the new company establishes, and what they do with their old relationships, Phifer said. This indicates whether they are going forward with their plans of increased openness. If they play ball rather than try to do everything themselves, it is a good sign.

The same goes for what they do with their new architecture, Phifer said. The more open they make it, the more flexibility there will be for the users. This is good news for most users, who have other systems alongside with SAP and therefore will be able to enjoy the same functionality that they would have in a pure SAP environment.

Customers about to make a purchasing decision in the near future should be as diligent as always, but should not worry about the changes within SAP, Phifer said. He recommends customers keep informed by reading trade magazines and analyst reports, and make use of research companies. He also advises customers to talk to reference accounts that have been around for some time. It takes nine months to a year to truly learn a system, and make sure it has been deployed across a business, he said.

He also recommended launching a pilot project, spending six to 10 weeks on a pilot to thoroughly evaluate the technology. At that point customers should start seeing signs of what the merger has in store, so they will have a much better idea of what decision to make, he said.

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