How SAP Plans to Beat Oracle in the SRM Arena

Some of you might know Bob Ferrari, one of the true gentlemen of the industry analyst community, and a fountain of insight in the supply chain and Spend Management arenas. Bob has spent the past year at IDC leading much of the research in their Manufacturing Insights program. I recently came across a report of his (free registration required) titled: "Perspectives on SAP Analyst Summit Meeting -- The Journey Continues".

In my view, Bob's analysis provides further proof that SAP has got a grand plan to beat Oracle in the supplier relationship management (SRM) arena by embracing competitors around their Net Weaver ecosystem (scroll down for post). While Bob previously led SCM product marketing for SAP before joining IDC, I trust his perspective of that as outsider looking in: "To provide further evidence of SAP's stance on embracing potential competitors, strategic sourcing and spend management vendor Ariba utilized the summit meeting to announce that it will utilize the NetWeaver platform to integrate the Ariba Services Network with mySAP procurement applications. During the question-and-answer segment, [Shai] Agassi was questioned on this announcement and indicated that this was the latest demonstration of SAP's more pragmatic perspective on inviting some potential competitors into this new wave of software innovation."

Embracing competitors is certainly a risk. But by creating an ecosystem around their own applications rather than building a guarded fort, SAP has a better shot at reaching a broader audience in the Spend Management arena than Oracle does. Of course only time will tell which software giant will emerge the winner, and given the speed with which Oracle moves, I would not put it past them to outflank SAP by making a smart acquisition -- or a series of smart acquisitions -- to build share in the sector, leaving SAP to build the software community equivalent of the EU. In other words, this battle could go either way, and whether SAP's efforts turn out to create a vibrant ecosystem or a bureaucratic flock is still unknown. But unlike their US foe, SAP has spelled out their SRM market strategy to the world. Now it's up to Oracle to respond.

Jason Busch

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