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SAP's Hub Plan Draws Fire

SAP'S strategy for supplying its users with electronic procurement capabilities is under fire from analysts as too proprietary.

SAP is banking on organisations turning their enterprise resource planning (ERP) systems into internet-enabled mechanisms for buying and selling between themselves, creating so-called trading hubs.

To enable this, SAP has invested heavily in its mySAP.com Marketplace trading hub product and Workplace enterprise portal product.

SAP has also developed e-procurement software called the business-to-business procurement (BBP) framework.

But manufacturing consultancy AMR Research last week warned that SAP's customers are being pressurised to upgrade to R/3 version 4 to take full advantage of the features in Marketplace, and that BBP lacks the functionality of competitive offerings.

Most ERP software, such as R/3 versions 3 and below, are built to the client/server model, making it difficult to integrate with net appliances. However, these integration problems don't necessarily justify an upgrade to version 4, said AMR vice president, Bruce Richardson.

"SAP is afraid that its large customers are buying eprocurement software from Commerce One, Ariba and i2," added Richardson. "It is pushing very hard with advanced selling to stop customers from walking away."

GartnerGroup research director Andy Kyte added that "generic eprocurement systems proposed by the ERP vendors are unlikely to offer buyers the same sophisticated contacts and content as the vertical market sites."

"If users ignore these systems by becoming locked into a single trading site, they will be ignoring potential markets," he said.

Companies will use numerous sites to buy and sell goods in the future, so tight integration between back-end systems and trading hubs will be impractical, he added. Users may be better off considering a wider variety of trading hub architectures.

Gareth Williams, procurement manager at National Power, said he will look at expanding its eprocurement system to buy production goods within two years. However, "an issue with [multiple trading sites] will be ease of use and how familiar users will be with several different systems," he warned.

When Hasso Plattner, co-chairman of SAP, announced mySAP.com at its Sapphire user conference in Nice last year, he claimed that it would lea