The agreement brings together one of the most popular Web sites with one of the biggest business software companies. SAP will create a new subsidiary called SAP Portals to develop the service in conjunction with its parent company and Yahoo.
The service will offer content determined by each user's role in the company, such as human resources information, financial news, stock portfolios or sales-tracking applications. Both Yahoo and SAP will program the type of information served and the integration of the software into the clients' infrastructure.
With the deal, Yahoo gains a seasoned partner in the enterprise software market with which to boost its own efforts to sell its Web portal to businesses. In January, the company formally unveiled Corporate Yahoo, a custom portal that businesses license for internal use. Already, companies such as McDonald's, Honeywell and Seagate Technology use Yahoo's service.
Analysts say the new service sounds similar to the existing enterprise portal offering.
"My question is how much of an extension it is and how much of a revenue possibility it is," said Sasha Kostadinov, an analyst with McDonald Investments.
"This SAP deal may allow (Yahoo) to enrich the intranet portion of the site by accessing the back-office functionality of the company, and then they get the addition of SAP's sales force," Kostadinov said. "Obviously, that can't hurt."
Yahoo relies primarily on selling advertising and on e-commerce channels throughout its site. But now that online advertising dollars have receded with the closing of many dot-coms, it is more important than ever for Yahoo to increase non-advertising revenue.
The market for corporate portals may be lucrative. Sales of these services could hit $1.2 billion in 2003, Aberdeen Group analyst Madan Sheina told Bloomberg last June. But SAP and Yahoo face considerable competition from some of the industry's biggest software companies, including Oracle, IBM, Hewlett-Packard and Microsoft.
SAP and Yahoo will begin selling the portal in the second quarter.
News.com's Cecily Barnes contributed to this report.