Commerce One stands to win big in SAP alliance

Pure-play B2B solutions provider Commerce One continues to reap the fruits of alliance as the company’s and its partner SAP AG’s joint solution was adopted by major Japanese e-marketplace.

Pure-play B2B solutions provider Commerce One continues to reap the fruits of alliance as the company’s and its partner SAP AG’s joint solution was adopted by a major Japanese e-marketplace as the primary technological platform.

Announced earlier this month, the new e-marketplace will unify sourcing and procurement for major Japanese utility companies. A host of companies, including such names as Tokyo Electric Power Co., Mitsubishi Corp., Mitsui & Co., Toshiba Corp and Hitachi Ltd. have taken an equity stake in the new e-marketplace.

Called simply Japan e-Market, operators of the e-marketplace estimate that as much as US$3 billion worth of procurement could go through the digital marketplace by the fifth year of operation.

The Japanese venture represents yet another win for the Commerce One-SAP alliance as the partners’ joint product, MarketSet, will be deployed as the primary platform for the e-marketplace.

“Our relationship with SAP is stronger than it has ever been from product development, straight through to sales and marketing,” said Emile Lee, Commerce One’s senior PR manager for Asia Pacific. “We have more than 40 joint customers around the world and we continue to gain positive momentum.”

The Japanese sell came shortly after a SAP announcement of an additional US$225 million injection into Commerce One, giving the German software giant an approximately 20% stake in the specialty B2B player.

The companies have enjoyed a particularly strong partnership since its inception early last year. A commitment of over 1,800 people from Commerce One and over 1,000 developers from SAP has been cited to work on joint developments as soon as the alliance was announced last June.

“We have worked together right from the ground up – from product development and integration to marketing and sales strategies,” said Lee. “At the outset, we had more than 2,000 developers collectively working on the joint solution.”

By all accounts, the partners seem to be a perfect fit technologically from the outset. While Commerce One provided a ready-made e-marketplace platform, SAP brought to the table the much coveted collaborative and supply chain technologies.

“The partnership … combines (Commerce One’s) e-marketplace operating environment with the technology for collaborative supply chain from SAP, … ” said Lee. “The bottom line is that we are not interested in a ‘go it alone’ strategy and trying to develop all solutions and applications in-house, a la Oracle.”

The alliance has worked so well that it has been cited recently by a Frost and Sullivan study as a technology partnership that works.

“If new vendors are to succeed, more partnerships of the same caliber as the Commerce One-SAP alliance will be required,” said the study’s author, Chris Carrington, commenting on a sector wide consolidation. “The e-commerce software industry is set to show the classical development of an immature market’s high growth followed by consolidation through mergers and acquisitions.”

Lee stressed that the SAP alliance is just one of many strategic partnerships that Commerce One is cultivating. The company is also seeking close alliance with other industry leaders such as Microsoft. The close ties with SAP, however, will continue to be something that the B2B software vendor rely on for breaking new grounds in the volatile IT industry.

“With the very public failures of other IT alliances, most notably the Ariba, i2 and IBM alliance, many are very skeptical about two or more IT companies coming together and working together effectively,” noted Lee. “That is why our close relationship is so shocking to most people. SAP’s decision to increase its investment in Commerce One should address this nagging question.”