Thursday, March 5, 2009

SAP Invests and Becomes a Co-Owner of Crossgate an e-Invoicing, EDI and B2B Exchange for SAP Users

SAP recently announced they have invested and become a co-owner of the EDI and B2B exchange called Crossgate. Crossgate is Europe's largest EDI exchange by transaction volume, and is rapidly growing in the Americas. This announcement, made at SAP's TechEd Berlin, caught many industry folks by surprise. Prior to this announcement SAP had left EDI and B2B issues up to their customers and third party EDI vendors to resolve. This announcement unveils a new strategy and paradigm for EDI and B2B connectivity for SAP users.

The SAP investment also included a strategic position on Crossgate's board, and an aggressive joint development and roadmap strategy between SAP and Crossgate to simplify and lower the costs of EDI and B2B implementations and support.

Paolo Malinverno, an analyst from Gartner, stood up at a press conference in TechEd and asked Leo Apotheker, CEO of SAP, about their investment in Crossgate and the potential next steps. Leo answered, "Our decision to invest in Crossgate is a very important step towards Business Network Transformation and this is our strategy."

Gartner's Malinverno followed up the announcement at TechEd with a paper called, SAP Steps Into the Growing B2B Services Market Via Crossgate and called this investment, "...a decisive move into the business-to-business infrastructure market." He explained SAP's strategy as follows, "The declared objective of this transaction is to keep the strategies of the two companies aligned. However, the main effects will be for SAP to have an out-of-the-box B2B (EDI) services connectivity solution... Access to Crossgate B2B (EDI) services will ship as a built-in service within SAP Enhancement packages, which minimizes the need for application integration...”

SAP's solutions have always required EDI and B2B connectivity through third party EDI vendors, so how is this announcement different? Malinverno describes it this way, "SAP is finally making a more decisive move into the B2B infrastructure market, compared with prior B2B alliances, which were only focused on reselling third-party technology. SAP will likely drive much of Crossgate’s strategy in the future."

In another paper by analysts Maureen Fleming and Jeff Silverstein from IDC called, SAP-Centric EDI Standardization and Low Total Cost of Ownership Move Customers to Crossgate, IDC writes, "Crossgate is fast becoming a disruptive vendor in the business-to-business (B2B) market. In essence, B2B 360 is the default choice (of SAP)." They listed the following key points as reasons SAP customers were using Crossgate's EDI and B2B managed services:

  • Strong integration with SAP is well aligned with customers’ initiatives to standardize versions of SAP across regions or globally. Many SAP customers, for example, are engaged in multi-year initiatives to update their many instances of SAP to a single standard, or template, across a region or globally. As part of this effort, many are standardizing EDI communications and have road maps to consolidate to a single B2B vendor.
  • Managed services offering are well aligned with customers’ plans to outsource mission-critical, nonstrategic software infrastructure
Geoffrey Moore, author of “Crossing the Chasm” and managing director at TCG Advisors said the following about SAP's investment in Crossgate, “In a world where business networks are emerging as a new unit of industry competition, the gating item has been business network-enabling systems. This latest announcement of a partnership between SAP’s worldwide enterprise capabilities and Crossgate’s existing network of enablement hubs goes a long way to fill that need, allowing business network transformation to become a growth accelerator instead of a roadblock. Crossgate is providing a service extension that facilitates operational excellence regardless of process, global region or trading-partner capability.”

Jim Hagemann Snabe, member, SAP Executive Board explained SAP's investment in Crossgate with these words, “We are providing companies with solutions that are key enablers for business network transformation, allowing them to increase their flexibility to capitalize on market changes and opportunities."

SAP Co-Founder and investor in Crossgate, Dietmar Hopp gave the following statement about the investment, "Our engagement at Crossgate is focused on supporting the international growth in the market for electronic data exchange (EDI). The business model is convincing: A central platform for B2B Data Exchange rather than redundant individual communication and integration platforms. Similar developments have taken place in the utility and telecommunication sector.”

Many of SAP's applications are dependent upon the exchange of electronic data with their business networks (trading partner communities). SAP is embedding Crossgate's B2B 360 services into its upcoming Business ByDesign offering. In addition, B2B 360 services will be available to Business Suite, ECC, Supply Network Collaboration, Transportation Management, All-In-One, and BusinessOne customers via SAP’s Enterprise Service Repository.

It is not a surprise that SAP recognizes how important EDI and B2B are to their applications' and customers' success. However, it is quite interesting to ponder the roadmaps for EDI and B2B within SAP environments. With the eSOA, Enterprise Services Repository, Global Data Types and Netweaver PI pieces all coming together with the Crossgate B2B Automated Exchange investment to deliver a new and much more efficient low cost method of implementing EDI and B2B for SAP customers.

SAP and Crossgate recently collaborated on a webinar called, Cost Control - The ROI of Managed EDI and B2B Integration Services which details some of the benchmark numbers and business cases for implementing EDI and B2B using SAP's Netweaver and Crossgate's Netweaver-based automated exchange.

If you have any questions or would like to discuss this subject in more detail please email me.

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