German business software giant SAP AG and U.S.-based electronic commerce specialist Commerce One Inc. have decided to rethink their strategic partnership by dropping plans to develop future online marketplaces for customers, SAP confirmed on Wednesday.

"I don't think I would use the term 'scale-back.' We've re-examined the partnership, though the alliance is still strategic and important to us," said Laurie Doyle Kelly, spokeswoman for SAP.

Commerce One could not immediately be reached for comment.

The 20-month-old partnership between SAP and Commerce One was first announced at the SAP user conference in Las Vegas in June 2000 and since that time SAP has increased its investment in the Pleasanton, California-based company. Last June, SAP increased its stake in Commerce One to just over 20 percent and said it would inject up to $250 million in new investment capital into Commerce One.

"We still have a 20 percent investment in Commerce One, that hasn't changed. What has changed is the marketplace. Two years ago, everyone thought that online exchanges were going to be the best thing and now that has changed. The customer is no longer interested," Doyle Kelly said.

As part of the strategic partnership, Commerce One and the SAP Markets division of SAP established 17 codevelopment teams, based in Palo Alto, California, Pleasanton and Cupertino, California. The resulting MarketSite product was intended to compete with the online public marketplace products being developed by the partnership established between IBM Corp., Ariba Inc. and i2 Technologies Inc.

Last May, IBM, Ariba and i2 ended their collaboration because they no longer believed that online marketplaces had a viable future. Ariba instead decided to focus on procurement, supply-chain management and CPFR (collaborative planning, forecasting, and replenishment).

As for customers currently using the MarketSite product from SAP and Commerce One, Doyle Kelly stressed that they would not be left high and dry. "Folks who have bought the joint solution, MarketSite, from us will see no change. This decision is more about where we're heading rather than dismantling what has already been established," she said.

In the near future, the customer focus will be to look at private exchanges, Doyle Kelly said. "Though customers want exchanges, it's not necessarily about opening up everything to your partners, it's more internal. In the future, the exchanges are not going to be as public and open as people originally thought," she said.

SAP and Commerce One have had different fortunes in their attempts to weather the current economic recession. While earlier in the month SAP announced that it would be able to beat its full-year 2001 revenue forecast due to better-than-expected fourth-quarter software sales, its partner has been forced to reduce its workforce due to weak financial results.

According to a report published Wednesday in the Financial Times newspaper, Hasso Plattner, SAP's co-chief executive officer (CEO) told Commerce One CEO Mark Hoffman that due to its increasing reliance on earnings from SAP, Plattner felt it was time for Commerce One to develop business independently of the partnership, even if the move put the two companies into direct competition.

"I don't know what may or may not have been said between Hasso Plattner and Mark Hoffman. I do know that they still have a very good relationship, that they talk often and that they enjoy working together," Doyle Kelly said.

ITworld.com

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