SAP And On-line Procurement

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CASE STUDY SAP and The Online-Procurement Market BCIS 316 E-Commerce Professor: Alexander Pelaez February 22, 2002 Submitted by: BIN ZHAO Section I Issues.

1. SAP is facing the challenge of the new market trend of e-procurement management 2. SAP has begun to stumble on its dominating ERP software market 3. SAP needs to catch up in the fast-growing CRM (customer relation management) and SCM (supply chain management) market 4. The new market trend of the integration of e-procurement management with SCM (direct and indirect e-procurement) Section II SWOT Analysis · Strengths 1. SAP plays a dominate figure in the ERP software market, commanding 30% of the market, which is more than twice the share of the second-place vendor, Oracle Corporation.

With this unique strength, SAP would be able to rapidly penetrate into other related software market. One example is Procter and Gamble Company (P&G). For P&G, being a long time SAP R/3 user, the choice was made easier to set about consolidating procurement with a solution from SAPMarket in 1999.

2. SAP?s new e-procurement solution gives the company a new competitive advantage. With SAP?s e-procurement solution, Marketplace, SAP has already gained 1200 procurement customers, 40% of which are live, up the end of 2001. This is a number that other pure-play e-procurement vendors (notably Ariba, Commerce One, and FreeMarkets) cannot match.

3. SAP continues to grow in the CRM market. SAP, along with other ERP companies, including Oracle and PepleSoft, had managed to win 17% of CRM market share, with Siebel dropping to 28% of the market.

· Weaknesses: 1. As stated in one of the issues, SAP had begun to stumble in the ERP market. In January 1999, the company reported that pretax profits for 1998 increased just 15% over the year...