November 18, 2004 - SAP Netweaver is an enterprise-computing platform linking together people, information and processes across an organization's heterogeneous landscape of enterprise applications, web services and information sources. The release of SAP Netweaver 2004 earlier this year and the massive investment made by SAP into the solution is now beginning to gain some customer adoption but only a fraction of the existing organizations operating SAP have purchased it. IBM and Microsoft, who SAP positions as partners, are still competing to become the defacto standard platform for application development. Ventana Research recommends organizations carefully examine the SAP Netweaver platform and balance the complexities of the platform and interoperability of the components with the upside of having a solution from one provider.

In a series of research notes, Ventana Research will examine the SAP Netweaver platform and specific solution areas for people, information, processes and the underlying technology to provide an independent view on the platform and it's capabilities for your enterprise computing requirements.

Assessment

Earlier this year SAP launched SAP Netweaver 2004 (see "SAP Tightens the Net," 12/9/03) which was the first time the entire set of application platform components were brought together in one release. This application platform is the foundation for the next generation of ERP, CRM, SCM and PLM releases along with the new cross-functional composite applications, X-Apps. While SAP is recognized as the leader in enterprise applications for ERP that has become a commodity ("ERP Rest in Peace," 10/27/04) and other areas but it is still in the early stages of proving an application platform for general enterprise computing.

Previous research and analysis preformed by Ventana Research found the majority of organizations are still determining their next steps with existing instances of SAP R/3 4.6 and R/3 Enterprise. Organizations considering leveraging SAP Netweaver will need to fully evaluate the impact of R/3 system upgrades and the associated performance and process improvements. This may seem straight forward but a careful assessment needs to be performed to determine the total cost of ownership (TCO) and evaluate the value that can be achieved in six to twelve month time periods.

When examining SAP Netweaver, it is crucial to understand that it is not just one server or platform but a set of coupled products that have individual administration tasks for interoperability between modules like Enterprise Portal, BI, Knowledge Management, Business Process Management and the underlying application server platform. These products have their individual depth and capabilities and SAP is working toward consolidating the administration and interfaces to operate more efficiently together. We anticipate this integration will occur over the next two to three years.

The SAP value proposition for SAP NetWeaver is based on integrating people, information and processes together utilizing a platform that delivers applications, services and information for efficiency improvements. The challenge you face is where to apply the platform for the highest return on your investment (ROI). SAP has begun to embrace and embed valuable third party components to strength the platform like IDS Scheer ARIS process optimization toolset for modeling and measurement and Metamatrix for enterprise information integration (EII) and metadata management capabilities. These moves by SAP continue to address gaps in the existing application platform while meeting the demanding challenges of organizations who utilize SAP.

Market Impact

SAP faces a new set of challenges as it expands its footprint with SAP Netweaver into the broader enterprise computing landscape. The pressures from enterprise software providers like Microsoft and IBM, let alone Oracle and Siebel, have SAP focused on competing at a level that disregards the point solution providers in integration, BI and process management. Individual integration providers like Tibco and Webmethods, BI providers like Business Objects, Cognos and Hyperion and a whole cast of process management providers continue to grow quite rapidly in adoption and deployments. As the market continues to consolidate, larger challenges are now facing SAP in how they continue to meet the ERP, CRM and application needs of its customers while branding themselves as a broader enterprise-computing provider.

Recommendation

The opportunity for you to advance your organization forward requires taking risks and looking at new approaches to enterprise computing. As you consider SAP Netweaver 2004 and upcoming releases in 2005, you should closely evaluate the risks in adopting this platform that is still maturing and has overhead in managing the interoperability and cost of integration across modules. While SAP is rapidly addressing these issues and advancing its efforts to gain further customer deployments, organizations moving toward adopting the separate or complete facets of SAP Netweaver should expect challenges in getting the system operational. Ventana Research recommends this application platform be carefully examined against alternatives though for many organizations it will become be a required piece of your application infrastructure for SAP enterprise applications.