ERP vendors enter the portal market

By Brian McDonough

Enterprise application vendors with large installed bases need to enter the enterprise information portal (EIP) software market to address users' needs for accessing information and applications across the enterprise or risk losing revenue, mind-share and control of business processes to third-party EIP vendors. While BEA Systems and IBM, leading vendors in the application server software markets, have been getting most of the attention as they make announcements to enter the EIP market, enterprise application suite vendors such as SAP, Oracle Oracle and PeopleSoft PeopleSoft will also be strong competitors in this market. In addition to selling to customers seeking an integrated method of accessing other applications and all kinds of information, enterprise application-based EIP software offers unique opportunities to vendors. These companies can build additional e-business application functionality on top of the EIP software and begin to penetrate deeper into their installed bases. This potential use of portal software is unlikely to develop in the next few years, but the enterprise application vendors need to capture the market now. Systems integrators will drive specialization of EIP software in the meantime.

Market Definition

EIPs integrate access to data or information and present it to the business user in a useful format.

Enterprise application portals (EAPs) are e-business applications that provide application functionality built on top of an EIP framework. Enterprise application vendors can extend their application capabilities by developing new applications with an EIP underpinning to provide collaboration and content management in the context of a transaction or decision point.

EIPs are used by the business user but include IT administration tools and have some level of the following functionalities native to the software:

• role- or rule-based administration, ;

• collaboration functionality, ;

• content management and search, and ;

• access to structured data such as end-user query and reporting.;

Some portal vendors partner for such functionality, especially search. Offering some level of the above functionalities is a requirement for EIP vendors.

Oracle

Oracle offers a broad suite of business applications as well as an application server and market leading database software, which is tightly integrated with its Oracle9iAS Portal offering. The Oracle portal offers much of the core portal functionality sought by users today. It has established a portal partner program to bring functionality, such as search and collaboration, offered by third-party software vendors to its customers.

Oracle's entry into the portal software market this year provides it with an opportunity to offer software that integrates access to multiple applications and information for the benefit of a broader user base than its software typically addressed. Additionally, Oracle and its system integrator partners can develop new ebusiness applications that leverage partner functionality, such as content management and collaboration, on top of the portal framework.

Oracle is focused on three product offerings that include application servers, enterprise applications and database software. To maintain this focus is has placed its responsibility for portal development with its application server product management team. The portal framework is sold with the application server at no additional cost. The EIP offering emphasizes application integration, and Oracle has established partnerships with software vendors in complimentary technology areas. This strategy will certainly put some price pressure on its competitors, but Oracle will still face competition from EIP vendors offering distinct and additional end-user functionality within the application. Oracle views its EIP as a tool primarily designed for the IT department to manage end-user access to applications and information, rather than as an application for the information age employee. SAP

SAP is the market leader in terms of software revenue for ERP applications and has a considerable installed base among very large global enterprises. SAP's successful launch of Web-based self-service applications built on top of a third-party EIP offering from TopTier and application integration software from webMethods (webmethods.com) helped it to squash wide references to its offerings as "legacy" offerings.

SAP acquired TopTier, a successful EIP vendor, early in 2001 to add EIP functionality to its enterprise application offerings. SAP Workplace, the company’s Web-based application designed to address the needs of a broader cross-section of its customer's employees, was built on top of TopTier's EIP offering.

TopTier had core strengths in managing stored transactional data. This focus on structured data access was evident in its "drag and relate" capability with which a user could drag a table of data from the browser window and drop it on a topic in the navigation tree to see a cross tab of the two data sets--provided the integration work was done before deployment. TopTier had begun to incorporate basic collaboration and content access capabilities into its portal when it was acquired by SAP.

SAP then established SAP Portals and partnered with Yahoo for its wide array of content services. Although Yahoo had launched its own competitive EIP offering, its partnership with SAP pointed to its strengths in content services. The relationship is only now beginning to bear fruit. SAP Portals soon announced an integration partnership with Baan, a competing enterprise application vendor. This integration work was well underway when TopTier was an independent EIP vendor. SAP Workplace has been discontinued with SAP Portals taking its place.

SAP Portals intends to continue to be open with integrating to other applications, but this will be difficult to accomplish with its stronger enterprise application competitors. Still, large systems integrators with experience implementing SAP and PeopleSoft applications, for example, will be able to deliver on this promise. TopTier could have accomplished this on its own, but as part of SAP, it will need to focus on noncompetitive partnerships.

SAP can continue to develop new e-business application extensions on top of SAP Portals while offering a portal framework for integrating access to diverse sources of information and all kinds of applications. It has a large organization focused on that very task. It will continue to invest tremendous resources into SAP Portals making it a strong competitor in the EIP market.

PeopleSoft

PeopleSoft offers a suite of cross-industry and vertical enterprise applications targeted to medium-sized and large enterprises. Its strong market position grew out of its popular human resource (HR) management application that it developed for client-server architectures 15 years ago.

PeopleSoft understands the need among enterprise application vendors to benefit from the Internet paradigm and ebusiness computing trends. The success PeopleSoft enjoyed from exploiting a shift to client-server computing that began in the late 1980s could be repeated as it begins to deliver knowledge-enabled e-business applications.

The company launched itself into e-business when it developed PeopleTools 8 and subsequently rewrote its applications with these Web-architected development tools in 1999 and delivered the new application set in September 2000. The company has been pushing its collaborative-oriented marketing message ever since.

PeopleSoft does not currently have collaborative application functionality or document management capabilities as commonly defined, and they should be considered requirements for enhancing transaction-oriented processes and competing in the EIP market. However, its strategy seems to be on target to offer these capabilities through third-party partnerships or future in-house development.

PeopleSoft has developed an EIP suitable for competition among the leading standalone portal software vendors. Its EIP offering was developed in-house to extend access to its core applications. PeopleSoft has preconfigured views (dependent on the audience) into data within its various application offerings. Its three current preconfigured portals are aimed at customers, suppliers or employees. This preconfiguration gives PeopleSoft an advantage in its client sites over third-party EIPs in the same way that enterprise application suites have advantages over disparate standalone business applications.

EIP Market Evolution

Enterprise application suite vendors face a large opportunity for their EIP offerings for at least the next five years. As prices for EIP software decrease and some of the functionality becomes standard across application servers and enterprise applications, vendors' EIP software may become an ebusiness development environment included with the purchase of their applications.

For now, their installed base will need to purchase their EIP offerings to benefit from additional application functionality, such as employee self-service. Whether or not they choose to use the EIP software to deploy an intranet or extranet will be tested over the next few years. There will be instances of uses of portal software from EIP vendors without enterprise application offerings such as Plumtree (plumtree.com), Netegrity (netegrity.com) or InfoImage (infoimage.com), as well as from the enterprise application vendors at the same company site.

Since EIP software needs to integrate access to multiple applications and information for the benefit of the business user, vendors must be able to establish integration partnerships with multiple portal ecosystem participants. Such a partnership will be difficult to accomplish between SAP and Oracle, for example. Systems integrators will manage this disconnect for a price.

The vendor that can provide easily established access to multiple competing applications without establishing partnerships will circumvent the trend in the EIP market to establish software integration partnerships and be more widely deployed. For example, one of the critical uses of EIP software will address issues associated with a corporate acquisition. The acquiring firm will need to use an EIP to quickly deploy information and applications to the new employees. The likelihood of compatible systems existing in the two firms is highly unlikely.

As long as the possibility of heterogeneous computing environments exists, there will be an opportunity for application-independent EIP software vendors. Architecturally, it will remain difficult for any vendor to provide out-of-the-box integration capabilities.

The market could see multiple EIP software products in use at a single customer site. For example, one EIP software product could provide enterprise application extensions into specific applications while another EIP software product provides a means to integrate access to multiple applications and information in a personalized interface.

EIP software does offer a remote risk to the enterprise application suite vendors. EIP software customers could choose standalone applications such as HR from PeopleSoft and financials from SAP and integrate access and transactions to and among these applications. The enterprise application suite vendors will be unable to rely on a long-standing message that a customer should buy all of its applications from a single vendor to benefit from the integration between the various functions. IDC believes that the EIP market will not reach this point in the next five years. The complexity of offering a deep level of integration across competing applications will prohibit this risk from becoming a reality any time soon. Therefore, the enterprise application vendors have an attractive market opportunity in front of them and the new competition will drive further enhancements to EIP software across all vendors.

As the enterprise application vendors pursue market share in the EIP software market, they need to realize that a greater opportunity exists for them in the ability to develop applications that are not transaction processing based. Enterprise application vendors should develop new content and contextual collaboration applications. Offering messaging (email) applications, as SAP and Oracle attempted in the early 1990s, falls well short of the possibilities of true collaborative commerce and knowledge-enhanced business processes.

Brian McDonough is research manager of Knowledge Management Software for IDC, e-mail bmcdonough@idc.com.