SAP Buys Supplier-Software Vendor

SAP AG said Wednesday it will acquire Frictionless Commerce for an undisclosed cash amount to expand its product portfolio of supplier relationship management (SRM) software. The deal should close in July, the German enterprise software maker said.

Frictionless Commerce helps large and mid-size corporations cut costs by managing and selecting their suppliers more efficiently. The move rings consistent with SAP's strategy to buy small companies that offer services required to fill-in holes in its offerings.

As globalization increases cost pressures, companies need to take a better approach to managing suppliers. The acquisition combines Frictionless' electronic sourcing capabilities SAP's applications, including mySAP Supplier Relationship Management, the company said.

Frictionless Commerce's On-Demand edition offers e-Sourcing capabilities available through a Web browser, allowing companies to begin sourcing projects and managing suppliers within days rather than months.

With more than 70 employees and an estimated $10 million to $12M in revenue, Frictionless will move its on-demand platform to an integrated SAP environment, according to AMR Research Inc.

The research firm said SAP made the announcement at the company's Sapphire customer conference in Orlando, Fla., where SAP chief executive officer Henning Kagermann highlighted the company's strategy for NetWeaver, the foundation for SAP's products. To encourage use of NetWeaver, SAP also set up a $125 million venture fund to persuade other software vendors to build on the NetWeaver platform.

Headquartered in Cambridge, Mass., the company's customers include Bristol-Myers Squibb, CIGNA, MetLife, Revlon and Wachovia.