The vision conjured up by most IT departments when the name SAP AG was mentioned used to be that it was a great enterprise resource planning (ERP) applications software provider whose products and services were time-consuming to implement, expensive to maintain, upgrade, enhance and integrate with other applications, and difficult to use across supply and value chains. However, SAP’s (News - Alert) September 20 announcement of its acquisition of business-to-business (B2B) integration provider and long-time trading partner Crossgate demonstrates that even large entities are capable of remaking themselves to accommodate changes in today’s dynamic global economy. This includes strategic acquisitions, like this one, of a partner in which SAP has been an investor since 2008, that tighten and enhance ecosystems.

In the press release announcing the deal, it is, in fact, noteworthy that the acquisition is in line with SAP’s focus on creating a “portfolio of solutions that create rapid value for customers worldwide.” This does that and more. Crossgate solutions enable companies to integrate and network with trading partners, clients and suppliers, allowing electronic data exchange with any business partner regardless of their technical capability. Headquartered in Munich, Germany, Crossgate helps more than 40,000 business partners across multiple industries to securely exchange important documents and data by connecting companies with their trading partners for faster, more efficient B2B e-commerce.

As highlighted in the release, “As a result of this acquisition, SAP will enable networking at the enterprise level, providing an easy way for trading partners to collaborate, share data and automate processes that link customers and suppliers for streamlined B2B e-commerce.

Crossgate’s value to SAP

So what does Crossgate do? For the uninitiated, Crossgate helps companies connect with any trading partner by joining the network once and linking with prebuilt business partner profiles eliminating the need for costly point-to-point integration. Its e-invoicing services offer an innovative and secure solution covering the entire process of inbound and outbound invoices, including signatures, compliance monitoring, integrated with customers' backend systems and finance processes.

As stated, the SAP and Crossgate relationship is not new. They have a global reseller agreement where SAP customers can use Crossgate's B2B Content Engine as an SAP solution extension named SAP® Information Interchange application by Crossgate. And, recently, SAP agreed to resell and market the SAP® E-Invoicing for Compliance application by Crossgate, which allows companies to send and receive digitally signed, compliant PDFs or EDI invoices electronically.

Peter Maier, general manager, head of Line of Business Solutions, SAP AG stated:

“Companies live in an evolving global network of customers and partners, and technology from Crossgate allows them to interact in new ways at the enterprise level the same way that social networking has transformed the way people interact as individuals…By acquiring Crossgate's highly differentiated solution, we help our customers extend their end-to-end business processes running on SAP to their customers and partners. As a result, thousands of SAP customers will join the network to exchange information easier, execute transactions faster and collaborate better."

Stefan Tittel, CEO and founder, Crossgate, added, "With combined social network paradigms and service extensions of business applications, SAP and Crossgate now have the potential to change the face of business networks and deliver a new level of collaboration to SAP customers and their business network partners.”

The acquisition is subject to the approval of the relevant antitrust authorities, and SAP says it will provide more details on its plans for Crossgate when the deal closes, which should be by November 1, 2011. Terms and purchase price of the transaction have not been disclosed.

By adding electronic data exchange networking, focused on the transactional and secure document transmittal levels, this move is an important part of SAP’s own transformation as it positions itself as a one-stop ecosystem shop for all things that have to do with the planning and execution of business operations. This is an important link in closing off opportunities for competitive in-roads. It will provide customers important value-added in terms of being able to leverage the tighter integration of ERP and CRM with transactional functions in order to increase efficiency and effectiveness.

As value creation for competitive advantage moves from an era of single company proprietary solutions as the catalyst for success to one dominated by the formation of defensible and vibrant ecosystems, SAP’s decision to make a key part of its ecosystem a wholly-owned subsidiary is a trend to watch. This was an important part of the puzzle.

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia, HP, Siemens, Nortel, France Telecom (News - Alert), and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.