High-Tech Partnerships: A Demise and a Birth

SAP America Inc., the prominent client/server system vendor, and chip- manufacturing leader Intel Corp. are making a joint move on the electronic commerce market.

The companies formed Pandesic LLC to offer software to merchants doing business over the Internet. The selling point is complete back-office automation: Merchants would use the system to process orders, check inventories, ship products, and secure electronic payments with no human intervention.

Pandesic's product packages software and services from Citicorp, Cybercash Inc., Taxware International Inc., and United Parcel Service.

The system will run on Windows NT-based servers from Compaq Computer Corp. and Hewlett-Packard Co., which are built on Intel microprocessors.

Pandesic joins numerous providers of electronic commerce systems and components, ranging from Microsoft and International Business Machines Corp. to small companies in specialized niches. Depending on how the market shapes up, they might complement or compete with Pandesic.

SAP and Intel are stressing the integrated nature of their offering.

"The combination of these companies gives Pandesic the potential to make a significant impact on electronic commerce," said Craig R. Barrett, Intel's president and chief operating officer.

"It's an end-to-end process," said SAP spokesman Gerry Van Zandt. "Once a buyer types in the order and hits 'enter,' the system takes over and essentially handles all of the elements required to process an order."

Intel, based in California's Silicon Valley, is the largest manufacturer of computer chips in the world. SAP America, a unit of SAP of Walldorf, Germany, sells business accounting and human resources management software to large companies.

Citicorp's involvement indicates how a bank could play a central role in an emerging Internet commerce system.

Bank officials were unavailable for comment, but Pandesic said card payments would be routed to Citi for immediate authorization.

Cybercash will supply merchants with electronic cash registers for secure electronic payments over the Internet. Cybercash vice president Richard Crone said banks could become resellers of the Pandesic system to their merchant customers, keeping control of the relationships and thus "driving transaction requests back to the bank."

Reston, Va.-based Cybercash is participating in three separate pilots involving Pandesic, said SAP's Mr. Van Zandt, and is about to complete an agreement with Bank of Nova Scotia, Toronto, for enabling Internet-based payments in Canada.

Gary Craft, vice president and research analyst at Robertson Stephens & Co., San Francisco, said he viewed the Pandesic model as a boon to electronic commerce. It eliminates the need for "a lot of integration work that has historically stymied the marketplace."

"I think it's a huge positive," Mr. Craft said. He added that companies involved in electronic data interchange, the automation of information flows, and sometimes payments among trading partners should stand up and applaud Pandesic as a source of added volume.

Nick Alex, senior vice president at NationsBank Corp., described the Pandesic approach as a "whole new genre of software."

"I do not know how successful it will be," he said, "but you have to pay attention to it."

Pandesic, based in Sunnyvale, Calif., is planning a formal product launch in September. The initial version will be for business-to-consumer transactions. Subsequent versions of the software will be for business-to- business transactions.

The pricing will range from $10,000 to $100,000, before volume-based transaction fees.

The system is modeled after SAP's accounting software and will be marketed primarily to small and midsize Internet merchants.

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