SAP to Expand Sourcing Offering with Acquisition of Frictionless Commerce

Customers to Gain Rapid Time-to-Benefit; Transaction Aims to Simplify Business Between Buyers and Suppliers While Enabling the Complete Source-to-Settle Process

ORLANDO, Fla. - May 17, 2006 - Recognizing the value customers gain by having a fast on-ramp for sourcing, SAP AG (NYSE: SAP) today announced that it is acquiring Frictionless® Commerce, a privately-held, leading provider of supplier relationship management (SRM) software. Through the addition of Frictionless Commerce, SAP will be able to help customers act quickly and save strategically while also providing a seamless and easy migration to the proven and robust mySAP™ SRM. Acquiring Frictionless Commerce extends the value of SAP® applications, representing a key component of the company’s strategy to offer the preferred global purchasing platform for organizations of all sizes and across all industries. The announcement was made today at the onset of SAPPHIRE® ’06, SAP’s international customer conference, being held in Orlando, Florida, May 16-18. Terms of the all-cash transaction were not disclosed.

Headquartered in Cambridge, Massachusetts, Frictionless Commerce serves large and midsize enterprises across an array of vertical markets, including banking, insurance, professional services, consumer products, discrete manufacturing, life sciences, telecommunications and utilities. The transaction with Frictionless Commerce is consistent with SAP’s strategy to use targeted, fill-in acquisitions that add superior functionality to its broad solution portfolio while continuing to grow its business organically.

With globalization and increasing cost pressures, companies need to take a strategic approach to managing suppliers. With this acquisition, SAP will combine the proven e-Sourcing capabilities of Frictionless with the robustness of SAP applications, including mySAP Supplier Relationship Management. As “Powered by SAP NetWeaver®” solutions, Frictionless products are fully compatible with SAP applications, minimizing product integration concerns and assuring a seamless solution road map as customer requirements grow.

“Frictionless Commerce’s vision included offering complete, real-time interoperability with SAP solutions,” said Mary Cotton, president and CEO, Frictionless Commerce. “With this announcement, we carry on this vision while immediately opening up our offerings to a larger number of entities. Customers can quickly benefit from the capabilities that Frictionless delivers while complementing their investments in SAP applications to manage their enterprises.”

Frictionless Commerce’s On-Demand edition offers e-Sourcing capabilities available through a Web browser. Within days, organizations can run sourcing events and begin managing suppliers. The On-Demand edition offers a faster time-to-benefit, as well as measurable cost savings with a minimal investment in time, resources and training.

“With today’s announcement, SAP continues its extension of mySAP Supplier Relationship Management to include an on-demand option for e-Sourcing,” said Shai Agassi, president of the Product & Technology Group and executive board member, SAP AG. “Sourcing on-demand offers customers a fast and consistent way to automate labor-intensive negotiations. Because Frictionless Commerce software is ‘Powered by SAP NetWeaver’ certified, integration with SAP applications already exists, making this a quick win for our customers. We extend a warm welcome to Frictionless Commerce’s employees and partners.”

SAP anticipates that the acquisition will be completed in July 2006. Headquartered in Cambridge, Massachusetts, Frictionless Commerce employs approximately 70 people and has an additional office in London, England. SAP said that it intends to continue operations in these offices. The company said it would provide additional details about the integration upon the closing of the transaction.

About Frictionless Commerce
Frictionless Commerce is a leading Supplier Relationship Management (SRM) software provider. Frictionless SRM software enables large and midsize enterprises to effectively perform spend analysis, supplier profiling and performance management, sourcing and contract management. Through its product, services and customer community, Frictionless customers lower supply base costs, reduce time-to-market, leverage external innovation and guarantee access to high quality goods and services.

Customers include: First Choice Holidays PLC, Revlon, Florida Power & Light, Aetna, Wachovia, Bristol-Myers Squibb, Broadlane, MetLife, TDS, Alticor, Prudential Plc, Telewest, CIGNA, and Philip Morris U.S.A.

About SAP
SAP is the world’s leading provider of business software*. Today, more than 33,200 customers in more than 120 countries run SAP® applications—from distinct solutions addressing the needs of small and midsize enterprises to suite offerings for global organizations. Powered by the SAP NetWeaver® platform to drive innovation and enable business change, SAP software helps enterprises of all sizes around the world improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations. SAP solution portfolios support the unique business processes of more than 25 industries, including high tech, retail, financial services, healthcare and the public sector. With subsidiaries in more than 50 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE under the symbol “SAP.” (Additional information at <http://www.sap.com>)

(*) SAP defines business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, product life-cycle management and supplier relationship management.

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