It performs the functions of an integration engine, but runs on SAP systems running Web AS (other than XI/PI). It becomes part of the XI domain, and allows for use of ABAP proxies to/from that SAP system.
With a local IE, you actually have to use some of the t-codes normally used in XI/PI to configure/use in your SAP business systems (SXMB_ADM, SXMB_MONI).
The systems on which SAP WAS is installed has Integration Engine as one of its components. Now for PI/XI also WAS is a must. Therefore PI/XI also has an Integration Engine called as Integration Server.
Now talking in terms of PI/XI, Integration Server has Adapter Engine, Integration engine (for pipeline steps) and Business Process Engine. This Integration Server is the central Integration Engine.
The Integration Engine of other systems is termed as local Integration Engine
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