SAP puts retail in the front window

At its annual user conference yesterday, SAP AG aimed to make clear its commitment to retailers seeking the sort of enterprise resource planning (ERP) software that the German tech vendor offers — a move designed to show the world that SAP’s wounds from a recent bidding war have healed, according to one industry analyst.

At Sapphire, SAP’s gathering for customers and partners held in Boston from May 17 to 19, the company laid out its recent retail industry wins.

It was announced that home renovation-products retailer The Home Depot decided to standardize on SAP’s wares for merchandising and supply chain activities, and Toronto-based Indigo Books & Music Inc. will turn to SAP’s latest offerings for inventory management, forecasting and replenishment functions.

Meanwhile, representatives of Stellarton, N.S.-based Sobeys Inc. came to Sapphire to talk about the grocery retailer’s recent SAP software upgrade.

The firm’s representatives outlined lessons learned from the install — be strict about testing new wares before putting them into production, for instance — and took questions from other Sapphire attendees.

SAP’s retail religion comes just one month after the firm lost a fight of financial one-upmanship to rival Oracle Corp. for retail software maker Retek Inc. Oracle, which ultimately paid US$630 million for Retek, has been on a buying spree in a bid to overtake SAP as the leading business software provider. In addition to Retek, Oracle swallowed ERP software seller PeopleSoft Inc. after a contentious battle with that company’s management late last year.

Given recent history, SAP’s retail focus is no surprise, noted Jamie Sharp, an IT industry analyst at IDC Canada Ltd. “It’s a reinforcement of SAP in retail,” he said during an interview at Sapphire.

Sharp pointed out that it’s important for SAP to drive home its ability to serve verticals like manufacturing, government and retail. “The horizontal ‘I can help you’ isn’t enough these days.” Customers expect tech vendors to understand the end-user organization’s business.

Aside from the retail details, SAP made other announcements designed to put the software vendor ahead of its competitors. SAP outlined its extended “Enterprise Services Architecture” (ESA), the firm’s name for services-oriented architecture (SOA), with network gear manufacturer Cisco Systems Inc., chip maker Intel Corp., Microsoft Corp. and other vendors saying they would build ESA technology into their wares.

SAP also unveiled a new version of mySAP CRM, its customer relationship management system, now with built-in analysis features to help users make business decisions from the CRM information.

According to SAP CEO Henning Kagermann, the company was investing in tech developments like ESA, analytics, and software integration underpinnings such as SAP NetWeaver when the IT industry was in the throes of “uncertainty,” circa 2003. Customers seemed to be on the fence about buying new technology back then, he said.

“Nine months later, growth was on the agenda of every CEO,” Kagermann said during a keynote speech at Sapphire, describing how technology can help companies improve their business prospects. Despite the questionable state of IT in 2003, SAP’s investing in new wares “was the right strategy.”

But SAP still faces challenges, said IDC Canada analyst Joel Martin, who also attended Sapphire. Martin pointed to partnerships as crucial for SAP’s future success. SAP is teaming up with Microsoft, for instance, to connect Microsoft’s front-end Office applications to SAP’s back-end ERP systems so users can access the ERP features from programs like Word and Excel. (The program is code-named “Mendocino.”)

“They have to make that composite application work,” Martin said. Enterprises are tired of having to deal with two sets of apps — one for the front end, another for ERP. “If they can make that seamless it’s going to be a huge win.”

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