SAP as a Retail Market Force: More Fact Than Fiction

It is well known that SAP AG, founded in 1972, is a market and technology leader in business management software, and since those early days retailers have been using the now legacy SAP R/1 and SAP R/2 financials solutions to support their financial processes. With the success of the client-server SAP R/3 enterprise resource planning (ERP) solution in the early 1990s and the burgeoning expansion of the global ERP market, SAP embarked on tailoring its solutions to specific industries beyond manufacturing.

Some pundits are still not convinced that retail is in SAP’s DNA (well, industry analysts and consultants are slowly getting there—the noise out there is generally from SAP’s competitors). Their point is that retail is a master vertical, much like manufacturing, with tons of various flavors all different from one another. For example, a fashion retailer is different from a supermarket, which is completely different from a big-box store. However, unlike in manufacturing, margins are low and sales cycles are long; retailers are loath to spend money on software and think that software vendors need many years and decades of experience to know their business. Have SAP’s engineers in its German headquarters (and for retail, SAP also has centers in Toronto, Montreal, Phoenix, and Palo Alto) had the patience to master how complex (and yet fascinating) the retail sector is?

SAP has long been a player in the apparel and footwear manufacturing space with its SAP Apparel and Footwear Solution (SAP AFS). Apparel production is basically discrete manufacturing, so it largely fits SAP’s core competencies and has experience with developing this sort of specialized ERP solution. But core retail functionality from the store on out was perceived as a weakness of SAP’s for a long time. To be fair, there had not been a provider of unified enterprise retail solutions until a few years ago—until that time, the market consisted of non-integrated, point solutions.

SAP for Retail: Beginnings

SAP’s involvement in developing a retail solution actually predates the SAP AFS product. In 1994 SAP acquired Dacos Software GmbH, a Germany–based software provider to the retail industry, which gave the vendor intellectual property, development resources, and customers in the European market. Before the acquisition, SAP occasionally used well-known R/3 components such as MM (Materials Management), SD (Sales and Distribution), and Warehousing for the retail industry. One of the most visible changes after the acquisition was a top-down menu, where users could add additional functionality, data, and additional organizational units to the standard SAP R/3 components.

A number of new pilot retail customers were signed around the world in the next couple of years, and with their input the existing SAP R/3 solutions were enhanced and extended to support retail business processes and best practices. Over time the material master in R/3 became the article (merchandise) master. More functionality and applications were added, culminating in the global launch of SAP Industry Solution for Retail or SAP IS-R (now called SAP for Retail) in 1997.

Since then SAP has continuously invested in and improved its retail solutions with subsequent releases of SAP ERP and enhancement packages. In addition, the giant has also made a number of strategic acquisitions. In 1999, SAP acquired Chicago, US–based Campbell Software Inc. Campbell itself was founded in 1989 and had developed software for workforce management (WFM) and personal time and attendance (T&A) recording. Thanks to its integration into SAP Human Capital Management (SAP HCM), it is now possible to manage and schedule hourly labor (as well as salaried employees), taking into account the complex overtime and bonus rules defined in the various overall labor or company agreements. SAP WFM can handle hourly labor without SAP HCM, and SAP has many standalone customers.

In 2005, SAP acquired Triversity, a leading provider of point-of-sale (POS) solutions, and Khimetrics, a leading provider of price and markdown optimization and patented science-based tools, which support retailers in their efforts to influence their customer demand strategies. Khimetrics was also a player in consumer packaged goods (CPG) manufacturing too, and thus SAP could apply the acquired tools to its supply chain management (SCM) solutions. For its part, Triversity’s POS solution not only manages the cash register, but is part of a multichannel solution that includes store inventory maintenance, customer relationship management (CRM)/clienteling (customer loyalty), and services for store and multichannel processes.

In 2009, SAP acquired the majority shareholding of SAF Simulation, Analysis and Forecasting AG, one of the leading global forecasting and automated replenishment solution providers for the retail and wholesale industries. SAF AG was founded in 1996 and is located in Switzerland, with subsidiaries in the US and Slovakia. Core components of the SAF solution have been embedded into SAP for Retail solutions since 2002. Before SAP acquired SAF, both companies had a long history of cooperation—SAP used SAF’s order and forecasting software as part of the SAP Forecasting and Replenishment solution.

In addition, the acquisition of OutlookSoft (in 2007), a leading provider of integrated financial planning, budgeting, and consolidation software; Business Objects (in 2008), the global market–leading business intelligence (BI) platform and tools provider; and Sybase (in 2010), a market-leading mobile platform, tools, and services provider gave SAP many more retail customers. Over the past 40 years, through multiple waves of technology—from mainframe, midrange and client-server computing to Web service-oriented architecture (SOA) and mobile technology—SAP’s vision has always been to enable real-time, integrated, platform-independent, end-to-end business processes.

This vision has served the vendor and its customers well: today SAP has over 100,000 customers across all industries, including several thousand customers in retail. This vision continues to drive SAP’s overarching product strategy. The vendor is really focusing on applying in-memory computing and mobility to retail as it feels that these are game-changing technologies—albeit disruptive ones—that retailers will need to embrace in order to compete, innovate, and grow.

SAP for Retail Today

SAP’s core solutions for merchandising, financials, HCM/WFM, and POS are basic building blocks for all retailers. Retailers also show strong interest in more specialized solutions for analytics, planning, replenishment, optimization, and customer intimacy (clienteling). SAP’s retail solution portfolio consists of the following six broad areas:

  1. Real-time Insight—SAP’s BI platform and tools, as well as its analytics applications, enable line-of-business (LoB) managers to gain rapid access to current and critical insight to determine a plan of action, whether focusing on better understanding their shoppers, managing the merchandise lifecycle, optimizing supply chain operations, ensuring a positive shopping experience, or understanding the performance of each channel.
  2. Integrated Marketing and Merchandising—SAP’s merchandise lifecycle solutions enable retailers to plan, buy, price, distribute, and sell their merchandise across multiple formats, channels, and locations. These solutions support retailers in selecting product assortments based on local shopper preferences so that they can profitably balance their most controllable investment—inventory. They also ensure that merchandising, logistics, store and non-store sales channels, finance, and trading partners are all planning and executing according to common objectives. It is an integrated retail planning, merchandising, and optimization solution that brings together comprehensive, real-time performance metrics with planning, simulation, and execution functions.
  3. Demand Driven Supply Network—SAP’s supply chain solutions support end-to-end logistics and fulfillment operations crucial to profitably managing the storage and movement of merchandise from source to consumer—to ensure the right product, in the right place, at the right time. It provides visibility across all nodes in the network, which is key to anticipating supply chain disruptions and facilitating the best way to respond in a timely and profitable manner across the global logistics network. In addition to providing traditional warehousing, transportation, global trade management (GTM), and order fulfillment capabilities, SAP’s supply chain solutions are fully integrated with SAP’s merchandise lifecycle solutions on a single unified platform, resulting in reduced logistics costs, robust trade compliance, and improved customer service levels.
  4. Multi Channel Customer Interaction—SAP’s customer experience solutions enable retailers to interact and transact with shoppers and customers anywhere—be it in-store or multichannel—anytime and on any device. The vendor’s in-store solutions help retailers to cost-effectively run their stores to maximize customer value, giving their managers more time to focus on business and employee needs. The solutions are designed to empower retail employees to become competitive assets, letting them deliver the kind of outstanding service and shopping experience that promote shopper loyalty. SAP’s multichannel solutions enable retailers to seamlessly integrate marketing, sales, and service to provide an enhanced shopping experience for their customers that promotes shopper convenience, satisfaction, and loyalty.
  5. Corporate Operations—SAP provides a portfolio of solutions that support the financial, human capital, real estate, corporate social responsibility (CSR), and sustainability functions of a retailer. In addition, SAP’s corporate operations solutions may be implemented in a shared services environment, which helps turn administrative functions into a service for the business—improving control, visibility, and compliance, while freeing up valuable resources for strategic tasks.
  6. Strategic Technology—SAP’s enabling technology allows retailers to support real-time, integrated end-to-end processes, whether on the latest and most cost-effective information technology (IT) or by leveraging their existing technology investments, thus enabling retailers to keep their competitive edge with agile operations that can support continuous business improvement and innovation. Recent developments in SAP enabling technology include in-memory computing and a mobile enterprise application platform (MEAP), called the Sybase Unwired Platform (SUP), to help enterprises in developing and managing their fleet of mobile applications and devices.

All of the above solutions can be deployed in a modular, phased manner. Many retailers run only select components of the SAP for Retail portfolio based on their business priorities and goals. As retailers emerge from the recession and are repositioning themselves for growth both domestically and internationally, SAP is seeing strong interest in its entire retail portfolio, especially in core retail solutions for merchandising, financials, and HCM. In addition, SAP reports that its latest innovations around analytics, social media, mobility, in-memory computing, and multichannel solutions are also receiving attention.

SAP’s retail customer base spans all the major retail segments—from softlines and hardlines to food and drug retailers. In addition, SAP’s retail customers operate across all retail channels—store, catalog, and online—and are of all sizes—from small and medium-sized retailers to leading global retailers. These retailers operate a variety of business models—from multiformat retailers to franchises and cooperatives. Customers of SAP’s retail solutions also include organizations that are principally product or service companies, but which also have retail operations.

SAP doesn’t regard any particular retail segment as its sweet spot. It rather believes that the breadth and depth of its retail customer base speaks to the functional richness, scalability, and flexibility of the SAP for Retail solution to support many different retail enterprises around the world. All of SAP’s solutions, whether they have been built by SAP or acquired, either run on-premise on a single platform that is called SAP NetWeaver, or have been SAP NetWeaver–certified, which means they are tightly integrated with SAP NetWeaver. This is true also of the partner-certified solutions.

SAP Retail Team Speaks Out

Despite the aforementioned initiatives, some competitors still claim that SAP will never be a strong retail software player outside of Europe. The company’s heritage in manufacturing, a multiplicity of competing priorities in nearly 30 industries, and the tricky details and requirements of the retail space might keep even some industry observers skeptical. SAP was all over Metro AG’s “store of the future” message a few years back (including radio frequency identification [RFID] technology), and has been a visible entity at a National Retail Federation (NRF) BIG Show since 1997.

SAP claims to be doing very well outside Europe, with leading retailers choosing it in Latin America, Asia Pacific, and North America. In fact, SAP doesn’t believe any other vendor can make this assertion. SAP’s core competency has long been supply chain management (SCM), which is quite relevant for retail. What follows is our candid discussion with SAP’s Retail Industry team.

TEC: What are the particular capabilities of SAP Retail to solve retail pain points?
SAP Retail: We have many unique differentiators that distinguish our solutions, technology, and company from our competitors. Some key differentiators that come to mind are as follows:

  • SAP provides pre-built, native, real-time integration across all of its solutions that run on a single, technology-agnostic platform. This integration should not be underestimated, as it helps retailers avoid the time, cost, and risk associated with trying to stitch together a number of disparate applications. In addition, since SAP solutions run on a wide range of platforms, retailers can avoid “burning” platforms—i.e., those that are at the end of life, which they need to get off of—or vendor lock-ins, where they are tied to a vendor because of past investments.
  • SAP Retail solutions are also integrated with solutions for other industries. This is especially relevant for manufacturers that have retail operations, such as in the apparel/footwear, consumer products, oil and gas, telecommunications, and entertainment and media industries. Conversely, as retailers expand their private-label programs to increasingly become manufacturers (so-called “act vertical” retailers) they can leverage SAP’s capabilities for managing the extended supply chain, which includes the sourcing and production of goods. This integration provides complete end-to-end visibility across the entire supply chain. 
  • SAP Retail solutions are very scalable, suitable for small and medium-sized retailers as well as the very largest and most complex retail global enterprises.

TEC: How do you view your competitive landscape in retail, and why do you win over, or lose to, these competitors?
SAP Retail: When we don’t make the sale, we generally lose to a retailer’s “do nothing” stance. It is usually because we have not been able to fully articulate our value proposition to the right decision makers in the retailer’s organization, and as a result they prefer to continue living with what they have, which is usually a combination of custom applications, highly customized software packages, and loosely coupled point solutions. Depending on the size and location of the retailer, we compete with a number of other ERP software vendors. It’s important to note that no current competitor has the breadth and depth of SAP Retail solution offerings, so SAP also competes with many point solution vendors for financials, HCM, optimization, POS, BI, etc.

Over the past few years we have had a good run in the marketplace and chalked up an impressive win/loss track record against our competitors. The main reasons retailers choose us are our people, who have deep retail expertise; our products and technology, which support retail best practices on a scalable platform; and our partnership and commitment to their success. We’ve been fortunate to have had the opportunity to work with the world’s leading retailers, both large and small, and they in turn have been great advocates in talking about their success with SAP.

TEC: How are your major system integrator (SI), independent software vendor (ISV), and other partnerships going in retail?
SAP Retail: We have more than 10,000 partners in the SAP ecosystem. This community includes implementation, software, and hardware partners. They range from large global partners such as Accenture, Deloitte, IBM, and Capgemini to regional partners that focus on retail implementation such as Data Business Systems, Gryffyns, Gravity Pro, GroupSoft, and Cognizant in North America; Ciber, Electra, Extend Technologies, Obtech, Seal Infotech, and Samsung SDS in Asia-Pacific, and still others around the world.

TEC: Are software as a service (SaaS) and on-demand services a major drive? Is the availability of these options an order qualifier or order winner yet?
SAP Retail: The cloud is a core pillar of SAP’s growth strategy. We are seeing a lot of interest in deployment models such as hosted, cloud, SaaS, and on-demand services. We recently announced our intent to acquire SuccessFactors, the leading provider of cloud-based offerings in the human capital management (HCM) market. We see two markets in the cloud—a suite market and a line-of-business (LoB) market. SAP Business ByDesign is our cloud suite solution. It addresses mid-sized companies who want to run their entire business in the cloud. Much of the cloud market today is a line of business market. SuccessFactors will accelerate our ambitions in the LoB cloud segment. It is complementary to our existing LOB cloud solutions such as SAP Sales on Demand as well as solutions for sourcing, carbon, and travel and expense management.

We have also recently launched our Performance & Insight Optimization (PIO) services, which deliver specialized solutions with high return on investment (ROI), using deep scientific and BI expertise merged with retail industry expertise and advanced analytics to model and optimize customer demand and business performance. There are many articles on how we are applying PIO services to the art and science of retailing (see, for example, “Not at Just Any Price”).

TEC: What were the major highlights and messages from your recent user conference and relevant industry events?
SAP Retail: We have a very active retail event calendar throughout the year that includes NRF BIG Show, SAPPHIRE, and SAP Retail Forum. Our events are very customer- and partner-driven—i.e., the speakers presenting at or discussing on panels or roundtables are retailers and their partners. The Retail Forum presentations from last year will give you a flavor of what happened in Vegas. At this Retail Forum, we also recognized over 30 go-lives in the last year and celebrated the achievements of our retail customers with our innovation awards.

This year we had an equally packed agenda and lineup of customers and partners in a recent event in Chicago. One message that’s clear is that the convergence of game-changing technologies such as mobility, in-memory computing, analytics, and on-demand software will provide retailers unparalleled capabilities of reach, speed, and personalization and the ability to forge a new business model we call “Retail without Boundaries.”

TEC: What were the major highlights over the last couple of years, and what do you expect in 2012 regarding demand for your retail solutions across different territories and product lines or modules?
SAP Retail: The strong rebound in retail IT spending since 2010, with retailers, both large and small, coming out of the recession with aggressive growth plans, especially as regards building multichannel capabilities and international expansion, has continued throughout 2011,with a strong pipeline across all regions, products, and retail segments going into 2012.

Social, Mobile, and In-memory Retail Tools

TEC: What is your strategy towards social tools and roles-based user experience, and their deployment for your target customers?
SAP Retail: We are very excited about Enterprise 2.0 and the use of Web 2.0 technologies within an organization to enable or streamline business processes while enhancing collaboration—connecting people through the use of social media tools. Last year we launched SAP StreamWork, which is a cloud-based collaborative decision-making tool that enables teams to perform collective problem solving. Retailers can invite people from inside or outside the company, get the team to commit to a cause, and keep everyone on the same page with notifications and action items.

This brings structure to the process by selecting proven, interactive business tools from a built-in catalog to plan agendas, assign responsibilities, rank lists of items, brainstorm options, poll the team, or strategize. They can upload and share the information to help ensure the team makes the best decisions based on the latest facts. As a result, they can develop and analyze hypotheses using intuitive data exploration and visualization with the SAP BusinessObjects Explorer software technology.

Because SAP StreamWork has an open architecture, retailers can work with their existing applications, such as e-mail, WebEx, and EVERNOTE, or develop their own business tools and integrations to support retail industry or LoB needs. Once a decision is made, it creates a corporate memory that records all participants, discussions, information, methods, and the final decision, in a single place, so that retailers can share or learn from prior decisions to make success repeatable. A couple of videos with a retail slant bring this to life: SAP StreamWork – and SAP StreamWork and Tasting Table.

We are also thrilled to have entered into an agreement to allow SAP to resell the NetBase social media solution. SAP Social Media Analytics is an on-demand, subscription-based solution that allows customers to search on brands and topics and instantly see a summary of net sentiment expressed via the social web. There are many use-cases of SAP Social Media Analytics, including tracking of new product launches, marketing campaigns, competitive intelligence, brand management, and sales cycle acceleration. The first SAP products with integrations to SAP Social Media Analytics deployable as on-premise and on-demand solutions are planned for the first half of 2012.

TEC: What is your mobility strategy, especially in light of the addition of Sybase to your roster?
SAP Retail: While retail executives rush ahead to equip their workforces with mobile devices, their CIOs must maintain a watchful eye on concerns such as security, data latency, and device proliferation. Gartner notes that by 2013, a typical Fortune 1000 company that deploys business-to-employee (B2E) or business-to-consumer (B2C) mobile applications will use at least six different combinations of mobile platform, architecture, and development tools. Gartner also observes that, even by 2014, 60 percent of Fortune 1000 companies will have failed to put a comprehensive mobile strategy in place—leading to considerable overspending.

Retailers need to develop an end-to-end strategy—one that unwires (untethers) their enterprises for today’s trends and establishes a solid foundation for the future of mobility. Mobility can be effectively managed with the right tools and applications. SAP has developed a comprehensive strategy for enterprises that addresses the four “Cs” of mobility: create, connect, control, and consume. These four components of a solid strategy work as follows:

  1. Create—Retailers can build compelling mobile applications using standard, integrated development environments (Eclipse and Microsoft Visual Studio). The Sybase Unwired Platform (SUP)—which provides a single, consistent development platform—is at the heart of the SAP mobile strategy. This flexible, open infrastructure allows retailers to respond to evolving device-type and data-source requirements that are owing to acquisitions, system refreshes, or mobile device technology changes. Retailers can develop an application once, and with the SUP, deploy it on multiple different device types. With the Sybase Mobile Workflow application for SAP Business Suite, retailers can create new and innovative business processes and applications that are integrated with SAP solutions and which can be deployed on different device platforms without custom development.
  2. Connect—A retailer’s users can communicate and interface with any SAP or non-SAP data source or application.
  3. Control—Retailers should be able to manage and secure mobile devices with full confidence. The Sybase Afaria mobile device management solution helps retailers to securely manage data across all major mobile platforms and throughout the mobile device lifecycle.
  4. Consume—A retailer’s users can use the mobile applications from the device of their choice, along with mobile services such a mobile messaging and payments provided by our Sybase 365 services.

Network latency remains a significant challenge for many organizations. SAP’s in-memory computing technology can help retailers process massive quantities of real-time data in main memory—eliminating the time-intensive read-write cycles that occur with traditional databases. Used in conjunction with mobile technology, in-memory computing can facilitate real-time look-up and let you perform faster data analysis—up to 30 times faster than what other solutions promise.

TEC: Incidentally, what SAP HANA-based retail apps are available?
SAP Retail: SAP HANA is an in-memory computing platform that lets companies gain real-time insights from running complex analysis on large data sets. First conceived in spring 2010, SAP HANA was delivered to select customers in November 2010 and made generally available as promised in June 2011. Initially, SAP HANA will enable companies to analyze large volumes of detailed operational and transactional information in real time, from virtually any data source. With this platform, SAP is renewing its existing applications and delivering an entirely new class of applications that change the way people think, work, plan, and operate.

In September 2011 we announced two new solutions built on SAP HANA—SAP Smart Meter Analytics, which targets the utilities industry, and SAP CO-PA Accelerator, which targets the financial LoB in multiple industries. We already have several customers in the retail industry who have bought SAP HANA for analytical purposes. We also have a service offering based on SAP HANA called Affinity Insight for Retail, which helps retailers drive larger basket sizes, fewer stockouts, and more effective promotions and measure the effect of product relationships on overall sales, margin, and inventory. Affinity Insight for Retail has been developed by SAP’s aforementioned PIO services. We also have planned innovations for leveraging the SAP HANA platform to support further retail applications, such as planning and customer segmentation—for example, we are aiming to release our Sales Analysis for Retail analytic application on SAP HANA sometime early next year.

Helping Retailer–Manufacturer Collaboration

TEC: Given JDA and RedPrairie’s success in marrying downstream CPG manufacturers’ supply chains with those of retailers, why hasn’t there been much more cooperation between SAP’s SCM and Retail teams? What is planned in the future to remedy this situation?
SAP Retail: SAP has done a considerable amount of work in linking supply and demand chains. One reason it may appear that we don’t do much with the CPG and retail supply chains specifically is that we have both a much broader customer base and solution portfolio than do the two companies you mention. SAP has developed numerous solutions—encompassing not only SCM but also CRM, supplier relationship management (SRM), product lifecycle management (PLM), ERP, financials, HCM, BI, and beyond—and conducted many innovation projects to facilitate business partner collaboration and help its customers—in more than 25 industries, including CPG and retail—become more vertically integrated. Some of our collaborative solutions include SAP Trade Promotion Management, SAP BusinessObjects On-Shelf Availability Analysis, SAP Retail Execution mobile app, and solutions for direct store delivery (DSD) and vendor-managed inventory (VMI).

Many of our collaborative solutions do not focus solely on sales, inventory, and margin in the supply chain, but go beyond to integrate the marketing, financial, and human resource aspects of collaboration in order to enable end-to-end business processes. A unique aspect of our customer base is that many of them have both manufacturing and retail operations in such industries as apparel footwear, consumer electronics and electrical appliances, entertainment, food and beverage, furniture, greeting cards, oil and gas, telecommunications, etc. and leverage multiple industry solutions on a single platform. This was one of the reasons that SAP was the only vendor to be given the highest ranking of “positive” in Gartner’s “Industry Strategy Effectiveness” grid (Gartner report G00210646, “Evaluating IBM, Microsoft, Oracle and SAP’s Business Application Industry Strategies,” May 10, 2011).

The recent appointment of Lori Mitchell-Keller to senior vice president (SVP) and head of the Global Retail Industry Business Unit (IBU) is significant as she brings a unique combination of retail, manufacturing, and SCM to bear on overseeing the delivery of end-to-end solutions that help customers build unified sales channels, consumer-driven supply networks, and integrated merchandising and marketing programs. Lori Mitchell-Keller has more than 20 years of experience in retail and manufacturing SCM technology. She joined SAP in 2007 and led LoB solution management for Idea-to-Delivery, in which she oversaw the delivery of end-to-end solutions in the areas of SCM, PLM, manufacturing, procurement, operational performance management (OPM), and business networks. Prior to joining SAP, she led retail solution management for JDA Software and held leadership positions with Manugistics for 10 years. We should expect to see some exciting developments in this area.

TEC: Have you seen any success in marrying retail and CPG manufacturing?
SAP Retail: There has been great interest in retailer-supplier collaboration, and we have held discussions with several of our retail and consumer products customers. With what we call business network transformation (BNT), retailers can lay the foundations for new business models and set themselves apart from their competitors.

Starbucks is an example of this model. Customers listening to the background music played in all Starbucks stores can now use the Apple iTunes music portal to display the current song on their cell phone and download it. The future approach will be for all companies to enhance their own business models with the knowledge of others, as illustrated perfectly by the Starbucks example. The synergy arising from coffee and music provides new impetus for sales. By adding this service, Starbucks is expanding its core business while benefiting from Apple’s experience in the music business.

Acquisitions Update and Future Outlook

TEC: What are the evident remaining retail white spaces in your portfolio, and how do you plan to fill them?
SAP Retail: While we already have a solution in the marketplace for merchandise and assortment planning, we are working on putting this solution on an in-memory computing platform, along with improved functionality and an enhanced user interface. We expect this to be a leading world-class solution able to tackle the most complex merchandise planning and assortment problems. Similarly, our e-commerce solution is undergoing a significant upgrade and will be a state-of-the-art solution that integrates marketing, sales, and service as part of a multichannel customer experience. Planograms and space-planning solutions are provided by partners.

TEC: What’s the current state of affairs with SAF, is it fully integrated with SAP Retail or it remain autonomous?
SAP Retail: Although SAP acquired the majority shareholding in SAF, for a long time it did not own all shares of the company. As such, SAP continued to treat SAF as a partner until it acquired all the outstanding shares of the company and it became a wholly owned subsidiary of SAP. SAF has been a strong partner of SAP since 2002, with core components of the SAF solution being embedded into SAP for Retail solutions. SAP completed the acquisition of SAF in September 2011 and so will begin the integration process. However, there are no plans to reduce the workforces of either company, and SAP plans to retain SAF’s current locations as centers of competence for retail, forecasting, and replenishment.

TEC: It is logical to assume that many retailers already use Crossgate. How does its recent acquisition relate to SAP Retail?
SAP Retail: Crossgate is a leading provider of hosted business-to-business (B2B) integration services that enable companies to connect with any trading partner, regardless of their technical capability, by joining the network once and linking with prebuilt business partner profiles. This eliminates the need for costly point-to-point integration and provides an easy way for trading partners to share data and automate processes, thus enabling a host of B2B collaborative initiatives. Currently about 100 customers, hailing from many industry sectors, use Crossgate.

Crossgate’s solutions include SAP Information Interchange by Crossgate and SAP E-Invoicing for Compliance by Crossgate. The latter generates electronic invoices and applies digital signatures to them before sending them as PDF files or through an electronic data interchange (EDI) interface. With the ability to issue PDF invoices, Crossgate users can also incorporate smaller suppliers and other companies that don’t use SAP into their networks. The German supermarket chain Edeka, for example, uses SAP E-Invoicing for Compliance by Crossgate in a cloud-based format. Users should put to rest their security concerns: the solution meets security specifications in over 38 countries and has special Information Technology Infrastructure Library (ITIL) security certifications. Further, SAP and Crossgate have zero access to their customers’ internal business data.

Another retailer who uses Crossgate is, a leading European mail-order company. More than 400 business partners connect to’s internal SAP infrastructure via Crossgate’s platform for the purpose of processing orders, delivery notes, and invoices and exchanging master data. The system handles an estimated five million transactions annually.

TEC: Is there anything that you are at liberty to volunteer on the division’s future moves, i.e., new functional scope, sub-verticals, etc.?
SAP Retail: SAP is the only software provider that publishes its future product direction in a series of industry and LoB roadmaps. These are available online at the SAP Service Marketplace (select the industry as Retail; registration required).

As SAP invests over 10 percent of its annual sales revenue in research and development (R&D)—a sum totaling more than US$2 billion annually— it is important that customers and partners be apprised of SAP’s future product direction so that they can influence and support SAP’s development efforts. The Retail Roadmap is a must read for all retail technologists and business process experts, for an overview not only of what our solutions provide today, but also of our planned innovations and future direction. In addition to the Retail Roadmap, readers can find further details and contact information at the SAP for Retail Web site.

References and Further Reading
Gartner. “Evaluating IBM, Microsoft, Oracle and SAP’s Business Application Industry Strategies.” G00210646. May 10, 2011.
Robert McFarland. Retail without Boundaries: Forging a New Business Model. Retail Info Systems News. December 20, 2010.
SAP. Not at Just Any Price. SAP Spectrum. March 2010.
TEC. “Act Vertical” vs. “Go Extinct” Retailers – Part 1. March 30, 2009.
TEC on SAP BusinessObjects Explorer. The Undying Users’ Quest for Exploring and Discovering Info – Part 3. October 7, 2009.
TEC. SAP Seeking Cloud Success via SuccessFactors Buy. December 5, 2011.
TEC. RedPrairie: Enabling End-to-End Supply Chains (from Manufacturer to Retail Shelf). December 29, 2011.


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