Q&A: SAP for Retail's present and future

SAP's senior vice president for trading industries discusses SAP for Retail, including market issues and SAP's plans.

NEW YORK -- At this week's National Retail Federation Conference, SAP highlighted its push into retail with many customer announcements. Microsoft CEO Steve Ballmer also made a point to mention SAP and Microsoft's joint efforts with zone optimization. We sat down with Rick Chavie, SAP senior vice president for trading industries, to get his thoughts on some of SAP's retail developments.

Can you give us an update on Khimetrics and Triversity? Going forward, how will they be integrated into SAP's retail products?

Rick Chavie: We completed the integration with Khimetrics in December. We're through all the solution validation and other things required. Triversity is also done. We're really at a point where we can say we are integrated and have standards and processes the same across the organizations.

We will still offer both as independent point solutions. We will take advantage of modularity -- customers can put financials in first or NetWeaver in first and start with that, or they can look at the demand side of things first. We can create custom roadmaps for any sequence a customer wants.

How is SAP organizationally focusing on retail?

Chavie: Retail is a little different than so many other industries inside SAP because we are able to take advantage of the core technology, but we also have over 500 people dedicated to retail, with 100% of their time in development and solution management. Retail is the only area of SAP like that, as far as industry focus.

In your opinion, what are some of the newer challenges facing retailers?

Chavie: One developing challenge is the chaotic customer behavior that retailers face. People are so acclimated to the latest technology and they move very fast. So, for example, if you have multiple systems, how do you get the right inventory in the right place at the right time to fit customer demands?

Multi-channel shoppers are much more demanding and can be much less forgiving. If customers have a bad experience online, they might not just abandon you online, they might not go into your stores or use your catalogs either.

So retailers need to make shopping a seamless experience across channels. So our challenge, given that SAP has a common platform, is how do we get with the retailers and create scenarios that cut across all channels -- utilizing common data, MDM, underlying NetWeaver architecture -- to make it more or less a seamless experience for customers.

Steve Ballmer mentioned Zone Optimization in his keynote. Can you give us a high-level view of what you think is interesting about it?

Chavie: One thing about Zone Optimization is that it really makes the science of retailing visible to the business executive. By marrying up the intuition aspect of retail with the science, it enables executives to take their decision making to another level.

Sometimes in retail you have to make some very hard choices. For example, it may be tough to go across geographies to move a store out of one zone and into another zone -- the company may be organized a certain way that is tough to change.

But if you can see the actual, calculated profit potential for the move then the decision becomes easier to justify. That really puts more power and logic behind a decision, and then you can add in all the intuitive "feet on the street" factors to supplement the data.

Where do you think SAP can improve its retail products?

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Chavie: One area where we're looking to continue to really attack is making the solution consumable for the business user.

Whether you're a CEO -- in terms of the kind of dashboarding or optimization exploration you want to do -- or you're a merchandizing or store person, we want to make it more accessible to everyone as a much more fundamentally visual, intuitive experience.

Also, SAP wants to be a more 24/7 organization in the way we serve our customers. To cover all the major markets with our people in those markets as part of a connected web internationally. What that brings is not only some of the best talent coming together around the world, but also that talent in those markets can help to support growth into those markets.

What can retailers expect from SAP going forward?

Chavie: We've taken the approach of really embracing sub-verticals -- grocery, apparel, etc. We're going to continue to make major investments in the next three years in those areas.

We are recognizing that we have to nuance things to go after sub-verticals. For example, grocery store versus apparel store, all have different nuances. We're embracing that as part of how we develop going forward.

The other side is in industry thought leadership. To invest more in demand insight, intelligent merchandising, supply chain management and customer experience in the store, covering multiple industries. Those are major pushes.

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