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Beall's Inc., which operates more than 600 U.S.-based department stores and outlets, is implementing SAP as part of a company-wide overhaul of its IT operations. Until now, competitors -- including rival Oracle Corp. -- have pointed out that many of SAP's retail customer wins had manufacturing operations, a long-standing strength for SAP, according to Nikki Baird, a senior analyst at Cambridge, Mass.-based Forrester Research Inc. "This is an important win because it's a U.S.-based customer that is not a vertically integrated retailer," Baird said. SAP and Oracle have been battling over the last year for a greater share of the retail market. Retailers have traditionally purchased best-of-breed software. But lately, Baird said, many have been spending more on technology and turning to larger software vendors to boost customer-facing activities and streamline operations as part of consolidation projects. "Most retailers have been focusing on the in-store experience," Baird said, "and that has implications for the back office and the rest of the enterprise." In Beall's case, it's a complete system overhaul. According to Joe Iannello, vice president and CIO of Beall's, the company had long ago outgrown its current IT systems, which consist of 25-year-old homegrown applications on an IBM AS400 iSeries mainframe. With company revenues now surpassing $1.25 billion, the systems are struggling to keep up. "Even though they supported our business over the years, our systems have been more of a patchwork quilt as opposed to an enterprise-wide proactive design," Iannello said. "Because our systems aren't as integrated as they could be, data is in many different places and therefore reporting isn't as easy as it could be." Beall's selected SAP because it had the integrated features that could support both the back office and sales operations, Iannello said. In June, the company signed a licensing agreement for the full Business Suite. It plans to begin the first phase of the deployment with financials, HR, payroll and point of sale rolled out across its Florida stores. Beall's is currently selecting an implementation partner and will begin deployment in September. "Our feeling was that SAP was much further along in bringing together and integrating various functions of the industry solution," Iannello said. SAP and Oracle have been on a shopping spree to build retail-specific functionality into their ERP suites. After a bidding war with SAP, Oracle paid $670 million for retail software maker Retek. SAP acquired Khimetrics Inc., a retail software vendor with expertise in profitability forecasts and pricing strategies, and Triversity, which makes point-of-sale software. Oracle also bought the intellectual property assets of Temposoft, a France-based workforce management software vendor, and acquired 360Commerce, a retail management software vendor that has not been integrated into its suite. Retailers can also still choose from niche vendors such as San Diego-based GERS Retail Systems, which has a foothold in the furniture industry, or JDA Software, which has a strong retail footprint, according to Michael Barrett, research director at Boston-based AMR Research Inc. But retailers with more than $2 billion in sales should look at SAP or Oracle, he said. "The reality is that both software vendors are still working on integrating those assets," Barrett said. "The story around NetWeaver is more real at this point in retail than Oracle's story is around Fusion." Retailers have been slow to move to packaged ERP vendors to tie together all operations, Barrett said, partly because software vendors have had trouble tying together merchandising functionality and financial data in back-end systems. Retailers are still taking a cautious approach on technology spending, according to Barrett. IT budgets for retailers in the U.S. market are very low, he said -- often under 2% of sales. "I think at the executive level, someone has to buy into the fact that it is a worthwhile expenditure," Barrett said. For Beall's, the battle between SAP and Oracle proved to be a big bargaining chip when dealing with the two software vendors, Iannello said. "We definitely felt there was an alignment of the planets."
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