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What's in store for SAP retail customers in 2009?

It's a tough road ahead for retailers. SAP's retail exec shares his thoughts on how the vendor will help its customers -- by not trying to sell them more software.

NEW YORK -- It's no secret that it's a tough road ahead for retailers. With the economy continuing to slump in the coming year, many companies will be trying to wring more value from their existing SAP applications.

SAP says it knows this and is prepared to help its customers do just that -- without pushing them to buy more software, according to Isaac Krakovsky, vice president of SAP Retail, Inc. sat down with Krakovsky during this year's National Retail Federation convention and expo in New York to hear his thoughts on the biggest IT challenges facing retailers in 2009, and how SAP plans to help them get through the recession.

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Read why Home Depot and Harrods selected SAP for retail software How will SAP help its retail customers optimize their existing application landscapes?

Isaac Krakovsky: We have just started a new initiative. We're going back into our existing customer base and we are providing a service for them to do just that -- to go back in and take a look at what they've implemented and what they bought.

So here's the little story on how it really works. When these companies go in and do these projects -- it could be SAP, it could be another software company -- they typically narrow down the scope as much as possible to get it in -- to get it in on time, to get it in under budget and to get it in with as little pain as possible, because implementations are painful, no matter whose software you use. So they narrow the scope down, typically, with the intent that once they get the solution live and up and running, they'll go back, six months later, three months later, whatever it may be, and now implement the rest.

But what we find is a lot of times, they don't actually do that. They get it in and they say, "OK, that's done. I never want to do that again; we're going to move forward." When what they've actually done … is they left a lot of benefit dollars on the table, sitting on the shelf. And that's not good for them, and that's not good for us.

So what we're doing is we're going back to those companies and saying, "Let us evaluate what you implemented, how you implemented it, and let's see what else you can do with the stuff that you already own to drive additional benefit." We'll update a business case for you, we'll create a whole value driven story around it. But that's exactly what we're doing, and it's specifically relevant to this time period and this economy.

The idea is, we're not pushing new software on you. We're trying to help you benefit more from what you've already bought. Will this service be free to SAP customers?

Krakovsky: We haven't figured that out yet. Is it available now?

Krakovsky: It's about to launch. We've actually done it with a couple of customers before. But now we're branding it and going to roll it out … as soon as we can. We're trying to do it first quarter. So what advice would you give the IT side for bringing buzzwords like 'gaining transparency and visibility' to fruition?

Krakovsky: Make sure you get the business involved in the process and keep them involved in the process. It's that partnership between business and IT that's critical. It's so important. Keep them involved in the decision-making process. The worst thing to do is to make the business feel like IT is doing it to them, and forcing stuff on them.

Having said that, I think it also takes the CEO to get on board with some of these large initiatives, not only to be on board but to be the sponsor and to set down the law, to say "This is what we're doing." In many cases, it's slamming fists on the table, saying "You're coming with us on this ride, or you're going to find another place to go and this is the way it's going to be."

It's those consensus-driven companies that really cause projects to fail and to take forever because you can never move forward. It really does come from the top down. What do you think is the biggest IT challenge facing retailers in 2009?

Krakovsky: I think the biggest challenge will be how to get more benefit out of IT without significantly increasing their spend. I hope this isn't the case, but I'm under the impression that there are going to be some cutbacks in IT spending in '09. We're optimistic, but we're also cautious, given the economy that we're dealing with and the results … retail [in general had] in '08, which were pretty bad.

So I think CIOs are challenged now to sort of do more with what they have, which is one of the reasons why we're taking that program out to them and saying, "Look, this is what you've already bought, this is what else, additional benefit, you can derive from an application that you already own." Where do you see the greatest IT opportunities for retailers in 2009?

Krakovsky: I think the greatest opportunities are probably in areas like workforce management that allow you to optimize labor in your stores and warehouse. Labor is the second biggest expense on a retailer's balance sheet, and it's controllable. I think every retailer should be looking at it.

You've got to make sure you have the right staffing levels in the stores even when you're doing well. The worst thing is when you walk into a store and you can't find someone to help and you need help. So labor optimization really helps to address those problems. So that is something I think will be of great interest in '09.

I think anything around multi-channel capabilities, online retailing capabilities, will be really important in '09. Online did really well in 2008. Actually, [it] was up significantly from a channel perspective, where bricks and mortar was down.

I think the analytics components, the ability to look into information at a detailed level, real time when you need it, is critical.

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