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SAP sizes up retail market

Peter Kirschbauer is an extended SAP board member, overseeing the company's Business Solutions Group (BSG) Services. He talked with about SAP's new pre-packaged solutions for small businesses, the unique needs of retailers, and SAP's message that better technology, not bargain prices, is the way to get close to customers.

How does SAP think the newly packaged Best Practices will benefit small businesses? What we do with packaged solutions...

in the small and medium-sized markets is we increase the level of readiness of the scenarios of a product. We do this to the extent that the cost reduction is significant. There we save work for the implementation project by doing this pre-configuration. On top of that, some customers have specific things they want to do on top of the package; they can do that. Where do you see the most activity right now -- within your division?

I see most activity right now in the retail area. We just announced a retail partnership with IBM. We brought a lot of new markets to the product this year -- point-of-sales data management enhancements, micro-forecasting capabilities, work force deployment. These are some of the significant enhancements we've made this year. This is a strategic industry for us because there is big IT spending there, and also penetration with packaged software for retail is below average, compared to other industries. There's a lot of potential to help retailers productize their IT infrastructures. What does the IBM-SAP deal do for customers?
The biggest benefit is that we are keeping layers in the retail area combined -- basically, you can combine your talents and assets. This is basically SAP's applications -- retail solutions and infrastructure -- and IBM's services, infrastructure and some of the store capabilities, like store integration framework. Now we can meet the needs of retailers and wonder how they can manage the pressure they are getting, like from the Wal-Mart of the worlds, or from customers.

I think it's critical for retailers to get away from this price-war strategy, and look more for customer retention. For that, you need more technology.

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Are retailers receptive?
Where IT needs to help is to make this all affordable. In Europe, right now, IT is much more valued by retailers. Right now, in the U.S., it's more likely [than in Europe] to hear some people say, 'IT is not my business. My business is to sell stuff.' But now retailers everywhere are realizing that they need a better infrastructure to support business processes and manage customer data. How long before RFID is affordable for lots of people?
You have to distinguish between the pallet and case-level tagging compared to single-item tagging. The first one addresses the supply chain and the movement of bigger chunks of materials and articles; that is very close. Many customers have a version of that or will very soon. Of course, you have to know the cost of scale when talking about costs, but the five-cent tag, that is still two or three years away. What is next on your to-do list?
What I think we need to do is put more examples in front of customers. They need to see how they can use the Enterprise Services Architecture and NetWeaver platform, and now xApps can benefit them. SAP can explain that now. And many of our customers can.

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