Why are so many people focused on technology for the retail industry right now?
The term has been around for years. But in the retail market, particularly, the momentum has been building in the last year or so.
It has to do with the fact that retail is suddenly realizing how they can benefit from the use or technology. First off, once RFID is in place, if you can't do complex product management you aren't going to be able to benefit from RFID.
Part of what we're seeing is the result of a tremendous increase in on-line companies, and the expectation that online commerce has for technology. Product information management is the starting point for being able to deliver that. What you do is link a customer to a specific class of attributes in the product mix. The end point is when you start linking those capabilities to RFID. Then you have this amazing feedback mechanism about which products sell, where they sell, and why the sell.How far away is RFID technology?
At the product level, where every tube of toothpaste has a tag, I wouldn't hold my breath. That's simply because you need the cost of the tags to do go down, and the efficiency of the readers to go up.
At a minimum, RFID will become very significant at the distribution level. It has an extreme value there today, and it's easier to justify and easier to implement than if you were doing it for tubes of toothpaste. RFID happens that way today.What is SAP doing in the area of GDS?
The recent A2i acquisition is a real key part of this – because A2i handles this product information. Retail products have very different requirements from the world SAP is used to. In the SAP world, the product master consists of something like this: 'What are the components that make up the product?' When you look at products in the retail world, they become something with hundreds of different attributes in them.
Retailers want to know how a product links to secondary products—stereos and batteries, for example —suddenly you are talking about something completely different. One of the reasons that SAP bought A2i was very much to bring that expertise, and an understanding of what a product looks like, to their world. Wasn't SAP's Master Data Management (MDM) a start in that direction?
Yes, they were already getting a start. MDM was addressing these kinds of issues from a technology standpoint. A2i allows them to understand a certain data model. Master Data Management (MDM) is without a doubt the number one technology initiative in NetWeaver -- from a customer standpoint. As we speak, we are waiting for the next release. They are going to be folding in a lot of A2i into this. It's an idea that has resonated with a tremendous number of customers, and really given SAP a tremendous opportunity for cross-sell to existing customers. Are people confused about how to deploy it?
How you deploy MDM will always be something of an issue. That's because it's more of a technology solution than a packaged software solution. One thing you will see is that MDM will be packaged for vertical industries, by necessity. But at the end of the day, dealing with the complex master data management issues is going to involve some consulting. It just can't be out of the box. You can't do a big-bang MDM solution. Could you deploy MDM if you weren't buying into the NetWeaver stack?
For a while it was very unclear whether you could run a piece of NetWeaver alongside an existing 4.7 implementation. And now it's very clear the answer is 'yes.'
While SAP is pushing everyone to upgrade, they are also allowing customers to run an instance of NetWeaver without having to do a big upgrade across the board. That's essential for them.
Read Part II of our interview with SAP consultant Joshua Greenbaum tomorrow.