SAP looks to retail sector for growth

SAP has launched an international consulting practice for retailers looking to expand into new international markets.

The SAP Retail Expansion Programme, launched last week, will provide retailers with access to consulting on a range of activities, including non-technology issues such as law, taxation and product-lifecycle management.

The announcement demonstrates SAP's increasing focus on the retail sector, which now represents up to 15 percent of the company's revenues in some markets, said Verlin Youd, senior vice president of SAP's Retail Business Unit. "We're investing more in retail than ever before, but we have to recognise that this isn't a sector where technology drives the business," he said.

SAP is the latest enterprise software vendor to turn its attention to the retail sector, which is still growing despite softening global economic conditions. Retail is particularly strong in emerging economies in Asia, while many retailers in the US and Europe are beginning to replace legacy systems after a long period of slow IT investment.

SAP says its new consulting service will provide expert advice and support to retailers who are looking to expand internationally, particularly in India and China. From the outset, the service will focus on business issues rather than technology.

"When a retailer wants to move overseas, there are a whole set of issues to be addressed before you look at something like software," said Youd. SAP's retail consultants will provide advice on issues such as retail site selection, legal and tax structuring, inventory financing and identifying appropriate local partners.

In some cases, the consultants may work for a locally licensed partner or for an existing, recognised consulting firm, but many consultants will be directly employed by SAP, said Youd. "We have a lot of expertise and experience on our own staff, and we will be looking to use that fully, and we are investing heavily on building knowledge in the future," he added.

This knowledge is perhaps one of SAP's greatest assets in the competitive retail sector, said Angela Eager, a senior research analyst with Butler Group. "With its technology base, Oracle has more points of entry into retail operations than SAP and therefore a larger potential customer base. But SAP has proven retail experience and a large bank of retail experts in its favour," she said.