SAP Buys Retek

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Mar 01, 2005
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Commentary and analysis by Stuart Silverman, Publisher, Retail Technology Milestones (www.rtmilestones.com)

After years of dabbling in retail, SAP finally takes the plunge with an investment of $496M to buy Retek.

SAP has made a number of efforts to establish a beachhead in retail. There have been some successes and some pretty spectacular failures. While they have always been a formidable
presence, competing against SAP in retail has been fairly easy by saying that they just don’t understand retail. Plus they insisted that the one-size-fits-all ERP model should
fit retail as well as it fits for everyone else (rude awakening!). When a CIO I know was asked recently to consider looking at SAP for a suite of retail systems, he replied that
while SAP keeps on re-entering the retail market, they never seem to stay around.

However, I always knew that if they were serious about retail, they could buy themselves into the retail market. I assumed that meant buying up all the smart retail tech professionals
and making a go of it. I never suspected that they would make a $500M investment.

Analysts have been talking about this year as being big with mergers and acquisitions. There’s Kmart/Sears, Federated/May, and now SAP/Retek. The transaction size may not be
as big, but the impact to our small community is comparable. Is SAP going to take retail seriously this time? Or will it just dumb down the functional capabilities offered to
retailers? How is this going to impact the other big players in IT that have a stake in retail — Oracle and Microsoft?

The last 15 months have seen the acquisitions of QRS, Yantra, OMI, Escalate, Trigo, Timera, viaLink, Meta Group and others — limited scope solution companies being absorbed
into larger, broader offer solution companies. Who’s next?

Moderator’s Comment: What will the SAP/Retek merger mean for the retail technology industry and retailers?
Stuart Silverman – Moderator

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5 Comments on "SAP Buys Retek"


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Robert Antall
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Robert Antall
16 years 3 days ago

Most people in retail do not understand that SAP went back to the drawing board about 3 years ago to enhance their product for the U.S. retail market and has a very competitive retail merchandising product today with some large, happy customers, albeit not many in the U.S. at this time. They have been winning big deals against Retek and JDA for the last year (e.g., The Limited) in the U.S. and worldwide.

In fact, Retek saw the handwriting on the wall and had to find someone to buy the business before the roof fell in. SAP bought Retek in a pre-emptive move to avoid Retek falling into the hands of Oracle, JDA, Microsoft, or someone who could make life difficult for SAP in retail. As a bonus, they pick up a nice tier 1 customer base and some potential point solutions (read POS) that might be of use going forward.

Ron Margulis
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16 years 3 days ago

Both companies have faced challenges entering certain verticals (namely supermarkets and mass retail) over the last decade. SAP had disastrous implementations at Nash Finch, Oshawa and others, and Retek has not been able to make its systems work effectively at A&P. The key to this merger in having any impact at all is to go back to the drawing board and create a solution based on industry best practices, not on what the technologists deem as appropriate for the industry. The joint company also needs to hire a few actual retailers to ensure that the needs of the business user at the customer are met. The lack of any retail pedigree has hurt SAP significantly in the past, and I am not convinced the addition of Retek alone will be enough to overcome that problem.

dietrich goltz
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dietrich goltz
16 years 3 days ago

Just one comment from Germany:

SAP is used by about 2300 retailers globally and, out of those about 450, among those Migros, COOP, Carrefour, B&Q, OfficeMax, J Crew, are live with SAP Retail!
And they do not just deploy single modules. Normally they deploy the whole suite, which is fully integrated.

Nash Finch happened (1996/97) when SAP Retail wasn’t really mature.
Right now there is no single “disaster” implementation at all, as to my knowledge.
I think, anyway, the move towards Retek was a good one.

Dan Gilmore
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Dan Gilmore
16 years 2 days ago
Although SAP has made some progress in retail, its market share in this vertical, especially in North America, is still very small. Like all software companies, SAP is trying to find ways to keep the growth engine going. Given its huge market penetration in most other verticals, such as consumer goods, chemicals, etc., retail was one of the few major verticals for which it still has lots of opportunity for market share gains. Retailers have been terrified of the kinds of huge implementation costs they hear about with SAP in these other verticals. Of course, Retek, with its extensive use of Accenture for implementations, hasn’t exactly had a reputation for cheap installs either. There were strong rumors of Oracle buying Retek. Retek is built in a total Oracle environment, using Oracle forms, etc. Hence, it would have been a great technical fit for Oracle apps. SAP, on the other hand, as with all its acquisitions, will ultimately totally rewrite Retek in its ABAP language and new NetWeaver framework – this is one of the key… Read more »
joseph kozak
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joseph kozak
15 years 11 months ago

Oracle spent 8 months evaluating Retek and came to the conclusion tha,t in order to be considered a “player” in retail, they would have to acquire a tier I global company such as Retek. SAP acquired Retek in the space of 30 days. Any wonder why SAP is the global leader in ERP applications revenue? Oracle is still in shock over this deal and must now concede yet another vertical to SAP. With the retail market now SAP’s for the asking, Oracle must now try to target the tier II market, much the same as CPG, Auto, High Tech, Oil & Gas, Pharma, etc, etc. Reason PeopleSoft was acquired is that Oracle cannot sell applications. Had Oracle stepped up and acquired Retek, they would have dominated Retail when you factor in the PeopleSoft installed base, Oracle’s dB retail market share, and Retek’s install base. Another major loss for Oracle!

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