February 28, 2005

Given its large size and its standing as the world's largest enterprise applications and ERP solution provider, as a whole, SAP doesn't make many acquisitions. That's all the more reason to pay real close attention when the company does.

Today SAP has agreed to acquire Retek, the retail applications specialist, for close to $400 million. The deal brings SAP product expertise in forecasting, planning, store operations, retail-specific order management, and demand-driven replenishment, among other functionality.

The acquisition of Retek gives SAP a robust play in retail, which it has historically courted as a customer relationship management (CRM) opportunity. SAP's acquisition of A2i was the first step toward retail, giving SAP data management capabilities in that sphere, but the acquisition of Retek signals a full-on assault on the vertical, with Retek's vertical-specific strengths complementing SAP's existing back office tools.

According to an AMR Research note, SAP benefits in that it "acquires some big name retailers [Sainsbury, The Gap, A&P, and Nordstrom] as clients who need immediate help."

Furthermore, on the competitive front, the acquisition means that" Oracle now must rely even more tightly on its other retail application software partner, Tomax..."

Finally, "Retailers...will be comparing the relative complimentary strengths of Retek and SAP in enterprise retail suites against JDA's legacy products and their long delayed .NET-enabled integrated suite. This puts JDA in a defensive posture."

Source: Line 56