SAP buys Retek to build retail business

Under-representation in sector reason for purchase: analyst

Looking to boost what has been perceived as an underwhelming presence in the retail market, SAP has gobbled up retail software maker Retek.

SAP says it has agreed to pay $US496 million for Retek. The transaction could close as early as next month, says SAP America spokesman William Wohl.

Customers have varied opinions about the deal; for example, Robin Lynas, CIO at Mark's Work Wearhouse, says he's waiting to see how the situation plays out in the next few weeks, though he believesSAP will leave Retek intact while providing "support and capital where needed."

"SAP went after a retail vertical because they don't play well there right now," Lynas said. Mark's Work Wearhouse, a retail clothing company, has been using Retek's point-of-sale software at its 320 stores for 18 months.

Shoe maker The Clarks Companies uses Retek's merchandising system to support its supply chain and inventory management processes.

If SAP tightly integrates Retek's applications into its own ERP software architecture, it could provide Clarks with "expanded possibilities," says CIO Richard Scheerer. Currently, Clarks uses Oracle's financial software rather than SAP's.

Wohl says SAP's move isn't specifically intended to buy market share or new customers, but instead helps round out SAP's offerings and expertise. It will also boost SAP's retail presence in the US, where Retek is strong, he says.

He noted that the move is not a reaction to Oracle's recent buyout of PeopleSoft, since most competition in the retail market isn't from those vendors or any third-party software maker. Retailers generally use home-grown systems, he says.

Despite investing considerable development resources into its retail portfolio in the past few years, SAP has been unable to grow its market share as quickly as it had hoped, according to IDC analyst Mike Witty, who says SAP should explain to Retek customers an "integration strategy and timeline, how overlapping functionality issues are going to be addressed and what the upgrade path will be for future releases."

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