Retailers Hit Installation Bumps With SAP Software

ERP giant gets mixed reviews on its retail line

SAP AG's applications for retailers continue to be stung by a series of high-profile installation problems that many say illustrate the complexity of trying to fit an integrated suite of enterprise resource planning software into a retail operation.

The latest example came late last month, when Canadian supermarket chain Sobeys Inc. abandoned an $89.1 million SAP Retail implementation.

"[SAP Retail has] insufficient core functionality . . . to effectively deal with the extremely high number of transactions in our retail operating environment," said Bill McEwan, president and CEO of the Stellarton, Nova Scotia-based retail chain.

Sobeys isn't alone.

Jo-Ann Stores Inc. in Hudson, Ohio, and pet supply retailer Petsmart Inc. in Phoenix last fall both attributed low financial results to problems with their SAP Retail rollouts. Both, however, said they're pleased with the system overall.

SAP officials continued to defend the capabilities of SAP Retail. Geraldine McBride, general manager of the consumer sector business unit at SAP America Inc., said the German vendor has signed up 264 retailers as customers, 128 of which have gone live.

But Greg Girard, an analyst at AMR Research Inc. in Boston, said most of the retailers are running SAP's financial and human resources applications, not SAP Retail itself.

"I can't point to a single happy SAP Retail account in North America," said Girard.

SAP Retail is a good product, argued Kevin Restivo, a Canada-based analyst who works for IDC in Framingham, Mass. But technology is never a "silver bullet, [just] part of a larger puzzle" that includes making sure internal business processes are in tune with the software's capabilities, Restivo said. That's especially true given the processing complexities faced by retailers, he added.

In late 1998, Reebok International Ltd. was the first U.S. company to go live with SAP Retail, which now supports 115 outlet stores run by the Stoughton, Mass.-based footwear maker. Peter Burrows, Reebok's chief technology officer, said the SAP system is producing "a very high level of stock accuracy" in the stores.

But the yearlong installation process wasn't easy and required some adjustments as the project went along, Burrows said.

The Home Depot Inc. recently completed an SAP R/3 installation in the company's Argentina operations.

Gary Cochran, vice president of information services at the Atlanta-based home improvement retailer, said he made "limited use" of SAP's consulting services.

Instead, Cochran put together a team of 50 top employees—IT personnel and end users. Because of the team's familiarity with legacy systems, he said, it didn't have to "face some of the configuration issues that have been problematic for other people."

"It went so smoothly, there was literally no ripple in corporate organization," Cochran said.

Best Buy?

How retail enterprises have fared with SAP’s software:

Nash Finch Co., a Minneapolis-based food wholesaler and supermarket operator, shelved most of a $76 million SAP project two years ago after development delays made it impossible to install the software in time to fix its Y2k problems.

Home Depot successfully installed SAP retail in Argentina last summer after painstakingly interviewing 30 SAP users to learn from their mistakes.

Copyright © 2001 IDG Communications, Inc.

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