[ Technology Blogs Articles News Reviews ]

www Technoclicks.com
Post Tech Blog Article News Reviews

Top Articles

Analysis: SAP's Khimetrics Deal Targets Rival Oracle

Posted by iTech - 2005-11-24

SAP AG's second try to acquire a pricing and optimization vendor could prove fruitful. The purchase of a small company like Khimetrics Inc. puts the software vendor on a more even footing against rival Oracle Corp., and provides a slew of powerful analytic tools it will integrate into its platform. SAP said it intends to buy the privately held Scottsdale, Ariz. software vendor for an undisclosed sum. The transaction is set to close in January 2006.

The deal isn't going to boost SAP's $8.8 billion revenue. Khimetrics estimated 2004 sales are about $30 million of which approximately $13.5 million is from application licenses and hosting services, according to AMR Research Inc. The research firm forecasts revenue from licensing and hosting to reach $17.6 million this year. "SAP missed out on acquiring both Retek and ProfitLogic, both had strong capabilities in demand intelligence," said Scott Langdoc, vice president of retail systems, AMR. "Both Oracle and SAP have complex integration and positioning challenges ahead, though with this deal it puts them on a more normalized footing."

But according to AMR, Oracle is pulling ahead. SAP's application license and hosting revenue from retail is expected to contribute $149.8 million this year, up from $135 million in 2004, compared with Oracle's estimated $201 million and $119 million, respectively, said AMR.

Retail price and promotion optimization, and consumer demand intelligence are key components in Khimetrics' Retail Lifecycle Price Management technology. These are mandatory functions if SAP wants to compete for enterprise retail deals where forecast-driven planning processes and technology is what leading retailers require to drive top line revenue and margin improvements in a competitive market, Langdoc writes in a report. It's functionality SAP lacked.

In May, SAP partnered with DemandTec Inc. to offer retail customers more accurate data to help them measure the performance of merchandising programs. But AMR's Langdoc said the partnership never really resulted in any joint deals. "Customers said the deal was interesting, but they needed more than an application to make price optimization successful," said Jim McMurray, SVP Retail at SAP America. "They were looking for the price optimization technology, but it has to be integrated back into the core merchandising and enterprise systems to execute on it."

AMR Research estimated the retail application market will reach $6.6 billion this year, up from $6 billion in 2004. By 2009 the total market is projected to grow by nearly $3 billion to $9.3 billion, driven primarily by retailers seeking long-needed replacements to legacy applications and more flexible, scalable demand-driven retailing software options.

In March, SAP lost a bidding war with Oracle for retail-software maker Retek Inc. Oracle won with an offer of $11.25 a share, or $670 million. SAP had first offered $8.50 a share. The Retek acquisition gave Oracle analytics around allocation, replenishment and advanced inventory planning.

Oracle acquired retail optimization vendor ProfitLogic in July, picking up analytics in lifecycle merchandising around markdowns and promotions, to boost its presence in retail. "Profit logic at the time had 30 customers, and we've announced three since the acquisition," said Dave Boyce, global head of marketing for Oracle's retail division. "Khimetrics has about 10 customers"

Similar to SAP's strategy, Oracle would take the technology outside retail and into financial, packaged goods, distribution and manufacturing.

Then last week, SAP appointed Rick Chavie to lead global solution management for SAP’s retail and wholesale industry solutions. Chavie, senior vice president of Industry Solution Management and Trading, came to SAP most recently from his post as CEO at the marketing technology firm Infolenz, which was founded by the Massachusetts Institute of Technology.

Related Category :

Software ||

Next ....: Hackers Target Security Software

:: Previous Articles
:: Microsoft Seeks New Office Format Standard
:: Wave Systems Shares Advance on Dell Deal
:: Microsoft fires first salvo of new console wars

Recent Articles



Home | | Members | Search | Upadtes | RSS | Tags | Site Map | Tags | Conact

© Technoclicks.com - All rights reserved.