SAP Gaining Ground in Merchant Applications

Tuesday Nov 22nd 2005 by Clint Boulton
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The company will purchase Khimetrics to keep up with Oracle in the retail applications niche.

Think Oracle's winning bid for Retek over SAP didn't rattle the No. 1 applications maker's cage? Think again.

Reinforcing that the retail space is a fertile battleground for selling merchants' applications, German giant SAP today agreed to buy privately held Khimetrics for an undisclosed sum.

Scottsdale, Ariz.-based Khimetrics makes Java-based software that allows retailers to analyze how to price and position items, install sales strategies to keep customers for the long haul and forecast profitability.

While retail is the primary focus of the deal, SAP said it will use Khimetrics' assets in its financial services and consumer products portfolios. SAP will also acquire a customer base that includes Lowe's, 7-Eleven, Sterling Jewelers and Big Y Foods.

The acquisition is expected to be completed in January 2006. SAP intends to keep the Khimetrics Scottsdale office and staff of 130 workers.

The bid comes two months after SAP's acquisition of point-of-sale software maker Triversity, which helps computers in retail stores execute purchases.

Two buys in the same space so close together highlight just how serious the applications leader is about the retail space after losing Retek to Oracle earlier this year.

"Recognizing the growing market opportunity of providing standard software to retailers, SAP has been making strategic investments in key retail functionalities to enhance its retail offering," SAP said in a statement.

Both SAP and Oracle believe customers are moving away from building proprietary software in-house to standardized software that will work with software from multiple vendors.

Oracle President Chuck Phillips confirmed this trend in a recent meeting with financial analysts in New York.

Analysts peg the retail software market as a multi-billion-dollar opportunity, and despite Oracle's Retek coup, SAP said more than 2,900 retailers worldwide use its software.

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