SAP to Build Home Depot's IT Foundation

by Colin C. Haley

The software maker announces a partnership with the retail giant and unfolds a product map at its annual conference.

BOSTON -- Home Depot , which until recently ran on a "stack 'em high and let 'em fly" mentality, will reshape its IT operations with the help of SAP .

The pact between the world's third-largest retailer and third-largest software vendor was announced here this morning at SAP's annual customer conference.

Home Depot will use SAP's software for retailers, which utilizes service-oriented architecture , to help manage its supply chain and inventory. Terms of the deal were not disclosed.

"[This agreement] makes sense because we are such a fast-growing company," Robert DeRodes, Home Depot executive vice president and CIO, said during a panel discussion.

Home Depot opens a new store every 48 hours and is increasingly looking at new channels and international markets, including Mexico and China, to continue its torrid growth.

The Atlanta-based company has come a long way in its use of technology. Just a few years ago, its new CEO wanted to send an e-mail message to the company's employees and was dismayed to learn that there was no way to do it.

Stores operated almost autonomously and under a strategy DeRodes described as "stack 'em high and let 'em fly."

But now, in addition to its expanded relationship with SAP, Home Depot is also bringing self-checkout, price scanners and other technology to the store floor. That creates a host of new data that can be used if properly managed and analyzed.

The Home Depot partnership was announced by SAP CEO Henning Kagermann who said he's optimistic that large corporations, especially in the United States, are prepared to invest in software that integrates with other applications and improves efficiency.

"IT cannot be viewed as a cost center in the future," Kagermann said. "It has to be viewed as a strategic lever for business."

SAP is on track to ship its business process platform, a complete suite of SAP business applications, including offerings customized for specific industry sectors, in 2007, he said.

The offering is designed to be easily integrated with software and equipment from other vendors, Kagermann said. That's a continuation of SAP's recent partnering efforts.

Late last year, SAP and HP announced a joint bundled service. And just last month, the German company and Microsoft said they will tie together SAP business applications with Microsoft Office.

SAP also announced a new deal with JPMorgan Chase. The financial services giant will use mySAP ERP as part of the bank's long-term plan to improve its finance platform, the companies said.

The Sapphire show continues tomorrow when SAP and Intel are expected to announce a new effort to improve RFID-powered supply chains.

  This article was originally published on Wednesday May 18th 2005
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