Women’s clothing brand Roman Originals has been inundated by calls since the photo became the center of an online debate.
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Growth in multi-channel retailing is providing retailers both the capital and the drive to invest in new web-based enterprise integration. “Retailers realize they need to invest in integrated enterprise systems to compete with customer-serving applications and enhance the customer experience,” says Scott Langdoc, retail technology analyst and vice president of AMR Research Inc. That means many retailers can’t afford to continue investing in the legacy enterprise systems that many of them built in-house and that still run a lot of retail operations without the customer-serving integration needed to compete in today’s retail climate, he adds.
Accordingly, retailers will spend about $7.4 billion on retail application software this year, up from $6.6 billion last year, as application upgrades and replacements continue to account for an increasing share of spending as compared to existing licensing and maintenance fees, AMR says in its report, “Retail Industry Market Analysis, 2004-2009.” The report projects that spending on retail applications will reach $9.3 billion in 2009.
Oracle, of course, is not the only technology provider with its eye on the retail market. It faces major competition from enterprise software rival SAP AG, which had fought Oracle over Retek but recently acquired Triversity for store operations software and Khimetrics for pricing optimization. Oracle also competes at different levels with companies ranging from infrastructure providers IBM Corp. and Microsoft Corp. to application providers like Art Technology Group Inc., Ecometry Corp. and Demandware Inc.
But while Oracle and SAP would each like to be known as a one-stop shop for full suites of retail operating software, the reality is that many retailers will opt to mix applications from two or more vendors, Langdoc says. The same Internet technology that makes it possible to integrate applications within enterprise suites like Oracle’s and SAP’s, he adds, also makes it possible to integrate with applications from other vendors-theoretically, at least.
Competition is increasing not only over individual retail software applications and suites, but over the underlying integration technology as well. While Oracle promotes its Java-based Fusion technology, SAP does the same with its NetWeaver, Microsoft with its .Net, and IBM with its Websphere platform. These and other versions of middleware technology, including from middleware specialists like Webmethods Inc. and TIIBCO Software Inc., all use open standards architecture, the guts of web-technology-based systems that are designed to easily integrate with one another.
Still, much remains to be proven, Langdoc and other experts say, especially that each vendor’s technology stack will operate smoothly within its own suite as well as with technology from other vendors.
Oracle, which like SAP introduced web-based enterprise software about 10 years ago, claims that its customers now have the ability to integrate information from all of the applications of Oracle Retail within a full Oracle e-Business Suite, integrating with Oracle financial management software, for instance, and pulling and analyzing data from a common Oracle database. It’s an option that Oracle is trying hard to get across to merchants who want to benefit from a truly integrated multi-channel environment.
Connecting the dots
“If you connect all the dots, it gives you a better feel for what customers are asking for at the store level, then you can take that up into the supply chain and back to the stores with the right products,” says Gladys Lau, senior director of strategy and marketing for Oracle Retail.
At the heart of Oracle’s combined offerings is its Java-based Fusion integration technology, which integrates multiple applications with minute levels of data and without extensive new coding and integration work, Lau says. “Not all software vendors can handle high volumes of product SKU-level data by color, size and location,” she says.
So far, analysts and retailers give Oracle high marks for coming through on its claims of inter-application integration. Anchor Blue Retail Group, Bush says, is not only getting the granular data it needs at the single store level, but is using the data to improve its level of communication with suppliers. “We’re doing more communication with suppliers electronically, which leads to fewer mistakes, and we’re no longer double- or triple-key-punching data into our system,” he says.
To make the new system work, Anchor Blue enters product codes for each product in purchase orders, so a rose-colored striped shirt would have an identifier distinct from a similar striped shirt in a different shade of red. Once the purchase order data is entered into the Oracle Retail system, he adds, it’s fully integrated with merchandising and supply chain applications.
Multiple names for red
“In the past, when buyers identified one color as being rose, another red and another hot pink, it was never clear which one was selling the best,” Bush says. “Now we have this on a more systematic basis, so we see what’s selling and where.”
Anchor Blue’s Oracle suite, which replaced a home-grown platform, was implemented on schedule last fall and within his planned budget of “between $2.5 and $5 million,” Bush says. The integration was not bogged down, he adds, even though Anchor Blue decided to keep its pre-existing Lawson Software financial application and its PKMS warehouse management software from Manhattan Associates Inc.
Neither was the project upset by the presence of Oracle itself, which acquired Retek after AnchorBlue had chosen Retek as its new software provider, Bush says, though he admits that he and his technology team had initial doubts. “We were concerned, but it wasn’t a panic attack,” he says. “The Retek team stuck with us, and Oracle did a good job of communicating with us.”
While Oracle is making definite inroads into the retail market-at last month’s annual National Retail Federation conference and trade show, Oracle trotted out Tesco, Reitmans, Anchor Blue and other customers to give positive testimonials-it’s far from dominating the market, and there may never be a dominant player, experts say.
SAP, which has been showcasing its work for The Home Depot and other major retailers, will not take a leisurely back seat to Oracle, analysts as well as SAP executives say. By acquiring both Triversity, which provides POS systems deployed across multiple channels, and Khimetrics, with its price optimization software, SAP is adding more demand-side applications to its forte in supply chain and enterprise systems, says Rick Chavie, senior vice president in charge of the SAP Retail suite.