SAP Acquisition Adds to Its Retail Tool SetBy Evan Schuman | Posted 09-20-2005
Financial terms of the deal were not announced, nor were the revenues of privately held Triversity confirmed.
The Hoover's financial service, however, estimates that Triversity brings in revenue of $31.5 million annually. SAP declined to comment on the accuracy of that figure. Triversity CEO David Thomas said the $31.5 million "is a low number" but that "it's in the ballpark."
The Triversity acquisition is the culmination of what was widely reported to be a quest by SAP executives to buy a company that could give it the kind of retail-application technology Retek offered. Oracle won an on-again, off-again bidding war for Retek last March, when it topped by a quarter SAP's bid of $11 per share. The last-minute, $670 million winning bid came after a months-long negotiation on price between Retek and SAP.
Oracle withdrew from the bidding last fall in order to focus on its then-recent acquisition of PeopleSoft. But the 400 retail customers PeopleSoft brought to Oracle and the increased need for top-flight retail applications brought the company back into the bidding for Retek.
At the time of the Oracle buyout, Retek was seen as attractive because of its marquee list of retail customers, including Abercrombie & Fitch Co., Nordstrom Inc., Hallmark, A&P, Best Buy, The Kroger Co., RadioShack Corp., Eckerd Corp., Tesco, Zale Corp., Sears Canada Inc., Gap Inc. and Kohl's Corp.
SAP officials also referred to "marquee" customers when touting its Triversity purchase. Among Triversity's retail customers are Williams-Sonoma, Dollar General, Party City, Children's Place, Trader Joe's, BJ's Wholesale Club, Kirkland's, the SportsAuthority, the WaWa convenience chain and The Body Shop, plus Staples in Canada and in other parts of the world.
Triversity has about 230 employees and some 400 customers.
Jim McMurray, who serves as the senior vice president for SAP America's retail business unit, said the negotiations between the two firms have been going on "over a couple of years period" but that negotiations "got serious six to eight weeks ago."
Although the two companies' U.S. operations are neighbors (SAP's U.S. headquarters is in Newtown Square, Pa., about a 15-minute drive from Triversity's U.S. headquarters in Bristol, Pa.), talks took place between representatives from the home countries: Walldorf, Germany, for SAP and Toronto for Triversity.
The global nature of the deal means that has to deal with U.S., Canadian and German regulatory rules and the companies couldn't even announce when the contract was signed, though Thomas did confirm that the deal was signed Friday.
Before the dial can be finalized, however, German regulatory authorities will, ultimately, decide to approve the purchase or not, McMurray said.
But despite the similarities of two multibillion-dollar enterprise application giants purchasing a comparatively small, well-regarded retail software specialist to plug holes in their product lines, advocates argue that there are major differences.
SAP's McMurray said the SAP-Triversity combo's greatest competitive advantages against Oracle's abilities come from a strong client/server POS version; a strong business analytics/loss prevention component; and a strong Java-based J2EE POS option. Triversity's retail software is designed to do more than run point-of-sale systems, Thomas said. The software also includes order-management functions that, combined with SAP's abilities, bring multichannel customer relationship management functions out of the back room and up to the point of sale, he said.
Paula Rosenblum, the director of retail research for analyst firm The Aberdeen Group, said she sees a big difference between the Oracle-Retek and the SAP-Triversity deals.
The big picture issue hereand it's the same with any software acquisitionis whether the sum of the parts is better than piecing it together on its own. The Oracle-Retek move was a bigger help for retailers because the integration was more helpful, Rosenblum said.
The SAP-Triversity package, although it makes sense, could work just as well with retailers buying the pieces on their own. "It's not quite the same as buying Retek," Rosenblum said. The Triversity part "is easier snap-on and snap-off."
"The real question here is, 'Have you drunk the Kool-Aid that retailers want an end-to-end solution?' I haven't drunk that Kool-Aid yet," she said, adding that many retailers are just as happyand just as well-servedpiecing together their own best-of-breed combination.
Does it become a key differentiator in the marketplace? Would this deal make a difference to, for example, Home Depot, which she said just made a $54 million commitment to SAP and also works with POS and related retail services vendor 360Commerce. "The answer will typically be, 'No.'"
Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com.
Check out eWEEK.com's for the latest news, views and analysis on technology's impact on retail.