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The Retail World

From a business and information technology perspective, the retail sector has its own challenges.  Some of the characteristics of this sector are:  – deals with large volumes of data in terms of masters and transactions – price sensitive – margins are low – deals with ‘you & me’, the consumer and the ‘experience’ – analytics of consumer buying patterns plays an important role – effective category management, forecasting requirements, replenishment and assortment planning are key areas for success – lots of interfaces to external systems like SAP to POS (Point of Sale) systems, POS to barcode scanners, weighing scales, payment gateways, RFID enabled systems, PDAs etc – the risk of pilferage and fraud is high due to the nature of merchandise which is ‘required by all’   In simple terms, a retailers business process flow, could be:  – procure merchandise at the most optimal prices – receive merchandise at the warehouse or store – optimize logistics to ensure that merchandise is available at the store, based on consumer demand– ensure that the consumer has a varied assortment to choose from – provide the best price, quality and serviceenhance the consumers buying experience through efficient and effective methods – enable sales at the store and send data to the back end system for analytics and financial accounting – analyse consumer buying patterns and cater to their needs – maintain customer loyalty  It is the keywords in these processes, which have been indicated in bold, that have created the powerful functionalities in products like SAP for Retail, e.g.:  – Category Management – Merchandise and Assortment Planning – Requirements Planning – Forecasting and Replenishment – Promotions – Allocation – Investment Buying – Open to Buy – Transportation – CRM – POS Data Management – Business Intelligence – POS integration through XI – etc.  However, what is happening in reality is that the pressures of ‘going live’ are forcing implementations to configure only the basic structure thereby ignoring the high end functionalities, that are the real benefit to the organization.  I do believe that discussions in this Retail space of BPX, will help community members optimize the utilization of these functionalities thereby facilitating direct benefits to organizations.  The sheer volume of data in the retail sector makes it absolutely essential to use technology and tools to make business processes efficient and effective. We have no other choice.    
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  • I agree with Babu that Retail business processes are made to appear very complex and his bullets are capturing the hi-level Retail processes in a simple/ understandable format.

    I wish to respond to a specific comment by Babu -Quote “However, what is happening in reality is that the pressures of ‘going live’ are forcing implementations to configure only the basic structure thereby ignoring the high end functionalities, that are the real benefit to the organization” unquote.

    1. It is the ERP Catch 22 that happens in almost all SAP implementations. Clients who have no knowledge of the SAP are required to give decisions for Customizing. Consultants scare them by saying – Don’t (over) Customize! – it will become too complex etc. When a client faces process logjams – consultants say – It was your decision – you signed off!!
    2. This results in a vanilla SAP without rolling in the company specific Processes that are unique and may be of competitive advantage
    3. If Reebok and Nike are on SAP and both have a vanilla SAP system – then where is the competitive advantage? Nick Carr makes this famous in his book IT doesn’t matter!
    4. Recently i read a blog(, a chat Dan Farber had with Uwe Hommel SAP’s executive vice president for Global Solution Operations Support, at Sapphire 2007, Atlanta.

    Hommel is said to have claimed that customers typically use 30 percent of functionality of SAP solutions. Dennis Howlett asked why SAP doesn’t charge customers for just the percent of the product functionality they use. Hommel responded that the SAP support service is a good deal. The reality is that it’s not a benefit to SAP’s business model.
    It has become fashionable to make such broad claims that Clients use only 30 % or 40% of the functionality of SAP.
    Does that mean they got ripped off?
    Does that mean that Clients are low IQ people who did not have the Know-how to exploit the ERP they bought? Then what was the role of a Consultant? A CON?
    Does that mean SAP vendors conned the Customers to pay for expensive features that they do not need?
    Does that mean SAP experts- (the BIG4 et al) did not configure the full functionality?
    Does that mean getting ROI from an SAP system is a joke?
    We need answers. Badly – considering the fact billions of dollar invested in SAP goes to only 30% of the product functionality and 70% is just lying there – wasted??

    Babu’s point has opened a Pandora’s box. I am aware it is a well-known secret but its time we did something about it before we become extinct.

    Best, Jagan Nathan Vaman
    CEO Altrion Technologies

    • Now that Babu has opened the Pandora’s Box let us get further into this.

      I would like to highlight couple of points

      Consulting firms have to take the fixed scope fixed price model proposed by SAP. There can be various packages like a quick start package with minimum scope and minimum implementation cost. Consulting firms can have several packages which go up to maximum scope and maximum cost.

      If the customers need more that the proposed scope on any of these packages they can pick up form the A la carte service menu of the consulting firm.

      I believe that most of the consulting firms will adapt this model in the near future. But SAP would also have to charge the customer based on scope. SAP will have to work closely with the consulting firms and adopt the fixed scope fixed price model for SAP licence fee as well.

      SAP should come out with a SPA(Safe Predictable Affordable)licence model similar to the ASAP Focus Implementation Methodology.

      We as consultants and consulting firms will do our part, will SAP do something about it?

      Alfred Sunil

  • I would like to share my viewpoints keeping from SAP IS Retail implementation experience in two clients in India;

    a)There are lots of products Gaps in SAP IS Retail business solution with respect to Indian environment. 

    b)As BPX Community members, we should give quick workaround amicable solutions to meet business requirements.

    c)At a same time, we should pressurize SAP, AG to develop all these product gaps on top most priority to attract more and more Retail customers

    d)I would also suggest and recommend to initiate IS-R-CIN (Industry Solution Retail-County India Version) at the earliest to take care above pain points

    Thanks for your attention.