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    Customers Would Win with Oracle, Report Says

    By
    Evan Schuman
    -
    March 9, 2005
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      As far as the retail customers of Retek are concerned, the current battle between Oracle and SAP for control of the Minneapolis retail technology firm would be better won by Oracle, according to an analyst report published Wednesday by the Aberdeen Group.

      “Retek users could breathe a sigh of relief if SAP decides to fold,” wrote Paula Rosenblum, who is Aberdeens director of retail research. “An Oracle purchase of Retek would be much less disruptive to existing clients and more comforting to prospects than an SAP purchase.”

      The boardroom battles public phase began Feb. 28, when SAP AG announced that it had signed a definitive merger agreement with Retek Inc.s board for $8.50 per share, which amounted to $496 million at the time.

      On Tuesday, Oracle Corp. stepped in and offered $9 per share, which amounted to $525 million. On Wednesday, Reteks shares continued to soar, closing at $10.63, a 23.75 percent increase on the hopes of a bidding war.

      Retek reported only $174 million in revenue in 2004, has about 525 employees and delivers a wide range of retail applications for companies that include 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 Kohls Corp.

      The Aberdeen report cited several reasons Oracle might be a less disruptive acquirer, including that Accenture would likely remain the preferred systems integrator, Oracle would remain the database of choice and Oracle Financials would continue as the back-office system of choice.

      /zimages/2/28571.gifTo read more about SAPs rationale for buying Retek, click here.

      With an Oracle acquisition, “little to no rationalization of Retek functionality would be required. Unlike with SAP, there is little to no product overlap between the Retek and Oracle application suites and many [complementary] products are shared by the companies,” Rosenblum wrote.

      “No architectural shifts would be needed. Retek has written most of its solution in the Oracle toolset, including its newer modules in the Oracle Java development tool—the current development environment for Oracle applications,” Rosenblum added.

      In an interview with eWEEK.com, Rosenblum said that she not only thinks that Oracle would be the more attractive acquirer, but that its also the more likely winner.

      “Yes, I think Oracle will get it. Im not sure that SAP will bid it up” and match or better Oracles offer, Rosenblum said. “This is certainly a better deal with Retek shareholders. Given the overlap of functionality, I think Oracle is a better fit.”

      As for SAP, Rosenblum predicts that they will make a move for a different retail specialist and find their way into this large vertical eventually. “SAP is a good company and, sooner or later, they will get retail right,” she said in the interview.

      In the Aberdeen report, she wrote that the Oracle/SAP moves could have an impact beyond Retek customers. “While SAPs proposed purchase of Retek would have frozen the merchandise operations software market in the near term, an Oracle purchase of Retek could melt it right back down again,” she wrote.

      /zimages/2/28571.gifTo read more about Oracles move to take over Retek, click here.

      The Aberdeen report, however, didnt suggest that an Oracle acquisition would be an easy thing for Retek customers, but merely preferable to an acquisition by SAP.

      “With Oracle still busy integrating PeopleSoft and J.D. Edwards and with Oracle management emphatic in stating that this purchase would be tiny compared to that effort,” the report said, “existing users will be faced with the same challenges they had before Retek went in play.”

      Among those challenges have been difficult upgrade paths as well as the fact that Reteks “core application remains difficult and expensive to install,” the report said.

      What does Aberdeen advise for retailers that are considering becoming Retek users? “Lock in a cap on annual maintenance and support costs now.”

      Retail Center Editor Evan Schuman can be reached at [email protected]

      /zimages/2/28571.gifCheck out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

      Evan Schuman
      Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at [email protected]

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