SAP to Acquire Retail Software Developer

Khimetrics develops software that enables retailers to perform demand analysis that helps with better product pricing and optimization and more accurate profitability forecasts.

SAP AG announced Thursday the acquisition of Khimetrics Inc., a privately held retail analysis and optimization software development company thats been ranked as one of the fastest growing companies in North America.

Khimetrics, based in Scottsdale, Ariz., develops software that enables retailers to perform demand analysis that helps with better product pricing and optimization and more accurate profitability forecasts. Khimetrics software also helps users implement longer-term sales strategies, SAP officials said.

Financial terms of the deal were not disclosed.

The acquisition comes on the heels of SAPs Triversity buy, a small software company that makes point-of-sale software. It also builds on SAPs strategy to buy very specific point solution software companies that add to its base of functionality in a specific vertical sector.

"Our acquisition strategy is focused and clear and differentiates SAP from its competitors," Jim Hagemann Snabe, general manager of Industry Solutions at SAP, said in a statement. "Were continuing to strategically add companies that bring valuable functionality to our product suite and extend our leading position within key industry verticals such as retail."

In terms of differentiation from its competitors, SAP is seeking to distance itself from the acquisition frenzy at rival Oracle Corp., which has amassed at least a dozen new companies—including database, security and applications providers—in less than a year. With its biggest acquisition to date, PeopleSoft Inc. for $10.3 billion in January, barely under its belt Oracle has acquired nearly a half dozen more (albeit smaller) companies in recent months. And its in the process of buying CRM (customer relationship management) vendor Siebel Systems Inc. for $5.85 billion in a deal thats expected to close early next year.

/zimages/2/28571.gifSAP is looking to partners to keep Oracle at bay. Click here to read more.

Many of Oracles acquisitions have been not only to stave off competition from top competitors like SAP (the worlds largest business applications software developer), but to topple the Walldorf, Germany-based company from its top spot.

The retail sector is a prime example. In February SAP announced it would acquire Retek Inc. for $496 million. The Oracle acquisition team quickly went into high gear, amassing Retek stock and secretly meeting with its advisory board to launch a counter-offer.

Shortly thereafter, Oracle announced it would seek to acquire Retek in the same terms set out by SAP. With visions of another proxy battle—similar to that waged by Oracle in the PeopleSoft deal—or perhaps something similarly Machiavellian in mind, SAP stepped aside. Oracle bought Retek, along with its competitor ProfitLogic, and formed a retail unit.

"We are the largest [vendor in North America], and we intend to defend that," said Oracle CEO Larry Ellison during a March press conference. "We have over 2,300 users in North America—quite a bit larger than SAPs—and we think its important to defend that position."

(Retek, based in Minneapolis, was largely considered the leader in its industry. The company developed software that enables automation from the point of purchase through the retail supply chain, and supports retailer activities such as merchandise operations management, supply chain management and merchandise planning and optimization.)

/zimages/2/28571.gifOracles buying spree makes for strange bedfellows. Click here to read more.

In a statement released Thursday, SAP officials said Khimetrics software will be used as a key element to its software portfolio for retailers that support "an efficient response to customer demand."

Khimetrics software is Java-based, as is SAPs newer software platforms. It will be integrated into the SAP for Retail software portfolio, which is built on SAPs NetWeaver integration platform. The company also plans to use Khimetrics software across its financial services and consumer product suites, where customer demand analysis is a big factor.

The deal is expected to close in January—unless Oracle decides to take a crack at Khimetrics.

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