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Kenneth Cole finds SAP a good fit

Retailer Kenneth Cole went shopping, and wound up buying SAP's NetWeaver platform to pump up its sales operations.

New York fashion company Kenneth Cole Productions Inc. put a notch in SAP's belt this week, adding its name to the list of NetWeaver customers at a time when competition for midmarket and retail customers is fierce.

The SAP decision was a major one for the company, said Harry Kubetz, vice president of operations. Since its inception 15 years ago, when the company had one store, Kenneth Cole has outsourced its back office and retail functions to a Long Island provider. With the retail chain reaching critical mass, it was time to bring those functions in-house, Kubetz said.

The company hired consultancy Kurt Salmon Associates to help investigate the marketplace. A committee of senior management from IT, finance and retail (including former President Paul Blum, who left the company this week reportedly for a CEO job) oversaw the search, a process which from proposal to on-site demos took about seven months.

Kubetz said that while the company was looking for a solution that could integrate its disparate corporate functions, retail function was the priority. "We were looking for the best. SAP won based on retail functionality."

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Kenneth Cole is buying SAP for Retail, SAP Apparel and Footwear and SAP Triversity point-of-sale applications. The SAP NetWeaver platform will replace various, disparate legacy systems.

With $516 million in revenue in 2004, the shoe and apparel designer is hardly a giant among SAP customers, but the endorsement represents a big win for SAP in its ongoing battle with Oracle, said industry observer Joshua Greenbaum.

"With Oracle buying [retail software maker] Retek out from under its feet, SAP is eager to show that it has legs in the retail space," said Greenbaum, principal of Enterprise Applications Consulting in Berkeley, Calif.

"With Kenneth Cole, SAP not only gets a name brand, which is important, but it can also say, 'here is a company that understands the message of NetWeaver,'" Greenbaum said. "That's a big win."

SAP introduced the NetWeaver platform two years ago as part of its strategy to compete in the middleware market, allow customers to leverage software from competitors, and provide an engine for improved business processes.

"The fact that SAP also has broader implications for our business is a positive thing, but I would have had my head taken off by our retail division if, at the end of this, I had chosen something they could say, 'Hey, wait a minute," it's a compromise,'' Kubetz said.

Kubetz would not reveal who the finalists were or how much the company is paying for the SAP applications. "The bottom line was, we wanted to ultimately create the best experience at retail for our customers, and have the right goods at the right time in the right place," he said.

Known mainly for shoes, Kenneth Cole designs a range of apparel and accessories. The company operates 85 retail stores, distributes its products to more than 7,000 department and specialty stores and also licenses its name to a variety of products, from sunglasses to scarves.

So what can the Kenneth Cole customer expect to get out of SAP? For one, more sales people at the ready to help with service and sizes, said Kubetz.

An SAP function called workforce deployment will be used to optimize staffing of stores, "making the best use of people when and where we need them," he said. The new systems should also make it easier to locate products from around the country and get them to the customers faster.

And for the Kenneth Cole customer who travels, her sizes, preferences and buying habits will follow her wherever she goes.

"So if you are a superb customer on the Internet or visit our Boston store all the time -- we'll know that right away, and we can give you the shopping experience you deserve," Kubetz said.

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