Coles rounds-up SAP products at lower price

Recently separated grocery and supermarket giant Coles has handed German software behemoth SAP the loose ends of its recent tech overhaul, with the mega-vendor trumpeting the addition of ERP, procurement and some human resources as it consolidates its operations.

Under the deal – the value of which has not been disclosed to the ASX suggesting it falls below the material disclosure threshold – Coles will adopt SAP S4/Hana, the SAP Ariba procurement product and SAP Success Factors career and performance management suite.

The deal essentially ropes-in a range of corporate and enterprise functions that sit on top of the core logistics, distribution and retail sales platforms that have been keenly eyed by investors for performance and efficiency.

“Making life easier for our customers and team members is a key focus for Coles, said Roger Sniezek, Coles’ chief information and digital officer in a statement provided by SAP.

“This partnership with SAP will allow us to innovate more with both groups to ensure we are as efficient as possible across our retail environment.”

In October last year Coles revealed a deal to automate its distribution centres through a deal with German automation specialist Witron Logistik + Informatik, a rollout the retailer pitched as potentially saving $150 million.

Supermarkets, including rival Woolworths have been ploughing major resources into supply chain efficiency and automating distribution because the big up-front savings that can be achieved by switching to robots for tasks like warehouse picking.

Aside from faster, more accurate and predictable warehouse to store order management, retailers can make big savings on human labour costs by either reducing headcount or re-deploying staff or contractors.

Applied analytics have also been a favourite cash and efficiency booster.  

The nature of grocery distribution is also changing, with online home delivery and click and collect options now both in the mix alongside traditional checkout offerings.

The lower-end capital and/or operational expenditure associated with the latest SAP win also suggests the management of Coles’ massive 115 person payroll is likely staying put, with outsourcer DXC the last known custodian of the platform supplied as a managed service – also built on SAP.

Blue chip companies routinely outsource payroll as a service to specialists to eliminate in-house integration risks and take advantage of volume discounts managed service providers can extract.

SAP has been on a mission over the last few years to extend many of its complementary purchases, like Success Factors, into its wider ecosystem to expand on the degree of customer commitment.