SAP DSD Development Partnership With Coca-Cola Enterprises Is

a Step Toward DDSN

Thursday, February 12, 2004
Roddy Martin

Coca-Cola Enterprises and SAP have formed a strategic partnership to develop Direct Store Delivery (DSD)
functionality. Coca-Cola joins leading Consumer Products (CP) manufacturers like Colgate-Palmolive, Kimberly-
Clarke, Hershey, and General Mills in partnering with SAP to develop new functionality, including Trade
Promotions Management (TPM), Supply Chain Planning (SCP), customer analytics, and Product Lifecycle
Management (PLM).

The Bottom Line: SAP’s work with companies like Coca-Cola will ripple throughout the CP industry, benefiting
those seeking competitive advantage through technology in customer-facing processes like DSD.

What It Means: SAP is cleverly cementing itself further into the CP industry by catering to the needs of these
leaders, but it’s only because these leaders have insisted upon it. The timing for SAP is good as the Oracle and
PeopleSoft battle shakes out (see the AMR Research Alert article “Oracle Increases Its Bid for PeopleSoft ahead of
DOJ Decision,” February 4, 2004). SAP’s multiyear partnership with Coca-Cola and its recent strategic partnership
with NCR/Teradata places it into a Tier 1 consumer goods leadership position that will become increasingly
difficult to challenge. This only stands to benefit CP companies looking for a vendor that knows and is proving
dedication to their business.

While partnering with a core software vendor to build strategic capabilities is the right thing to do, it is not an easy
task, as the difficult experiences of a few leading manufacturers will attest. The Coca-Cola DSD partnership and
other announcements expected to follow are important credibility steps for SAP in the CP industry. They are also
bragging rights. This increases problems for SAP competitors, such as Manugistics, which must step up and
articulate their DDSN roadmap to avoid being replaced by SAP. However, this is where the competition can still
compete. SAP has not provided the industry with a great roadmap that CP companies can follow to link all of these
needs together. While manufacturers still in best-of-breed Information Technology (IT) architectures increasingly
see SAP’s evolving developments as a means to leapfrog the competition with new capabilities, they must demand
that their niche vendor provide them with a solid roadmap if they don’t want to take on the headache of strategically
partnering with their vendor.

Of course, the DSD process in the Food, Snacks, and Beverage industries requires the integration of more than just
Enterprise Resource Planning (ERP) and supply chain functionality. The process incorporates mobile sales force
infrastructure, field and internal sales functions, back-office planning, and logistics operations to support the
processes of order-to-cash and settlement. During the next few years, the Coca-Cola partnership will be based on
some of the technologies in mySAP Business Suite:

mySAP Customer Relationship Management--Integrates customer-facing business processes and IT

infrastructure, such as order and help desk management, with operations planning
mySAP Supply Chain Management--Allows for the seamless use of operations and planning data, from
packaging and customer service to the vending machine and store shelf
mySAP ERP--Lets manufacturing operations do plan and cost
SAP NetWeaver--Enables infrastructure integration to link the remote sales force with order management,
logistics, and transportation operations

With this partnership, SAP takes its first steps toward building integrated customer-facing applications and
downstream data that support a Demand-Driven Supply Network (DDSN) business transformation. Although not
part of the announcement, Coca-Cola already uses Teradata’s data analytics to improve the scalability of SAP’s
Business Warehouse (BW) and provide short-cycle performance feedback in the data-intensive sales environment.

Conclusion: Notwithstanding the win, the pressure is on SAP to deliver and on the manufacturing partners to
manage executive-level expectations and delivery. Leveraging IT investments for competitive advantage is
becoming less of an IT challenge, and more an issue of change leadership, governance, and organizational
effectiveness. As for other SAP customers and CP companies tied to SAP competitors in this market, they must be
more vigilant in getting their vendors to spell out their plans for DDSN.
Copyright © 2004 AMR Research, Inc.