Wal-Mart is known for going it alone when it comes to developing applications for its information technology needs. That's what made the company's decision to go outside and hire SAP to develop financial planning software news in IT circles.
The world's largest retailer said it chose SAP after concluding that its own internally developed program was not scalable to Wal-Mart's needs.
Tom Schoewe, Wal-Mart chief financial officer, told the Financial Times, "The efficiency of our home-grown system has not kept pace with the corporation's growth."
Mr. Schoewe said the SAP system would "be expensive to implement, but it will be far more efficient once we're up and running and ... it is scalable. As you continue to see us grow, enter new countries, it's something that can accommodate that better than our home-grown solution.”
Wal-Mart is rolling out the SAP program in stages with the first phase expected to be completed within two years while stages two and three going live between three and five years.
While Wal-Mart went outside to tap the expertise of SAP to handle this project, the retailer has not given any real indication that it intends to change its practice of developing applications internally.
Discussion Questions: Do you see Wal-Mart's decision to use SAP to develop financial planning applications as significant and does it suggest a shift in the company's practice of coming up with information technology solutions internally? Is the trend within retailing moving away or towards using third-party vendors? What do you see as the pros and cons associated with an internal approach versus going outside?