As for pricing -- a core merchandising process -- DeRodes expects SAP technology, especially its new business analytics product, to help the retailer change and adjust prices more effectively to meet the needs of individual stores.
But the CIO is less excited about using a "value-based" pricing model for purchasing SAP software, an option the Walldorf, Germany, vendor is currently studying. "This is a big idea for them," he said. "Whether it's a big idea for customers is another issue. Frankly, the whole idea scares the hell out of me."
Home Depot has established its own pricing arrangement with SAP because, as DeRodes was quick to point out: "We wanted to feel good about the value we're getting today and in the long term."
Other technology companies, such as Accenture and IBM, are already offering valued-based pricing, and are willing to lower their base fees significantly and "bet that their products will deliver value," he said. "It can be a win-win situation; it's not always negative. But you have to be really smart. This is no place for naïve buyers."
Speaking about pricing and ways to lower software costs, DeRodes doesn't see many opportunities for open source in business application areas such as ERP (enterprise resource planning). "Linux has proven that it can work well in university settings and in the entrepreneurial world," he said. "But for Fortune 100 and even 200 companies, I think it has less promise. We wouldn't place a bet for our shareholders on bulletin-board software. Big companies need big software companies."
Looking ahead, DeRodes sees the big challenges for Home Depot in "tooling and training" its workforce in SAP technology. Although the company has been using SAP financial software for nearly seven years, it's now planning a much broader use that will require a greater effort from staff. "There will be a challenge in learning how to do multiple concurrent major SAP implementations," he said. "Other big companies have faced a similar challenge and done well. We can learn from them."
DeRodes expects SAP technology to drive Home Depot's business transformation. "That's what we're after," he said. "We have our work cut out for us."