The Home Depot, which already has spent $1 billion over the last three years to overhaul its IT infrastructure, will deploy SAP for Retail merchandising and supply-chain applications as the retailer's next step to transform itself "into a more information-based company," Home Depot executive VP and CIO Bob DeRodes said at SAP's Sapphire user conference in Boston Wednesday.

"We call it 'Digitizing the Depot,' " DeRodes said during a customer panel segment of a keynote speech delivered by SAP CEO Henning Kagermann. DeRodes, who joined Home Depot four years ago, acknowledged that the company has lagged from an information-technology perspective. When he was hired, the most advanced technology in some Home Depot stores was a No. 2 pencil, he said.

Under the deal, Home Depot will utilize SAP applications wherever possible, said Bill McDermott, president and CEO of SAP America Inc., in an interview at Sapphire. He portrayed the customer win as a major victory in SAP's increasingly bitter competition with Oracle, especially in the market for retail-industry applications.

Home Depot implemented SAP's financial applications last year. But DeRodes said the company still lacks merchandising, inventory, and supply-chain-management capabilities and visibility into its supply-chain operations. That led to the decision to become an SAP Global Alliance Account, which means that Home Depot will not only implement SAP software, but will work with SAP to design leading-edge capabilities for future releases of those applications.

Karen Etzhorn, Home Depot's VP of IT merchandising and marketing systems, said in a Q&A session at Sapphire that Home Depot isn't electronically connected to its suppliers. The retailer decided that using "best-of-breed" applications or building them in-house was too risky and would take too long. The company opted for SAP over other vendors because it needed a scalable system that could stretch across its consumer and contractor businesses and expand beyond the United States as Home Depot grows. Implementing the merchandising and retail systems would begin in August, she said.

DeRodes said the "Digitizing the Depot" effort would continue for another eight to 10 years.