Woolworths makes fixing IT a priority

Woolworths has made fixing its technology basics a priority after struggling through a difficult implementation of an SAP-based merchandising system that it claims is now finally stable.

The go-live of the platform mid-last year for Woolworths subsidiary Big W caused the retailer millions in lost sales after it was unable to submit orders to suppliers, leaving shelves empty. 

The introduction of the SAP system formed part of Woolworths' long-running Project Galaxy transformation. The platform replaced Woolworths' 30 year-old proprietary CASS system.

Woolworths has spent the past year working to stabilise the SAP platform, and now claims that there have been no unplanned outages in the last three months.

In its full-year results today, Woolworths said the implementation was showing "positive momentum" following the stabilisation efforts.

CEO Brad Banducci said the SAP rollout caused "a lot of headaches" for the Woolworths group going into Christmas.

"It was one of the major reasons why we had availability issues in store. And there were points in time when we lost visibility on sales and profit performance in our business, and those were worrisome times, because as retailers we need to know all the time where we're at," he said.

Prior to the SAP rollout, each individual supermarket would receive a daily profit and loss statement, but the new system was unable to produce the reports given incompatibilities with data collection methods.

Banducci said the retailer had managed to rectify the issue and stores were now receiving the important sales figures each day.

"We always used to have it, we lost it during the SAP implementation, and that's unbelievably important for me, because stores are accountable for their performance," the CEO said.

Woolworths has identified fixing IT as one of its key priorities in its pursuit to become a "lean retailer".

The supermarket chain has commenced an "IT foundation program" that aims to "catch up on underinvestment in IT infrastructure". The effort will focus specifically on self-service check-outs (SCOs) and point-of-sale systems.

It has started piloting an upgraded version of NCR Retalix software in one store. Woolworths signed a five-year deal with NCR in 2012 for 25,000 PoS terminals across 2000 stores.

"We think we can materially improve our technology in check outs. We were the first into SCOs, and old SCOs are slow. [We need to] give our team the opportunity to really fly on the checkout," Banducci said.

The retailer also recently rolled out its new cloud-based SAP SuccessFactors human capital management system, replacing a legacy approach that involved a mixture of in-house solutions and Excel.

Banducci labelled the SuccessFactors rollout the "biggest ever payroll implementation in Australia". Woolworths has 197,000 employees across the group.

"I'm delighted to say that's gone far less painfully than the ERP, that will help us materially," he said.

More responsive store IT support and upgraded RF guns and printers will also form part of Woolworths' "end-to-end process improvement" efforts.

The company recently announced it would cut 500 jobs across its support office and supply chain network following a review into its operating model.

It also revealed it would write down millions in IT assets from its two-year old Mercury 2 initiative, which aimed to transform its supply chain using data analysis.

Woolworths is currently searching for a chief information officer to lead its IT initiatives following the departure of Clive Whincup in June.