Woolworths looks for pay-off from new IT systems

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In the back half of FY17 and in the new financial year Woolworths will be seeking a productivity dividend from on the back of the rollout and stabilisation of key new IT systems, CEO Brad Banducci said today during a briefing on the supermarket group’s half-year results.

The retailer in its full year results for the prior year, reported in August, announced it had completed what it believes is the biggest individual payroll implementation ever in Australia, using SAP’s SuccessFactors payroll management system.

The other key IT system rollout for the supermarket chain has been an SAP-based merchandising platform — implementation of which caused high-profile supply disruptions at Big W stores and created significant problems for Woolworths during the 2015 Christmas period.

Both the payroll and merchandising systems are now stable, according to Banducci.

“Those platforms are now in and a lot of the basics around IT in our stores is now in and it’s terrific that we’re no longer talking about that,” Banducci said.

“What we haven’t yet managed to do and need to do and will be doing in the back half of this financial year and then into the next financial year is working on the productivity dividend on having efficient and new systems,” the CEO said today.

Woolworths has unashamedly been more focussed on “making them work” than it has about the opportunities to drive more efficient processes, Banducci said.

The CEO noted that John Hunt last week took up his role as chief information officer at the retail group. Hunt was previously the CIO at South African retailer Woolworths (owner of Australian retailer David Jones).

Woolworths reported a net profit after tax from continuing operations of $785.7 million for the six months ending 31 December (down 16.7 per cent on the comparative period).

Woolworths noted that depreciation from its IT investments would have an impact on results from its second half, along with continued investment in improving the store experience for customers, depreciation from its renewal program and higher team incentive payments.