Even for retail, an industry accustomed to disruption — from shifting customer demands to economic downturns — 2020 was a year like no other. COVID-19 shutdowns accelerated fundamental changes in consumer behavior, highlighted supply chain issues and required quick moves to new business models such as e-commerce, contactless payments, in-store fulfillment and curbside pickup.
Not surprisingly, retail chief financial officers (CFOs) and finance organizations have keenly felt the effects of these pandemic-era moves. They have worked overtime to respond to changing conditions and used financial and operational data to help make decisions.
“The pace of change is so dramatic,” said Ben Pierce, vice president, financials at Workday. “Desire for information and guidance about financial results has simply exploded.”
To gain access to more accurate, real-time data and a better understanding of cost structures, there are increased internal pressures on retail finance to boost innovation through cloud-based technology and automation. “If retail CFOs don’t have the right data, they can’t guide the business and help them pivot and plan,” Pierce added. “The planning process used to be predictable, but now there are hundreds of new scenarios.”
Yet, as financial leaders rapidly evaluated their priorities, adapted operating models and shifted financial and human resources, many have discovered limits to their legacy technologies, such as lack of real-time visibility or scenario planning. They found they did not have the right modern-technology platform to reduce friction, drive informed decision-making and improve execution.
It’s now clear that retailers must future-proof their back-end financial systems with cloud-based options that are agile and flexible enough to nimbly respond to market shifts but also targeted enough to provide a quick ROI. The right technology platform can integrate data from many sources in many formats and data models while reducing silos between departments. Moving to the cloud, with a partner that can integrate the right third-party point solutions and bring human capital management and finance together, is essential.
For example, Atlanta-based RaceTrac, a family-owned chain of more than 600 gasoline and convenience locations in 10 Southern U.S. states, was looking to implement a modern platform in the cloud. Its finance, payroll and HR solutions were at their end of life, and the company was looking for one solution that would consolidate its systems, be future-proof and let it dig its heels in for the next 10 to 20 years.
“Our growth was outpacing our technology — we were living with two very dated systems on the human capital management side, as well as on the accounting side,” said Kelly Benton, vice president of accounting at RaceTrac. “Our old system was very custom, with limited flexibility, and we had a history of just bolting on point solutions anytime we had a business need. Trying to maintain that very complex infrastructure was challenging for us.”
By adopting Workday, the company moved from a manual, inconsistent process to streamlined, automated workflows overnight. “For a $10 billion company, we were still moving a lot of paper with manual approvals,” Benton added. “Now, thanks to our core Workday platform serving as the backbone, we feel like we are very well-positioned to support continuous innovation at RaceTrac and we’re excited about future enhancements and functionality in the cloud.”
Many retail CFOs held off on investments in the early days of the pandemic. However, there is now a recognized urgency to accelerate initiatives to modernize finance with new technologies and processes. They often bypass the long, heavy process of replacing or upgrading legacy ERP systems in favor of enterprise cloud applications that cost less and are easier to scope and simpler to fund.
“It was important to be able to take what was relevant from all of our systems and blend them with financial data, in order to make the right decisions,” Benton said. “Agility is the key word, because our previous bolt-on, on-premise systems were not agile.”
The bottom line is, retailers can’t afford to wait for digital transformation if they want to keep up in a highly competitive landscape. “As the complexity of the retail space continues to increase, having a nimble system in the back office supporting that is absolutely critical,” Benton said.
The new face of finance needs to be flexible, cloud-based and automated. This is the time for the CFO to make a dramatic shift to a future-proof retail finance future, Pierce said. “The pandemic highlighted limitations that have existed for years in retail finance,” he explained, adding that CFOs have realized change wasn’t happening fast enough to guide the business as effectively as they wanted: “Now, the importance of digital transformation in the office of the CFO is crystal clear.”