Coles stands up SAP S/4 HANA finance core in five months

Coles Group has brought its new SAP S/4 HANA finance system online in five months, with plans now to uplift specific processes and build out procurement and HR on the new core.

The supermarket giant announced its planned shift onto S/4 HANA back in February, upgrading from an earlier version of SAP’s enterprise resource planning (ERP) system.

Chief information and digital officer Roger Sniezek told iTnews that the S/4 HANA environment is hosted on Azure, the retailer’s cloud environment of choice.

The rapid timeline was aided by the services of an SAP partner Acclimation and by the use of a tool called SNP Bluefield approach to S/4 migration, which has also been used by the likes of the NSW Land Registry.

“SNP have got a pretty interesting tool set that seemingly does the impossible of taking the old system of SAP and automating a large part of the migration of not only the data but all of the other parts and interfaces of our old system, ensuring that that can go live into S/4 HANA,” Sniezek said.

“They've built a tool that does a lot of the work [in the migration] and identifies then where [additional] work is necessary, so you end up being very laser-focused on what needs to be done rather than the traditional approach which is to attempt to do this as a full implementation from the ground up.”

Coles is planning some rework of finance processes that have been largely lifted-and-shifted into S/4 HANA.

“Going forward we will now be able to re-engineer, as we want, our finance processes,” Sniezek said.

“So rather than do a multi-year project where you define all of your new finance processes and then spend a long time building it, and then you go live or attempt to go live in a big bang, [SNP Bluefield] allows you to get onto the S/4 platform, get the speed and stability benefits, and then almost process by process decide on how you want to re-engineer.”

Getting S/4 HANA bedded down quickly was also important because other SAP systems - such as Ariba for procurement and SuccessFactors for HR - that Coles wanted to deploy required an existing S/4 foundation.

“On top of S/4 HANA we’ve implemented SAP Ariba, which is really changing the way that we are working as a business in terms of ordering the billions of dollars of goods not for resale right the way across the organisation,” Sniezek said.

“Implementing S/4 HANA is also a requirement for us to implement SAP SuccessFactors and [a new] payroll system next year, which is also part of our SAP investment.”

New B2B exchange platform

Coles also announced today it has struck an agreement with Infor to run all international transactions through its GT Nexus B2B information exchange.

While the supermarket operator has an Australian First sourcing policy, some items - such as light globes and spices - are brought in from overseas.

“There are a large number of items that cannot be sourced locally in Australia,” Sniezek said.

“[GT Nexus] is a world-class trade platform that allows us to order those items, and gives us a standard way to interact with suppliers and to automate all of that. 

“It means that we know where the stock is, we've got visibility of where it's coming into the country.

“It will reduce our working capital through lower stock in transit and lower distribution centre stock holdings; reduce transport costs because we can get stuff to the right place first time; and simplify all of the transactions that we've got with great service providers.

“Ultimately, what all of that will lead to is better [product] availability for our customers on-the-shelf.”

Sniezek said the transactional amount to run through GT Nexus is “material” but declined to put a number on it.

“It's everything that we source internationally into our supermarkets,” he said.

Coles has also built Azure-hosted interfaces between GT Nexus and its own systems.

Sniezek said that while he expected many of Coles’ international suppliers would already be onboarded with GT Nexus, the retailer is “working through now others who would need to then come onto this platform”.

Azure migration

Coles has also spent much of the year preparing to migrate some of its applications to Azure cloud, including creating standard patterns and controls to aid the migration.

Sniezek indicated that work was now significantly advanced, however the retailer will continue with its strategy to port applications on a case-by-case basis.

It has a portfolio of between 400 and 500 applications that could be targets for cloud migration.

But applications that would need considerable refactoring are likely to be replaced entirely.

“The more complex ones we'll probably be looking for the right timing about when we may be moving to a completely new platform in any case, because I think that's probably what achieves the simplest economic and timing result,” Sniezek said.

“If you spend all your time just migrating I don't think that gives you the benefits that you want to see.”

Of the company’s cloud migration efforts to date, he said: “We’re trialling, learning, and then we're figuring out what works.”