PORTLAND, ORE. -- Faced with a massive financial operations consolidation challenge, Fred Meyer Inc. here is planning to implement new technology that will marry critical data from its various business entities.
The enterprise financial management software module the retailer has purchased is designed to alleviate the hectic financial closing procedure, which was made more complex by three recent acquisitions: Quality Food Centers and Ralphs/Food 4 Less in March, and Smith's Food & Drug Centers last September.
The retailer now operates more than 800 stores that generate $15 billion in estimated annual revenues. The company operates 250 jewelry stores and 110 Fred Meyer stores, selling apparel, general merchandise, home electronics and groceries.
The new technology is termed "enterprise" because it analyzes data from numerous types of systems and databases that otherwise couldn't share information, and brings that data together in such a way that top executives can review it and get a true "big picture" look at the entire organization.
Bob McCauley, vice president and retail controller at Fred Meyer, said that when the financial management system is implemented next year, the financial closing procedure will be simpler and quicker.
"That's where our focus is -- to have a shorter time frame" on closing the books, McCauley said. With quicker financial closings, key information can be distributed to decision-makers while it's still current enough to be acted upon.
"The important thing about financial information is accessibility and decision-making. Data doesn't help you much unless it's actionable," he added.
Retailers in all classes of trade are seeking to get a better fix on their ongoing financial performance, sometimes on a day-to-day basis, so that they can predict future financial results and, where necessary, take corrective measures to avoid dips in earnings per share, for example.
"Clients are no longer content to look at month-end numbers. They want to see out one month, three months ahead," said Charles Mobraten, senior manager, Ernst & Young Consulting Practice, San Francisco.
McCauley said Fred Meyer's recent growth spurt also influenced the decision to implement the financial consolidation software from Walker Interactive, San Francisco. "When you get to be so big, it becomes more difficult to get data out in a presentable manner," he pointed out.
The impact of the acquisitions on financial operations for the company was underscored in Fred Meyer's May 1 annual financial report filed with the Securities & Exchange Commission.
"The significant increase in size of the company's operations resulting from the recent mergers has substantially increased the demands placed upon the company's management, including demands resulting from the need to integrate the accounting systems," the statement read.
For the fiscal year ended Jan. 31, 1998 -- prior to the two most recent acquisitions -- Fred Meyer reported net income of $12.1 million on net sales of $5.5 billion.
The consolidation software, which automates the gathering, reporting and analysis of financial data across the entire company, is linked to an on-line analytical processing (OLAP) database engine from Arbor Software, Sunnyvale, Calif. Arbor's Essbase server processes data from numerous and disparate systems -- such as various general ledger systems -- and makes it available to the consolidation system.
OLAP capability is essential to companies wanting to analyze their financial data in a timely manner. It enables multiple computer users to simultaneously access a database and rapidly analyze information -- in any way they choose -- to provide a multidimensional, conceptual view of data that can then be used to support decisions.