Kmart Group intends to “tread carefully” with AI uses in corporate finance, so far using the technology to improve the way its 450-odd stores get their vendor invoices paid.
Speaking at an SAP AI summit in Melbourne, enterprise technology general manager Craig Lanigan said the retailer saw “opportunities to streamline and get cost out of our business” with AI.
“While we are experimenting with AI in many different areas [of the business], when it comes to our finance system, it’s probably one that we’re going to tread carefully with,” Lanigan said.
“We need to set up all of our frameworks and governance before we get into that.”
Lanigan said Kmart had “dabbled” in AI through vendor invoice management process improvement works.
“We have vendor invoice management we’ve rolled out to all of our shops,” Lanigan said.
“Instead of using an internal mailbag – not many companies have an internal mailbag anymore, but in our 450-odd shops they used to send invoices into the office to get them paid, and they used to do a fair amount of stamping and writing information on them, but that’s all scanned at store now, the system recognises the details on the invoice and then it’s just a coding exercise in the office.”
Kmart Group – which comprises both Kmart and Target – was created through a 2023 merger of the two Wesfarmers-owned retail chains.
While they both remain as separate chains, the backend operations were merged to create efficiencies.
From a practical perspective in the internal finance domain, Kmart and Target have come together onto a transformed SAP system – the S/4HANA-based RISE with SAP on AWS.
“We already had SAP S/4HANA on HEC [HANA Enterprise Cloud] for our Target brand, and we had an old ECC instance for our Kmart brand that was hosted in AWS,” Lanigan said.
“One of the things that we wanted to do [in our merger] was bring our ERPs together.
“The [merger] announcement included a nine month time period to implement, which at the time was probably record-breaking to do that sort of work.
“We had to choose something that we had a great surety of delivery with, and we felt at the time – and it proved to be true – that making the choice to go to RISE would enable us to accelerate and get it done in nine months.”
The group had been live on RISE for a year at the time of the presentation – add a couple of months to that now.
Lanigan said that Target’s previous experience of adopting S/4HANA assisted in encouraging Kmart’s finance team to make the switch.
“The people that moved from ECC to S/4HANA -the Kmart people – had been using ECC 6.0 for a long time. They were very comfortable with the way it worked, it was rock solid and it never let them down,” Lanigan said.
“Usually, the change management program required to make a change like that would be quite difficult.
“The benefit we had was that our Target people were already using S/4HANA. Their change journey was a fantastic one, so they were super fans of SAP S/4HANA as opposed to ECC in terms of their daily life and experience doing their job.”
Lanigan said the shift to S/4HANA had generally helped finance teams to do their jobs faster, improved usability and access to insights, and “made their lives a lot easier”.
“From a user point of view, productivity, usability and satisfaction in their jobs has really lifted,” he said.
Lanigan said there were also benefits for Kmart Group IT, with upgrades now able to be made much faster.
“Whereas we used to bite off a 12 month exercise to do an upgrade, we’re just about to do an upgrade on RISE that will be three months from start to finish, underpinned by a lot of automated testing,” he said.
“[The fact] we can do that in three months now is a gamechanger.
“So [we] can keep current with the toolset, stay under support, [and we’ve] got the benefit of having AWS and SAP doing a lot of the heavy lifting. That’s made the lives of our application support team a lot easier … [and resulted in a] big drop in the cost of doing … upgrades.”