FRED MEYER’S MARRIAGE OF CRITICAL DATA

Byline: Denise Power

NEW YORK — Faced with a massive financial operations consolidation, Fred Meyer plans to implement new technology that will combine critical data from its various entities.
The “enterprise financial management” software module Fred Meyer has purchased is designed to alleviate the hectic financial closing procedure made more complex by three recent acquisitions.
The Portland, Ore., retailer grew to more than 800 stores and $15 billion in annual revenues with the acquisitions of a food retailer last fall and two other food chains last March. The company also 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 could not share information, and brings the data together so executives can review it — a “big picture” of the entire organization. Bob McCauley, vice president and retail controller of Fred Meyer, said when the financial management system is in place 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, he said. With quicker financial closings, key information can be distributed to decision-makers while it’s 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,” McCauley added.
Retailers in all classes of trade are trying to get a better fix on their ongoing financial performance, sometimes on a day-to-day basis so they can predict future financial results and take corrective measures if necessary.
“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 at Ernst & Young Consulting Practice, San Francisco.
McCauley said Fred Meyer’s recent rapid growth led to the decision to buy 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 said.
In March, Fred Meyer acquired Quality Food Centers and Ralphs/Food 4 Less supermarket chains. Last September, the company acquired Smith’s Food & Drug Centers. The impact of those acquisitions on financial operations for the entire 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 said.
For the fiscal year ended Jan. 31, 1998, the company reported net income of $12.1 million on net sales of $5.5 billion.
McCauley said the financial consolidation software is scheduled to be installed next year. “We’re still in the merger process. We want to wait until things settle down,” he said.
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 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.

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