If you're starting a new brand or there's a launch into a new market, trying to make old tech [fit] into a new space is probably a recipe for high cost and missing your dates.
An important learning from Robert Massie, VP of IT at US discount retailer Dollar General, as he looks back across two years of work to expand the firm’s footprint into Mexico, with the assistance of Oracle and Accenture to deliver the necessary tech infrastructure. .
When Dollar General was founded in 1939, it wasn’t a particularly boom time for the US economy. The retailer was set up with the aim of supporting the most marginalized people in the country, explains Massie:
That's why our our mantra is really to win in rural. There are so many stores and retailers and other businesses that won't go into the places that we go into because the cost of supply chain, the cost of doing business in those rural areas, is much more challenging. To give you an example. Dollar General has 19,000 stores spread out of all of the states in the United States. We grow by three stores a day and those stores are within five miles of 75% of the US population.
Around two years ago, the firm noticed that it was also picking up business from customers from south of the border. Massie says:
As we began to think about other markets that we could grow into, we started noticing some of our border town markets and the work that was done there and that our name recognition was growing down there. We could tell by credit card sales and other things that we were getting Mexican consumers.
With that in mind, the company announced plans in 2021 to begin operations in the Mexican Republic, with the stated intention of opening up 35 stores in the north part of the country, beginning this year. With that objective set, the question was how to get the necessary operational infrastructure in place, not least the underlying tech to support critical business functions, such as HR and Finance?
This didn’t get off to the best of starts, recalls Massie, as it wasn’t a case of ‘lift and shift’ what worked across the US to the new region:
I burned five months trying to figure out how to take technology that was designed for 19,000 US stores and make it fit into a brand new start-up and a brand new model.
Following this false start, the decision was taken to begin again from scratch in terms of IT and Massie and his team started looking for suitable solutions to meet their needs. At this point, interestingly, Oracle was not on the table as a potential supplier:
We had decided long ago that the dead hand of the past often screws up the now. So we were like, 'No, we're not going to use Oracle. That's a non-starter. We're going to go down other fronts.'
But it wasn’t long before Oracle had been brought into the loop and, following a thorough review of its entire tech stack, Massie was convinced that this was the way to go. The next step was to engage Accenture to assist with the rollout.
A critical decision that was taken was that as far as possible Dollar General would run with a Minimal Viable Product [MVP] and avoid as much customization as it could. There were tight timescales to be meet and using ‘out of the box’ tech was deemed to be the best way of hitting those deadlines.
According to Mitchell Mount, MD of Technology Consulting, Retail and CPG at Accenture, the thesis was that the vanilla Oracle solutions had around 90-95% of the functionality that Dollar General needed to operate in Mexico:
Making it difficult to go and do customizations was key. You don't want to do customization because from a maintenance perspective and all the upgrades and all the different stuff, it's a lot easier for our clients to maintain, especially now in the SaaS world. So the fact that we stayed vanilla was key.
Essentially, Accenture approached the project as a greenfield installation. It was also a tech-led initiative, as the various executive management roles in Mexico hadn’t been filled when the program began. This was also a different way of doing things, says Massie:
I love to run an IT organization that starts with a good conversation with the business stakeholders, takes those requirements, runs it through some sort of a chain of development and prioritization and then build, and then user acceptance testing and then deliver. We couldn't do that.
This did mean that Dollar General was particularly dependent on its suppliers for guidance on what was needed to run an operation across Mexico based on their experience of the market, he adds.
We had such a constrained timeline, we had to get MVP out the door, so it was a tech-led initiative...We moved the whole business process mapping work to the very end when the folks had been hired. We didn't have really somebody there to say 'OK, this is how we do it at Dollar General in Mexico’. We didn't have somebody there [to say] that this business process has not been defined’. We had Accenture come in and help define that.
That did lead to to some issues. For example, the retailer’s US finance team suggested that the new business arm use the existing chart of accounts and not complicate matters. But as soon as a Mexico CFO was hired, she said this wouldn’t work, leading to a last minute change of plan.
But the ‘vanilla first’ policy has held firm, says Massie, arguing that accounts payable and accounts receivable aren’t competitive differentiators:
We don't have to be super-creative about that stuff. Let's focus our attention on the things that actually drive differentiation and drive value for our customers. Let the rest of it be done as a commodity. That's the approach that we take - stick with vanilla, customize where there is differentiation [to be had]. We stuck to that 95% of the time.
It’s paid off as a philosophy, he concludes:
Now that we have delivered, is everything 100% perfect? Absolutely not. I mean, I'd be lying if I said that. The fact is, is we've opened our stores, we're running our business, we're able to open up new stores. Moving the ball, we're now identifying what does year two look like? What do we need to do? What business process isn't working that we need to fix?