Walmart Stores Inc. is an American multinational retail corporation which operates a chain of grocery stores, discount department stores, and hypermarkets. The company operates more than 11,500 stores and clubs in 28 different countries. Walmart has grown to become the world’s largest company by revenue and to have more than $500 billion in revenue. The company is the largest private employer in the world with 2.3 million employees. The company’s success is largely attributed to its budgeting process. The company invests in information technology to ensure that its systems run efficiently. This paper discusses Walmart Stores Inc.’s IT budgeting process, proposes various ways it can be improved, and analyses the benefits of improving the processes.
Walmart’s budgeting process
The budgeting process of Walmart focuses on both the long and short term to achieve its business objectives. The focus of the company’s budgeting system is to be able to provide better services and quality to customers. Walmart follows the corporate fiscal policy for its budgeting procedures and process. The policy enables the company to implement a flexible budget for its business and allocates capital to overhead costs effectively. This enables Walmart to make its IT budget for different activity levels.
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Walmart sets objectives and goals which define the company’s vision and mission throughout the budgeting process. The company plans for stock requirements to achieve its forecasted sales level. The IT budgeting process also enables the company to manage costs of different levels of activity. Walmart strives to control the IT spending costs by comparing the actual costs versus the budgeted costs. The firm then undertakes corrective actions geared towards correcting those costs. The company’s budget is also flexible and can be adjusted in case there is a need for a decrease in a specific technology.
Walmart’s IT expenditure was estimated to be $10 billion for the fiscal year of the year 2015. The IT expenditures include costs on software, hardware, IT services, internal IT spending, and telecommunication service. With revenues that are about $500 billion, the retail giant’s expenditure of $10 billion is massive but is still a small amount for the company. The huge expenditure on IT has seen the company create a personalized and immersive experience for digital shopping. Digital shopping has been applied to provide an in-store experience. The company recently announced a large-scale integration and investment on digital technology. The company’s focus on a large portion of its IT budget over its next couple of months should see its entire shopping experience become digitally-infused (Denman, 2016).
Walmart’s IT budgeting process focuses on technological investments to serve customers better. The company focuses its budget on fours specific areas including global technology, a next-generation network, and integrating digital and physical, and talent. The talent section of the company is especially important to attract top and superior talent in technology. The company invests in top-level digital innovators to stay ahead of competitors.
Walmart makes use of IT budgeting tools and techniques to make its budgeting process efficient. The company currently uses Vision Suite accounting software to handle different aspects of finance. The software ensures proper handling of check writing, the general ledger, and its external accounting integration. The software enables to company to generate accounting documents and information in a fast and efficient manner. Many other useful reports are generated for management to enable making proper financial decisions.
The company also makes use of MAS budgeting tool to collect, store and prepare financial and budgeting information. The system comes up with different kinds of alternatives to create an integration accounting information. This helps the management to identify the best strategy for organizational effectiveness and improvement. The tool also enables Walmart to disseminate the accounting information through budgets for all of its departments. This helps the company facilitate proper integration for different activities in the company.
Proposal for improvement
One way that Walmart can improve its budgeting process is through appointing an IT finance specialist for the different stores. The company has a finance expert that works with the IT in its headquarter but not in specific stores. A financial specialist should enable IT managers to understand costs and drivers for the costs in new ways. When handing operations budget, they should be able to assist with value and cost analysis of the infrastructure and services. They can also help in managing the translation process between the fiscal IT budget and the functional IT budget. The finance specialist should also monitor various IT new projects for different business cases. They will function as brokers between the business units and the IT section.
Walmart can choose to split the budgeting process between operations and innovations. With the ever-increasing complexities of the IT framework, it can be difficult for IT organizations to keep its basic infrastructure running. The IT budgeting section can be split to create ease in managing different operations. The operations IT will include a large number of IT operations such as infrastructure, security, servers, support, and infrastructure. The operations IT are mainly involved in various activities that ensure the successful daily running of the organization. The strategic IT will contain the entirety of business analysis, business technologists, and architects. The team would drive innovations within the company (Shimamoto, 2012). Walmart should hire a workforce in this department filled with extremely creative individuals. While both the operations and innovations IT will work together, they will have different goals and have different types of individuals working with each other.
Benefits of the proposed budgeting process
Having an IT finance specialist in different stores will be beneficial for easy budgeting of IT at the different stores. A good partnership with an IT and finance expert will enable the company to make full use of the two employees. A finance expert will be beneficial in providing a deeper understanding of various cost components with the company. He or she should play a big role in articulating business value. They can critically analyze the benefits of various IT projects to ensure their success. Improvement of the relationship between finance and IT should make it easier to create IT budgets. Having IT finance people will also be important in removing a huge workload from IT managers (McKeen and Smith, 2008).
The separation of the operations and innovations will be beneficial in bringing down the costs of operations. The IT department dealing with operations will easily bring down the costs required to run the company on a daily basis. This will be achieved by having a greater level of visibility on the company’s IT spending which has been absent in most companies. A greater deal of investment will then be geared towards the innovation department and this would help in improving the company’s technologies. Bigger investments in innovations should enable Walmart to stay ahead of other competing stores.
In conclusion, the current IT budgeting process of Walmart is efficient in providing value for the company. The company invests heavily in IT to ensure customer satisfaction. Walmart makes use of budgeting tools to ensure that the budgeting process is efficient and effective. The proposed budgeting process can be used to improve the company’s budgeting. Proposal for improvement includes having IT finance specialists in its different stores and splitting its budgeting process into operations and innovations. Doing this will ensure efficiency in the budgeting process and would bring down costs of the operations budget.
References
Denman, T. (2016). Walmart Is Still the Largest IT Investor in the World. Retrieved from https://risnews.com/walmart-still-largest-it-investor-world
McKeen, J. D., & Smith, H. (2008). IT strategy in action . Prentice Hall Press.
Shimamoto, D. (2012). A strategic approach to IT budgeting. Journal Of Accountancy .
