The Total Economic Impact™ Of Workday HCM And Financial Management In The Retail Industry

Profit Increase Due To Better Frontline Workforce Optimization

Evidence and data. Interviewees noted that workforce optimization involved strategically managing the workforce to align with business goals, maximize productivity, and ensure employee engagement and satisfaction. By deploying Workday, the interviewees’ organizations achieved improved workforce planning and employee scheduling, which was critical for their organizations. A satisfied and engaged frontline workforce directly contributed to higher revenue and profit for the interviewees’ organizations.

• Workday Scheduling automated shift assignments, ensuring that shifts met business demands and ultimately increasing revenue. The head of people at the eyewear retail organization shared: “For scheduling, the return on investment was massive. By aligning our FTEs on the shop floor to the number of visitors, we increased our in-store conversion rate from about 9% to 11%. This increase in conversion rate generated more revenue with the same number of visitors and marketing spend. In the first month of implementation, we saw an uplift of about $200,000 in offline business revenues.”
• Workday Scheduling provided frontline employees at the interviewees’ organizations with greater visibility into shift management, allowing them to be scheduled for shifts that matched their availability and preferences. This balanced workloads, prevented burnout, and improved job satisfaction. The head of corporate finance and risk at the discount retail organization explained: “Stores used to create schedules on paper and post them on the wall. Employees had to come in to check their schedules. Now, they can access their schedules on their phones, giving them more autonomy. Before implementing Workday, sales per labor hour were $165. Now, we’re generating around $207 to $210, with 30% of that improvement attributed to Workday Scheduling.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization experiences an increase in sales per labor hour from 4% in Year 1 to 6% in Year 2 and 8% in Year 3.
• The average sales per labor hour before Workday deployment is $107.
• Based on the Forrester research, the net profit margin of retail industry is 3.3%.²

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The metrics the organization uses to track business performance.
• The fluctuations in the sales and the number of frontline employees on the store floor.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $5.4 million.

Seasonal Hiring Savings

Evidence and data. Seasonal hiring was essential for the interviewees’ retail organizations to meet fluctuating business demands. With the Workday Workforce Planning, the interviewees’ organizations could better predict seasonal variations, balance full-time workloads with appropriate shift assignments, and reduce the need for seasonal hiring.

• After deploying Workday, the interviewees noted their organizations gained greater visibility into shift assignments, allowing full-time frontline workers to cover more shifts. The SVP of people services at the apparel retail company noted: “We reduced temporary hires by 25%. We were able to give more hours to existing employees because we had better visibility.”
• Workday Recruiting enabled a faster hiring process, allowing managers to onboard seasonal hires more quickly. The same interviewee shared: “Being able to recruit quickly means we don’t need as many temps on our payroll. We can provide accurate information to our scheduling tool and avoid overstaffing. This results in cost savings.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization experiences a decreased percentage of seasonal hiring from 15% in Year 1 to 20% in Year 2 and 25% in Year 3.
• The average compensation and hiring cost of one seasonal hiring is $5,000.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The demand for seasonal hiring at the organization.
• The Workday modules the organization deploys.
• The average compensation and hiring cost of the seasonal hiring.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.9 million.

Payroll Error Reduction

Evidence and data. Without a robust payroll system, the interviewees’ organizations experienced financial losses due to payroll errors and compromised employee experiences. The administrative burdens also rendered HR and finance teams inefficient.

• Before deploying the Workday Payroll Solutions , the interviewees’ organizations lacked a payroll system integrated with their financial systems. This led to extensive paperwork and prolonged task completion times. The head of people, workplace, and controlling at the eyewear retail organization shared: “Previously, every payroll file for import had to be manually consolidated from accumulated documents. Now, you just pull a report and check its accuracy. Doing payroll used to take about a week; now, it takes maybe 4 hours.”
• For interviewees’ retail companies, the payroll process involved multiple roles — especially for the frontline workforce — necessitating more system integration to ensure error-free payroll processing. The head of corporate finance and risk at the discount chain retail organization said: “The payroll process works much better with Workday. Stores are happy with how hours are integrated and passed to payroll, eliminating last-minute changes and faxing in hours.” The interviewee continued, noting that streamlined processes led to fewer errors: “We were experiencing payroll errors costing us over a million dollars a year, with error rates as high as 0.75% to 1%. We were overpaying hours and not catching it. Now, I’d be surprised if the error rate is higher than 0.1%.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization pays out $300 million per year as total employee salary.
• The payroll error was 1% before the deployment of Workday and decreases to 0.1% after the deployment.
• Half of the error is due to overpaying and 50% of the overpaid error can be captured and corrected. The overall error recapture rate is 25%.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The total amount of the salary paid out per year.
• The previous payroll system the organization uses and the level of integration with other systems.
• The way that payroll error can be corrected.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.3 million.

Manager Productivity Improvement

Evidence and data. According to interviewees, managers play a critical role at their retail companies, overseeing operations to maximize revenue and making strategic decisions to support long-term growth. Before deploying Workday, the interviewees’ managers spent extensive time on administrative tasks, hindering their ability to focus on strategic initiatives. The interviewee observed significant improvements at their organizations after implementing Workday.

• Workday HCM reduced the time managers spent on paperwork. The SVP of people services at the apparel retail organization shared the experience: “[Before Workday], HR mandated documentation and employees needed to sign, which was previously all falling on the manager to follow up. Now, we just push all those things directly to the employee and the manager is out of it. We would send reports to the manager and say, ‘Hey, if you can follow up, because these are the four people who haven’t done it.’ But the initial process of actually finding people at the right shift and asking them to do things — managers don’t do any of that and that can be a pretty huge time savings depending on the specific initiative in question.”
• Without appropriate tools, talent and performance management were time-consuming for managers at the interviewees’ retail organizations. Workday HCM enabled more efficient completion of these tasks. The SVP of people services at the apparel retail organization shared: “We’ve done more self-service with Workday, so the associates can actually go in and complete a self-assessment, which means the managers have some visibility into that already and they don’t have to spend time really thinking about what they really did. We were able to cascade store goals down to the associates. It was definitely a more objective discussion about what was met and what was not met, as opposed to trying to do this on paper.”
• Interviewees noted managing scheduling was crucial for store operations. Workday Scheduling helped managers easily manage shifts, providing employees with greater visibility. Any changes could be tracked electronically by both managers and employees. The head of corporate finance and risk from the discount chain retail organization shared: “Before the employees were calling the manager and try to get the manager to change their shift or find somebody else to work it. Now, they can swap with somebody using their phone and then it gets routed to the manager to approve it. In the past, this would have spent at least an hour a week in the past and they likely spend 10 minutes a week now.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The managers can save 3 hours on handling paperwork, 2 hours on employee training, and another 3 hours on scheduling.
• The fully burdened hourly rate for managers is $34, with a 50% productivity recapture rate.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The previous HR tool, scheduling tool, and talent management tool deployed at the organization.
• The Workday module deployed at the organization.
• The average compensation of managers.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $12.7 million.

Employee Turnover Reduction

Evidence and data. The retail industry has traditionally faced high turnover rates due to various complex factors. However, the implementation of Workday positively impacted the turnover rates in the interviewees’ organizations through the following improvements:

• Most interviewees discussed the limited growth opportunities available to their workforce. Workday Talent and Performance Management provided employees at the interviewees’ organizations with a clear vision of career advancement and learning opportunities, giving them a sense of control over their career development and encouraging long-term retention.
• Interviewees noted that frontline employees frequently dealt with unpredictable hours and lacked flexibility in managing their shifts. Workday Scheduling allowed the interviewees’ organizations’ employees to view and adjust their shifts via their cell phones, increasing employee satisfaction and proving to be a game changer for the interviewees’ organizations.
• Without automated systems like Workday, both managers and frontline workers at the interviewees’ organizations were burdened with administrative tasks and extensive paperwork. Workday streamlined processes and reduced paperwork, allowing employees to focus more on their core tasks, leading to higher job satisfaction for both managers and frontline workers.
• With employee feedback systems like Workday Peakon, the interviewees’ organizations’ employees had a platform to voice their opinions and managers had a structured way to listen and provide feedback. This created a more positive working environment with constructive feedback.
• The SVP of people services from the apparel retail organization summarized: “There are a lot of factors that go into retention. I would like to say that there’s probably like a single digit increase in retention after the deployment of Workday.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The improvement in turnover rate of frontline employees is 2% in Year 1, 3% in Year 2, and 4% in Year 3. The industry average replacement cost of a frontline employee is $5,000.
• The improvement in turnover rate of managers is 1% in Year 1, 2% in Year 2, and 4% in Year 3. The retail industry’s average replacement cost of a manager is 50% of their compensation.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The previous turnover rate of the organization.
• The Workday modules deployed at the organization and the level of usage.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.3 million.

FP&A Planning And Operation Efficiency Savings

Evidence and data. Interviewees noted FP&A solutions were critical for their businesses, enhancing efficiency, providing accurate data to the finance department, supporting decision-making processes, and reducing operational risk. Before deploying Workday Financial Management, the interviewees’ organizations faced challenges in forecasting, resource allocation, risk management, and scaling effectively. Their finance teams were bogged down by paperwork and poor interdepartmental collaboration.

• Financial planning was essential for the interviewees’ organizations’ finance departments. Before implementing Workday Adaptive Planning, the interviewees’ organizations spent excessive time using spreadsheets for financial planning. Budget cycles were infrequent due to limited resources. The head of people, workplace, and controlling at the eyewear retail organization shared: “Before Workday, the full planning cycle took three months. Now, four weeks altogether, including all reviews after we introduced Workday Adaptive Planning, we basically have 12 forecasting cycles. Every month, we can refresh our rolling forecast with new assumptions based on the last few months and that gives us the option to also steer more effectively.”
• The interviewees noted that financial tasks occur at both corporate and store levels in the retail industry. A unified approach and consistent tools ensured accurate data flow between stores and corporate. The head of corporate finance and risk from the discount retail said: “The stores get their financial statements now from Workday instead of having a PDF emailed to them. There’s no information on PDF other than the number itself. With Workday, you can drill into the number and find out what’s underneath it. Like ‘Geez, there’s $2,000 here in this expense. I wonder what that is? Oh, I paid X amount to cleaning this month.’ [On the accounting team member side], I expect that they’re spending — each accounting staff member, which is a team of I think eight — would spend 1 hour less a week.”
• Workday Financial Management made it easier for finance department team members to perform their jobs, reducing the time spent on planning, general accounting, and auditing. The VP of accounting/controller from an automotive retail organization shared: “Before, it was lots and lots and lots of spreadsheets, probably 20. Now, all of our regional vice presidents, everyone has a login to Workday Adaptive Planning. It was a two-week process for the forecast. Now, it’s a couple days — sometimes even a couple of hours. It’s shortened the timeline by at least eight days of planning and numerous files. It took them two weeks to close COGS [cost of goods sold]. Now we’re on four days. We’re not waiting for something to be received and have to manually handle it.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• There are three team members in the finance department responsible for planning and budgeting. Each year, they spend 200 days on planning before Workday Adaptive Planning. After the deployment, there is a 65% reduction.
• There are 15 team members in the finance department responsible for general accounting. Each year, they spend 120 days on core accounting tasks, including payment processing and tax. After the deployment of Workday Financial Management, 60% of the time is saved.
• The composite organization spends 500 hours on annual auditing. With the deployment of Workday Financial Management, there is a 20% reduction in the time spent auditing.
• The fully burdened hourly rate for an FP&A staff is $41, with a 50% productivity recapture rate.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The size of the financial team and the previous tools they used.
• The financial policy of the organization, such as the planning cycle frequency and the general accounting policy.
• The deployment of Workday Financial Management and the usage of it.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $549,000.

Recruitment Efficiency Savings

Evidence and data. The interviewees reported that their retail organizations frequently hired employees, involving both corporate HR teams and store managers. Workday Recruiting provided the interviewees’ organizations with an end-to-end solution, streamlining the process for HR and store managers to efficiently acquire the talent they need.

• Workday Recruiting standardized the recruitment process for the interviewees’ organizations, eliminating back-and-forth paperwork and ensuring all records were kept in one place. The SVP of people services from the apparel retail said: “Workday pretty much did most of the work as far as hiring. Even for people who are just walking in the store, we could literally get them to apply. We now can get them hired and they could start working the next day. I would say from a total of 40 hours before, we brought it down to like 2 hours.”
• The onboarding process became more standardized and automated, reducing the time store managers spent on training. The built-in self-serve training module allowed new hires to complete onboarding independently. The same interviewee shared: “I would think a couple hours per week saved through training and then another couple of hours per week on documentation. I would probably say like 4 hours total time saved compared to previously when they were doing it manually.”
• Before Workday, HR teams at the interviewees’ organizations spent extensive time on recruitment tasks, which is especially challenging in retail due to the different hiring processes for frontline workers and office staff. With Workday, organizations reduced the HR headcount needed for recruitment. The head of people, workplace, and controlling from the eyewear retail organization shared: “[With Workday recruitment], our HR team was halved in headcount and is more efficient than it was previously. So we saved about 20 headcounts since mid-end 2022.” The SVP of people services from the apparel retail organization also commented: “With hiring, transfers, promotions, and terminations, they were all initiated by the manager and all HR had to do was validate and confirm the information, not have to actually key it all in. So that, I think, would definitely be a saving.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• There are 10 HR FTEs in the composite organization, and they spent 50% of their effort on employee documentation preparation before Workday Recruiting. With Workday Recruiting deployed, 80% of the time can be saved.
• On the store managers’ side, previously they spent 200 hours per year on recruitment. With the deployment of Workday, 40% of the time decreases on recruitment tasks.
• The average fully burdened annual salary for an HR FTE is $81,000 and the fully burdened hourly rate for store managers is $34. The productivity recapture rate is 50%.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The number of recruiters and the store managers.
• The prior workflow of hiring.
• The deployment of Workday modules.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.2 million.

IT Efficiency Savings Due To System Consolidation

Evidence and data. The interviewees’ organizations realized IT efficiency savings due to solution consolidation with Workday’s HCM and Financial Management solutions. They no longer needed to maintain relationships with multiple vendors. The IT team could manage the system through a single pane of glass, maintaining consistency across different departments. Troubleshooting tasks became more uniform across modules, and vendor relationships were easier to manage. The SVP of people services from the apparel retail organization shared: “We definitely have savings on duplicate configurations. You take any area trying to do this once in Workday and doing it again in another system is inefficient. I think there were like two or three people there and I think we’ve got some of those roles out.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization has seven IT technicians working on payroll, HR, and the finance system before. After the deployment of Workday, 30% of their effort can be saved.
• The average fully burdened annual salary for IT technicians is $135,000. The productivity recapture rate is 50%.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The number of IT technicians.
• The technical stack of HR, payroll, and finance before the deployment of Workday.
• The Workday deployment environment.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $317,000.

Legacy System Retirement Savings

Evidence and data. The interviewees’ organizations were able to retire their legacy systems related to payroll, HR, and finance after the full deployment of Workday HCM and Financial Management. Most of the legacy systems were on a licensing model so the decommission saved the interviewees’ organizations from the ongoing cost. The head of people, workplace, and controlling from the eyewear retail organization reported a $35,000 savings on one legacy system licensing fee. The VP of accounting/controller from the automotive retail organization shared that they were able to save $150,000 on one tool among the multiple tools they retired and reallocate nine people who were using and maintaining those legacy systems.

Modeling and assumptions. Based on the interviews, Forrester assumes the licensing fee of the retired legacy systems is $800,000 per year. With the deployment of Workday, this cost can be saved entirely.

Risks. The expected financial impact is subject to risks and variation based on several factors that may reduce or slow recognition of this benefit, including:

• The tools used by the organization before Workday.
• The Workday deployment characteristics and the modules in use.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.7 million.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Improved data access and reduced email correspondence. Workday HCM and Financial Management enhanced data visibility across the interviewees’ organizations, reducing the need for email inquiries. The VP of accounting/controller at an automotive retail company shared: “The reporting is immediate and drillable. Previously, they would send emails asking about the source of an expense, requiring the accounting team to perform mundane reporting and searching tasks. Now, the P&L [profit and loss] owner can access this information directly and their team no longer has to answer those questions.”
• Advanced analytics and reporting for strategic decision-making. The analytics and reporting functionality of Workday were crucial for the interviewees’ businesses, providing valuable workforce insights, improving decision-making, and optimizing HR management strategies. The SVP of people services from the apparel retail organization shared their experience: “We’ve done studies like how many recruiters do we need in a particular area? So we were able to use data on Workday and say, ‘These are the typical ratios we see based on the type of role being recruited and the seniority of roles being recruited. Based on that, for your group, you need X and you’re at Y, and how can you make adjustments?’ They’ve used information like that to staff certain places, which we’ve been successful with. On the business side, we’ve used information around ideal role profiles within, for talent purposes — what’s the role, ideal role profile for a general manager? We did that through talent reviews and skills and things like that. Workday is definitely a very big source of getting this information. And then with the reliable data, you’re able to actually use analytics. I stand behind the results because the data is accurate and our analysis is accurate; therefore, we can actually use this to make decisions.”

Flexibility

The value of flexibility of Workday is unique to each customer. There are multiple scenarios in which a customer might implement Workday HCM and Financial Management and later realize additional uses and business opportunities, including:

• Leveraging AI to achieve organizational objectives. Workday embeds AI capabilities in its solutions, enabling the interviewees’ organizations to achieve their objectives more efficiently and with greater agility. For example, the head of people, workplace, and controlling noted their eyewear retail company utilized machine learning for Workday Scheduling and natural language processing (NLP) in Peakon to analyze comments and identify key topics. The VP of accounting/controller stated their automotive retail company leveraged AI in Workday Financial Management for bank reconciliation rules, automatically processing 82% of deposits with a goal to reach 95% in the future.
• Customizable integration levels with future expansion potential. Interviewees noted the integration of various Workday solutions could be highly configured, allowing for integration with other point solutions. Some interviewees’ organizations implemented Workday solutions in phases, planning for further integration in the future. The SVP of people services from the eyewear retail organization believed that full integration in the future could help their organization achieve more ambitious goals.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).