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[11 comments]

Target names new CIO, announces switch to chip-and-PIN cards

May 1, 2014

It didn't take long for Target to find a new chief information officer. About six weeks after former CIO Beth Jacob resigned, the retailer announced that it has hired Bob DeRodes to head up its technology initiatives and to lead efforts to keep data secure. Target still plans to hire a chief information security officer and a chief compliance officer to further improve data security.

Mr. DeRodes comes to Target with more than 40 years experience in IT, data security and business operations. He has been a senior information technology advisor for the Center for CIO Leadership, the U.S. Department of Homeland Security, the U.S. Secretary of Defense, and the U.S. Department of Justice. During his career, Mr. DeRodes has also held top technology positions at companies including CitiBank, USAA Federal Savings Bank, First Data, Home Depot and Delta Air Lines.

The news of Target's planned switch to chip-and-PIN cards may have been greeted with more cheers than the hiring of its new CIO. The retail announced it would switch its current portfolio of credit and debit REDcards to chip-and-PIN technology in early 2015. The reason for the switch is simple — greater security.

To make the switch, Target is in the process of replacing its registers with ones that can conduct transactions using the new technology. The chain expects to have new terminals in all its U.S. stores by the end of September, six months ahead of its initial schedule.

"As we aggressively move forward to bring enhanced technology to Target, we believe it is critical that we provide our REDcard guests with the most secure payment product available," said John Mulligan, Target's CFO, in a statement. "This new initiative satisfies that goal."

The Retail industry Leaders Association (RILA) issued a press release to applaud Target for the switch to chip-and-PIN.

"Migrating to chip-and-PIN technology is a major component of RILA's Cybersecurity and Data Privacy Initiative," said Sandy Kennedy, RILA president, in a statement. "The security features associated with chip-and-PIN technology will reduce the risk of fraud in the United States as they have done around the world where this enhanced fraud prevention technology has been in place for years."

FINANCIALS:     [NYSE:TGT] [ ]

Discussion Questions:

What is your reaction to Target's new CIO hire? Will the switch to chip-and-PIN technology for Target's REDcards significantly increase security over the current technology being used?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How successful will the move to chip-and-PIN card security be in making Target's customers feel more confident charging their purchases?

Comments:

It's been well-documented that the U.S. is far behind other parts of the world in adapting chip-and-PIN technology for its debit and credit cards. (And readers may have run into this issue while traveling to Europe and elsewhere.) It's a big step for a major retailer like Target to convert its proprietary card to a safer technology. Now, if the other issuers of credit cards (especially bank cards) would follow suit....

Meanwhile, the hiring of an outside tech expert to be Target's next CIO will help the company wrestle with remaining data security issues. Target has a tradition of internal promotion to senior positions -- which is sometimes admirable, sometimes not -- and in this case the outgoing CIO was a "homegrown" talent without as much tech background as needed, in hindsight.

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Dick Seesel, Principal, Retailing In Focus LLC

Bravo for Target. They hired a CIO skilled in tech security and will move to a chip-and-PIN card, which will greatly increase their security. Hopefully the move to chip and pin will prompt other merchants to do the same.

Target has a history of botched technology launches, so this one will be closely watched. Let's hope they can get it right the first time. The last thing they need is another black eye.

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Max Goldberg, President, Max Goldberg & Associates

Chip-and-PIN cards, a ten year old technology is safer than the average US Retail 20 year old technology (or older)? There's some money for whoever can invent something for the mobile shopper that works broadly and simply.

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Peter J. Charness, SVP America, Global CMO, TXT Group

New CIO..."so what"! Chip-and-PIN...It is bizarre that this technology isn't widespread and hasn't been available in the U.S. like it is in the rest of the world.

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Gene Detroyer, Professor, Independent

Oh, you mean move into the 21st century? Yes, that's probably a good idea.

My Canadian colleagues, who have had this technology for a long time, are always shocked at how primitive credit card technology is here in the US. What is it about this country that keeps us so far behind the rest of the world in technology, health care, environmental issues, education, financial management, safety and so on? What are we ranked in internet speed...31st or so? Below Estonia and Uruguay for goodness sakes. Can't be stupidity can it? That pretty well leaves ego and greed.

Nice to know that Target plans to "aggressively move forward" priding themselves on being six months ahead of schedule while being six years behind the rest of the developed world.

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Ian Percy, President, The Ian Percy Corporation

Target has addressed their horrible Information Technology mess by hiring an army of one general with no practical solutions in place or on order. The article discloses a need for the consumer to keep a cash only transaction type for Target at least until 2015.

This is more than their competitors have done to stop the avalanche of private financial information from falling into criminal hands for illegal use, but is far short of anything needed to stop the hacking. The people in charge are the problem in this nightmare. The playing of musical chairs in a company board room never repairs an issue of any size as we plainly see here.

'gjarnoldjr'

Sounds like someone with the background to work with the NRF on their recently announced security initiative.

Vahe Katros, Consultant, Plan B

The new CIO for Target shows how seriously they are taking the security breach from earlier this year. What is not clear is whether this hire can plan a technology strategy to advance Target over the next decade, which is also a key role for the CIO, apart from security issues.

Chip and pin tech will help with security of the Target card. However, a majority of Target customers use their bank credit cards and not the Target card. Security will remain an issue for them until Target develops the infrastructure to address those issues.

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Mark Price, Managing Partner, M Squared Group, Inc.

So Target has calculated that the cost of a complete update of tens of thousands of POS terminals to support chip-and-PIN compatibility and re-issuance of millions of cards to shoppers would ultimately be less than the damage done by its now infamous breech. Or maybe the critical PR impact makes this necessary at any cost.

Gee I hope they have picked the right technology this time. Chip-and-PIN is not exactly a new concept, although it seems to be working well in other countries so far. It will be up to new CIO DeRhodes to make certain that it is hardened enough to protect shoppers' -- and the chain's -- critical interests. He had also best be planning to migrate to the next level BEFORE this implementation develops the inevitable cracks.

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James Tenser, Principal, VSN Strategies

Kudos to Target for the hire! Now that they have him, use him to move beyond the 21st century. Why pick a decade-old, borderline 20th century technology like chip-and-PIN?

Let's boldly go where no man has been before! Or something like that. Folks this is too big of an issue to use last year's technology...just my 2 cents.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

Target needed to make big changes if it was ever to gain back the trust from its guests (customers to the rest of us). I do think the background of the new CIO does a great deal toward that goal. As for chip-and-PIN, it is a fantastic move and will help generate a ground swell toward the technology. If any retailer was even thinking of asking for a delay on the October 15 entry of chip-and-PIN in the U.S., this will certainly play a big role for everyone to join in the change.

Target will continue to show leadership and once the Walmart guys get on board it is a done deal for chip-and-PIN for worldwide retail. This is all good news for retail, costly for sure, but still good news.

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Frank Riso, Principal, Frank Riso Associates, LLC

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