Meijer cuts IT staff as it moves to the cloud

Discussion
Oct 11, 2017
Tom Ryan

Meijer has become the latest company to lay off information technology (IT) staff as those functions are farmed out to a third-party technology vendor with expertise in cloud computing.

Fortunately, many of Meijer’s workers were rehired by the technology vendor and continue to work inside Meijer’s headquarters as contractors, according to reports in the Michigan area where the supercenter chain is based. Some positions are being eliminated.

“We are making changes to our ITS structure that will enable us to provide even more solutions in both the digital and physical space for Meijer customers,” said Terry Ledbetter, Meijer’s CIO, in a statement.

Many traditional outsourcing providers now offer strong cloud platforms or SaaS (software as a service).

The 2017 Harvey Nash/KPMG CIO Survey found “very positive feedback” around cloud computing. Larger organizations cited the benefits of cost savings and improved responsiveness from cloud technologies. Smaller firms remarked on the stability and simplicity while valuing the scalability of cloud solutions. The report stated, “Suppliers are providing robust, flexible solutions, while customers are much less ‘prima donna’ about the uniqueness of their estate, clearing the way for the exploitation of cloud technology.”

The same survey found a strong appetite for outsourcing with the goals of freeing up resources, gaining access to new skills and saving money. Hot outsourcing areas include application development, followed by infrastructure and software maintenance.

The “Store It As A Service” study from RIS News that came out last November found that, while options have long been available to retailers to outsource the help desk and payment processing, retailers are increasingly looking to outsource wireless networks, mobile devices and real-time analytics. Survey respondents were less enthused about outsourcing POS hardware update/upgrade, SaaS management and security.

The study added, “Outsourcing store IT, while generally understood and partially adopted, has more room to grow before it becomes fully developed and implemented beyond a few functions that have been around for many years.”

DISCUSSION QUESTIONS: Considering the advances being made in cloud computing, does it make sense for Meijer and other retailers to outsource as many IT functions as possible? Which traditional IT functions should stay in-house?

Braintrust
"Be GREAT at where you need to be the expert. Reinvent your own wheel. Leave the timing belt to someone else."
"Outsource your break/fix activities so you can focus on being creative and seamlessly integrating new technology that delivers value to your customer."
"Meijer might have missed a great opportunity to grow its team for the future demand it will see in IT and digital in retailing."

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13 Comments on "Meijer cuts IT staff as it moves to the cloud"

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Tom Dougherty
BrainTrust

Yes. By all means outsource IT. Retailers need to spend every drop of their resources on reimagining retail. Why spend a penny supporting technologies that can be someone else’s expertise?

Be GREAT at where you need to be the expert. Reinvent your own wheel. Leave the timing belt to someone else.

Sterling Hawkins
BrainTrust

I’m with Tom here. The focus should be on your competitive advantage, and traditional IT tools and support usually doesn’t fall into that category. I think this is a good move by Meijer and likely provides better service at a lesser cost. At the same time, how technologies come together for a retailer can be a competitive advantage, which is why it’s important to keep higher-level IT / CIO roles in-house.

Charles Dimov
BrainTrust

Face it, SaaS has taken over the world. More importantly, always look for multi-tenant SaaS solutions — as these will be most cost effective. In the retail space, even thinking about a single-tenant SaaS or on-premise solution should be immediate red flags. There are copious TCO studies that point out that SaaS is the most cost-effective solutions.
Retail in-house IT should focus on the integrations of the best-in-class systems and keeping an eye out for how to configure the systems ideally to suit their individual needs.

Bob Amster
BrainTrust

Agreed on all points. And to think that for a few years, many CIOs were so concerned about not housing the data, or not housing the applications in their own data centers … it has taken a few years, but they are seeing the light.

Zel Bianco
BrainTrust

It does make sense, however it is important to retain at least some of the IT folks who understand the legacy systems so that the transition is smooth. It is good to hear that that many of the Meijer IT folks have been hired by the cloud firm. It does make sense to have the retailer turn their attention to other, more critical areas, but if the transition to the outside services are chaotic, then valuable time and resources are wasted.

I agree with Tom Dougherty, let the experts in cloud or application development do what they do best. Whenever we get pushback that something like what we offer is being handled by IT, the result almost always comes up short, and they end up coming back to us after a year or two of poor results and a lot of time and money spent. Let me be clear, IT plays an incredibly important role, some of which cannot be outsourced, but there are areas that can and should be. Cloud and application development are two areas that should always be explored.

Bob Amster
BrainTrust

We have been espousing outsourcing, SaaS applications and cloud computing since long before it because a daily topic of conversation. Any IT function that is not either intellectual property or one which represents a unique competitive advantage should be outsourced. It makes sense for Meijer as for any other company. The functions that should stay in-house are the technical support that often requires that a person walk to the office of the customer to install something or fix something that is broken. In some cases, the development of truly unique software applications that provide a true differentiation factor, and the IT knowledge of the business that will be the liaison to the outside world, should remain in-house.

Brandon Rael
BrainTrust

The transformation of retail also has a direct impact on IT organizations. Outsourcing the IT-related operational processes makes complete sense, and will provide short-term economic relief. There is a clear differentiation between supporting technology and infrastructure.

However by all means the business-facing technology systems, which support the customer facing solutions, absolutely should remain in-house. These include all of the solutions and systems which support the merchandising, store operations, design, e-commerce, digital, mobile, social, teams. This paradigm shift from the traditional IT support model, to one that is focused on the business side was well captured by Forrester’s CEO, George Colony back in 2007. Technology is now your business, and business is your technology.

The leaders within the business technology departments should work in complete partnership with the business retail leaders and do what is necessary to keep, retain and acquire new customers.

Dave Nixon
BrainTrust
YES, retailers should outsource these types of transformative technologies that it doesn’t make sense to “own.” It is good business to do so, especially around the cloud. Leave the security, management and support of the applications to a larger and more experienced team of experts, all while gaining the flexibility and nimbleness (and security) that cloud can bring. But Meijer might have missed a great opportunity to grow its team for the future demand it will see in IT and digital in retailing. Those IT professionals could have been retrained and repurposed for more of a DevOps role within the IT group, as shifting to the cloud is not a 100 percent outsourced service in most cases. We need to adapt IT departments to transition the roles with a different focus. Instead of managing internal infrastructure, these folks can evolve into new positions that will be even more critical in the future to their enterprises around new applications, new deployment methods and enhancing security that will be leveraged differently using the cloud. They can be of great value in helping developers with the way they build new software for this new service. How many were offered to be trained in… Read more »
Darren Knipp
Guest

The line between technology and driving world-class customer experiences will continue to blur. As a result, retailers need to make calculated decisions on what functions are part of their “secret sauce” and which ones are not. The “nots” are prime to outsource, while the key ingredients are most likely very collaborative projects between IT and their best-of-breed vendors. The role of IT inside a retail organization needs to become one of orchestrating all the moving parts while driving the vision for the business alongside their colleagues.

Kai Clarke
BrainTrust

This move to the cloud is a no-brainer for retailers. Let experts manage your IT needs, storage and access, and SAAS. Then cut the IT department to 1 or 2 people who gather competitive bids to evaluate vendors who can best supply these products and services. This is what Meijer is doing, and probably saving on space, money, and HR needs. Retailers should focus on what they know best — retail.

Ken Morris
BrainTrust
Leveraging cloud computing and IT outsourcing makes a lot of sense for many retailers. IT is not a core competency or differentiator for most retailers — it is just a necessity. A cloud approach enables retailers to significantly reduce infrastructure, improve security and increase operational effectiveness by centralizing management of data and processes. Retailers are embracing this move to centralized data as they realize that it is key to accelerating their path to a single version of the truth with a centralized unified commerce platform that is integrated, scalable and flexible to support evolving business needs. Given the move to the cloud and a growing preference by retailers for utility-based, as-a-service solutions, we see the next step in this evolution as “IT-as-a-Service.” This is a real opportunity for retailers with a one-stop-service for all their IT needs — hardware, infrastructure, applications, implementation and maintenance services. This bundled, all-inclusive approach can simplify retailers’ operations and give them the agility and flexibility to quickly transform their business — much faster than they could do with legacy decentralized software and their own staff that is often bogged down with their day job “keeping the lights on” and “fighting fires.” At the store level… Read more »
Ricardo Belmar
BrainTrust

The digital transformation path for retailers is paved with outsourcing! Retailers need to innovate and spend their technology budget on projects that will differentiate their brand and their store experience for the customer. For many retailers this has to lead to reduced spending on “traditional IT” where they are just “keeping the lights on.” Outsourcing these IT functions so that the retailer’s IT can focus on innovating may be the fastest path to revitalizing their store experience. Especially for more routine/mundane functions that are maintenance-centric vs unique operations. Outsource your break/fix activities so you can focus on being creative and seamlessly integrating new technology that delivers value to your customer.

Vahe Katros
Guest

Clouds and hybrid clouds, and apps that sit on top of said clouds, are the basis for future “wows”, if not the minimum consumers will expect from modern companies (whose partners include a variety of mobile apps).

But to be sure, the cash management application built on an Excel macro will remain operational as will the RS232 printer.

wpDiscuz
Braintrust
"Be GREAT at where you need to be the expert. Reinvent your own wheel. Leave the timing belt to someone else."
"Outsource your break/fix activities so you can focus on being creative and seamlessly integrating new technology that delivers value to your customer."
"Meijer might have missed a great opportunity to grow its team for the future demand it will see in IT and digital in retailing."

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