Is IT insourcing critical to omnichannel?
At the NRF Big Show, the CIOs of Lowe’s and Target talked up the benefits of bringing software development in-house to move quicker and be more responsive to meeting customers’ needs.
Target began its shift to insourcing following a Cyber Monday 2015 website crash soon after CIO Michael McNamara joined the retailer from Tesco.
Target now has a team of about 4,000 IT employees, of which only about 10 percent are outside contractors. Previously, Target had 10,000 IT workers, of which 70 percent were external.
At the NRF session, Mr. McNamara said Target can work with a smaller team because it only prioritizes IT projects critical to its business objectives. The team has developed supply chain software, merchant tools and POS applications with much of the effort supporting pick-up and Shipt-supported delivery.
Mr. McNamara told diginomica that two-thirds of Target’s growth is coming from digital and that digital’s needs are fairly split between technology and process.
“For most of my career, we’ve been talking about omnichannel,” Mr. McNamara told diginomica. “I think Target does it right, and I think we’re one of the very few companies, sizable retail companies, that do it right, where digital is operationally just integrated seamlessly with the rest of Target.”
Target’s internal IT team is also able to release updates weekly versus only a few times a year previously and speed major projects with fewer team members.
Lowe’s over the last few years has developed more apps and website features in-house, including those related to inventory, pricing, customer reviews and associate tools.
CIO Seemantini Godbole believes retailers should insource technologies that are core to operations. Said Ms. Godbole at the session, according to The Wall Street Journal, “Wherever you have secret sauce that you want to put your fingerprints on, for your customer experience or for your own associates.” “I’ve always believed that you should build your own technology.”
Last March, Dick’s Sporting Goods revealed it was transitioning to in-house software for inventory tracking, e-commerce platforms and other functions due to speed as well as to improve the functionality and ease-of-use of technology for customers and employees.
- Target and Lowe’s Tech Execs Credit Talent, Culture for Insourcing Success – The Wall Street Journal
- NRF 2020 – Target’s CIO on the tech secrets behind Target’s transformation – build features customers love, and abstract your infrastructure – diginomica
- Target CIO Helped Retailer Find Its Tech Groove – The Wall Street Journal
- Dick’s Tech Chief Goes All Out on In-House Software – The Wall Street Journal
- Is Dick’s making the right move by bringing its software development in-house? – RetailWire
DISCUSSION QUESTIONS: Has the internal development of software become more important with digital’s increasing prevalence across retail and the fast-changing technological landscape? How should retailers determine which IT projects to insource versus outsource?