Target CIO grows IT staff, tightens budget, hones tech focus

By Dan O'Shea | July 31, 2016

Dive Brief:

• Target CIO Mike McNamara has managed to shrink the retailer's IT budget in the last year, while still managing to hire about 700 new engineers and streamlining its agenda of technology projects from more than 800 down to 80,according to the Minneapolis Star Tribune.
• After a brief time during which Target outsourced about 70% of its technology work (and about 70% of its technology workers were outsourced contract workers), McNamara has brought more work in-house and now has the retailer claiming about 70% of technology workers as its own.
• McNamara said that after relying on outside software suppliers, Target's technology workforce has started writing much more of its own software code, an effort which contributed to a recent update of its website.

Dive Insight:

Mike McNamara is making quite an impression, and in a way that contrasts sharply with what some other major retailers are doing. Faced with the challenges of creating omnichannel shopping experiences at the same time as an array of new technologies—mobile payments, supply chain automation, robotics, to name just a few—are pulling their IT staffs in a number of different directions, retailers have increasingly turned to IT outsourcing in recent years.

Target, in fact, was one of those companies. It outsourced much of its technoloogy work, perhaps after recognizing that it couldn't keep up with all these new technologies it needed to adopt (and all the ways it needed to innovate) in order to keep pace with the likes of Amazon.

Now, under a dynamic new CIO, Target is headed in the opposite direction. McNamara speaks the language of someone who believes that technology is intrinsic to the success of the retail business, that proprietary innovation delivers greater value than any off-the-shelf software can.

Can that philosophy catch on more broadly in retail? Shouldit? Target is still in the early innings of the reversal of its technology strategy. McNamara's ideas seem to be producing results so far, or he at least has everyone believing that they will. You can bet that other retailers are closely watching what Target is doing here, and to what degree it succeeds.

If Target becomes a much stronger e-commerce company with McNamara heading its technology efforts, it could only be a matter of time before other retailers take a similar route—perhaps under one of McNamara's proteges, or even the man himself.