One of the long-held truths about life as a C-level in a Fortune 500 company is that money — and the number of projects under your command — is power. And, the mantra continues, power is good. Power is respect. The goal, by the way, of having power is to achieve far more power. Target's CIO has a very different view.
In an interview with the Minneapolis Star-Tribune, CIO Mike McNamara said that his initial budget when he arrived last year from British chain Tesco (where he held the identical CIO title) was too large and that his group was working on far too many projects. Here is the quote: "We were just doing too many things. I mean we had over 800 projects. Even a company as big as Target doesn’t have 800 priorities,” and he ordered the list cut by 90%, down to 80 projects.
McNamara's point was all about focus. Target's focus was getting seriously diluted by even deciding to pursue so many IT projects, let alone caring and feeding for so many. In short, Target needed to make some decisions about what is important to its future and focus on the top items.
I've been impressed with the large number of tech trials that Target has done, but McNamara's argument is that chasing 800 efforts may be impressive to the media and possibly board members, but it's robbing the company of focus. Senior management would be better served by making harder decisions up front and then truly being able to dig into the much smaller number of pursued projects.
The second key change that he made, according to the interview, is much more expected. All large companies love to ride the swinging pendulum of internal versus external deployments. Is it best to keep your salaried talent focused on your very top strategic efforts and to outsource everything else — necessary but strategic — to contractors or to do the opposite?
Target's CIO has apparently chosen, for the moment, to boost head count and cut back outsourcing. "In an abrupt shift following thousands of headquarters layoffs last year, McNamara has taken Target on a hiring spree aimed at making the company into an engineering powerhouse instead of relying on contractors. In the past year, Target has hired about 700 engineers, many of them based out of the company’s offices along Nicollet Mall and in Brooklyn Park. About one-quarter of the new recruits work at its offices in Bangalore, India. Target currently has about 800 more open tech positions. 'I could easily fill another thousand positions,' McNamara said. 'We need to have a much stronger engineering capability than we had, and we need to own it. We need to own our technology.'"
The truth of the matter, in this never-ending and ultimately pointless outsourcing debate, is that there is really no significant difference. With the right contracts and oversight, companies of Target's size will equally "own our own technology," whether the coders involved are on the payroll or not. Once paid for, the work of contractors is just as much the property of Target as if its own salaried people had done it.
What control does he think salaried people give? They can resign and work for a rival just as much as a contractor — with the limitation of any noncompete contracts, which would also apply equally to both contract and salaried talent. With both, you own the intellectual property and with neither do you control if the people choose to leave tomorrow and go somewhere else.
Target contractors are as loyal as any employee. Indeed, an argument can be made that a contractor has a reason to be more loyal. A longtime employee knows that a termination without cause (or even with cause) means a lot of paperwork and dreaded HR involvement. But if the relevant manager wants to cut off an entire outsourced operation, that manager is only limited by the terms of the contract — which invariably favor the client.
Not so sure how adding to your payroll head count — which increases a dozen other costs, directly or indirectly — increases your control, but if it's more secure, why not?
But on that triage effort, Target is showing some true thought leadership. At the very least, it's smart enough to realize that it now needs to pursue fewer thoughts.
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