TGT Target Corp

By Jared Council 

NEW YORK -- Large retailers are finding that the right talent and the right company culture are critical to success as they bring more software development in-house to stay competitive.

Executives from Lowe's Cos. and Target Corp., who spoke Monday at the National Retail Federation conference, said they have been expanding internal technology teams to build everything from inventory-management systems to point-of-sale software.

The idea is to be more hands-on in tailoring technology to their customers and employees -- and to do it quickly -- as they compete with the likes of Amazon.com Inc. in an increasingly digital retail landscape.

"Two-thirds of growth is coming through digital," said Target Chief Information Officer Michael McNamara, referring to same-store sales growth being boosted by initiatives such as Drive Up, which allows customers to pick up online orders without leaving their cars. "By and large that is all about technology, and you've got to be able to build that stuff yourself."

Not everything needs to be done in-house, but companies should opt to build technologies that are core to their businesses, said Seemantini Godbole, chief information officer at Lowe's.

"Wherever you have secret sauce that you want to put your fingerprints on, for your customer experience or for your own associates," she said, "I've always believed that you should build your own technology."

Lowe's over the past several years has developed more of its own applications and website features, including those related to inventory, pricing and customer reviews. Last year the company, which houses about 4,000 engineers, built 20 applications designed to help in-store associates better guide customers, including where products are located and best-selling items they might want to recommend.

When hiring, it is important to identify prospective tech talent that can learn quickly, Ms. Godbole said.

"[O]ne of the things we are always looking for is learning ability," she said. "Because technology changes really fast, and today's hard skill is not so hard two years from now."

At Target, the company's 3,500-person engineering team develops its own technology, including supply-chain software, merchant tools, and point-of-sale commerce applications. Before Mr. McNamara's arrival in 2015, those particular systems were developed externally.

Shifting software development internally involved reducing reliance on third-party contractors. Mr. McNamara said when he arrived, the company's engineering team was made up of 10,000 people, roughly 70% of whom were external contractors. Today, about 10% of the 3,500-person team are contractors.

Mr. McNamara said instilling a culture of speed was key to developing technology in-house. To that end, he helped introduce agile practices -- which involves quickly iterating and testing software features -- and other methodologies.

The result has been faster development cycles. For point-of-sale software built by Target's technology team, for instance, releasing two or three product updates in a year used to be a heavy lift, Mr. McNamara said. Today, he said his team releases updates weekly, "and we could do it on a daily basis if we so chose."

"We can produce technology now at a speed that was unimaginable to me just a few years ago," he said. "And that speed and that kind of culture of change is what really has accelerated over the last few years."

Write to Jared Council at jared.council@wsj.com

(END) Dow Jones Newswires

January 13, 2020 20:20 ET (01:20 GMT)

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