Meijer cuts IT staff as it moves to the cloud


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.”
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Meijer laying off workers as Midwest retailer streamlines IT – MLive
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Layoffs, transitions within Meijer’s IT department – Fox 17
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Meijer reducing its IT payroll by 400 employees – WoodTV
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Meijer continues to restructure I.T. department – MiBiz
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How is outsourcing different from cloud computing? – CloudPro
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2017 Harvey Nash/KPMG CIO Survey – KPMG
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Store IT as a Service – RIS News
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?
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13 Comments on "Meijer cuts IT staff as it moves to the cloud"
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President and CEO, Stealing Share
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.
Co-founder, CART
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.
Vice President of Marketing, OrderDynamics
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.
Principal, Retail Technology Group
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.
President, founder and CEO Interactive Edge
Principal, Retail Technology Group
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.
Strategy & Operations Delivery Leader
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.
Retail Solutions Executive, Teradata
President & CEO, Balance Innovations
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.
CEO, President- American Retail Consultants
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.
Managing Partner Cambridge Retail Advisors
Retail Transformation Thought Leader, Advisor, & Strategist
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.
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.