6 Questions On GM's Bankruptcy For CIO Ralph Szygenda
Szygenda anticipates changes to the IT budget and outsourcing contracts worth billions of dollars, while lifting the "historical weight of our heavy balance sheet."
Szygenda: We will ask more of our outsourcers
General Motors filed for bankruptcy on Monday, reporting a debt of $172.8 billon. GM plans to use $50 billion in government loans to launch a leaner, more competitive company within the next three months, which includes ridding itself of unsuccessful brands and shuttering some factories.
On Wednesday, InformationWeek conducted an e-mail interview with GM CIO Ralph Szygenda to learn how the bankruptcy filing and subsequent restructuring will impact the company's vast IT infrastructure and investments.
GM's IT budget will likely change, Szygenda said, with more money going to help with the restructuring and into software involved in process changes. Not surprisingly, IT investments related to shrinking parts of the company will be slashed.
GM's IT outsourcing partners also should expect changes to their contracts with the automaker, with some likely to see their contracts dwindle in size, if they're related to parts of the business that GM is reducing or closing.
In 2006, Szygenda awarded about $7 billion in multiyear IT contracts to Capgemini, Hewlett-Packard, EDS, and others, and earmarked another $7 billion or so for additional contracts in the following five to 10 years. Szygenda says he'll expect "even more" from his IT partners during the restructuring, while adding that contracts were written to allow "adjusting" for business changes.
On a positive note, the bankruptcy should allow GM to make some IT investments that previously may not have been possible, Szygenda indicated, because of the "historical weight of our balance sheet."
The full text of InformationWeek's interview with GM follows:
InformationWeek: In a June 1 letter to employees, CEO Fritz Henderson said the restructuring will allow GM to become a "leaner, more customer-focused, more cost-competitive company." What role will IT play in helping GM meet these three goals?
Szygenda: Over the last decade, IT has been implemented to give GM the flexibility to do whatever the business desires. I believe that Fritz will expect to leverage this environment to implement any restructuring quickly and be the foundation for any process changes to better service customers and be more competitive.
InformationWeek: Is the bankruptcy and reorganization going to impact your IT budget? If so, how?
Szygenda: The answer is probably yes. IT investment for restructuring and process change applications will increase while cost will decrease for areas being closed or reduced.
InformationWeek: Do you anticipate any reordering of technology and/or investment priorities? For example, is there greater need for systems to help with compliance requirements given the federal government's role in the restructuring of GM?
Szygenda: There will be reordering based upon any new business process changes and additional restructuring. Existing systems meet any compliance requirements.