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6/28/2012
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General Motors Will Slash Outsourcing In IT Overhaul

GM's new CIO Randy Mott plans to bring nearly all IT work in-house as one piece of a sweeping IT overhaul. It's a high-risk strategy that's similar to what Mott drove at Hewlett-Packard.

As Randy Mott, the new CIO of General Motors, goes about his workday, he carries with him a well-worn calculator. It sits in front of him in the place of prominence that most people reserve for a smartphone.

Mott, who has been CIO at Wal-Mart, Dell, and Hewlett-Packard and joined GM in February, believes in numbers. And as he tries to transform GM's IT operations, he plans to flip one set of numbers on a scale that no CIO has ever done before.

Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers.

Insourcing IT on that scale will require GM to go on a hiring binge for software developers, project managers, database experts, business analysts, and other IT pros over the next three years. As part of that effort, it plans to create three new software development centers, all of them in the U.S. IT outsourcers, including GM's one-time captive provider, EDS, face the loss of contracts once valued at up to $3 billion a year.

This dramatic move away from outsourcing is just one piece of the "IT transformation" Mott is leading, which includes consolidating data centers and applications, centralizing IT planning and execution, and getting a better grip on GM's customer and production data. GM's IT transformation doesn't emphasize budget cuts but instead centers on delivering more value from IT, much faster. In many ways, the foundation Mott is laying is similar to the one Ford started laying four or five years ago as part of its One Ford/One IT initiative.

The overhaul Mott envisions puts the everyday operations of GM at risk during a time when the world's No. 2 automaker (Toyota is now No. 1) is still climbing out of bankruptcy protection and a $50 billion government bailout. GM's factories, supply chains, and financial reporting rely on the IT organization to keep information flowing in near real time on a global scale. The fact that Mott's boss, CEO Dan Akerson, would bless this level of IT change and accept this level of risk at a still-fragile stage of GM's recovery shows how essential the best data and technology are to the company's future.

GM CIO Randy Mott
GM CIO Randy Mott: How GM's IT pros spend their time is "upside down"

Akerson "was looking to make changes in the speed and cadence of the company," Mott says. "Whether it was with me or someone else, Dan Akerson was going to do an IT transformation here."

Mott's philosophy on outsourcing at GM, as it was at HP, Dell, and Wal-Mart, is that the company needs more creative, business-changing ideas from IT, and IT teams need to deliver those innovative projects faster. Mott doesn't think GM can be creative or fast enough with outsourced IT. "When the business says 'go,' then that means we start working on a contract, we don't start working on a project," Mott says of the current outsourced model. (Mott is on InformationWeek's editorial advisory board and was named our Chief of the Year in 1997, when he was at Wal-Mart.)

The shift away from outsourcing is only the most dramatic element of Mott's IT "transformation." The plan, approved by Akerson and the rest of the executive operating committee, comes straight out of the playbook Mott has developed over a three-decade career in the retail, high-tech, and now automotive industries. Mott's plan for GM is nearly identical to the one he led at HP between 2005 and 2008 under CEO Mark Hurd, before Hurd and then Mott got bounced in an executive shake-up.

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JohnT488
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JohnT488,
User Rank: Apprentice
4/8/2015 | 1:15:09 PM
Re: management
Do your own homework, you bum!
anon3842671493
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anon3842671493,
User Rank: Apprentice
12/7/2014 | 9:16:59 AM
management
can anyone help me answer this question.. i need the answer tonight... please

 
  1. How will Mott's IT strategy affect the four functions of management?

  2. In what ways can insourcing IT help GM improve its performance ?
harsah
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harsah,
User Rank: Apprentice
10/3/2014 | 6:24:23 PM
re: General Motors Will Slash Outsourcing In IT Overhaul
I fully agree what Converted Cloud is saying. Based on my experience I can say summarize Mr. Mott achievments in GM : (of course that's my personal opinion) :

- Mess, mess, mess - "we are too big to help the business", one project can have 30 people, while 1st if talking, second is writing on excel, third is creating a power point presentation and fourth is uploading it to sharepoint. I have never seen so many people with so weak knowledge. 

- Support does not exist or it's decreasing regullary. "Go help yourself" is a new support model. If you can't - "I'm sorry it's not IT problem. Go and learn IT moron"

- Executives want to see painted blue grass saying it's and ocean. They must be really blind on what's going on, or they don't want to see how IT is getting worse and worse each month. It's strange how they want too see time reporting based on their way of thinking, while it looks completly different, so time report is 100% bullshit and it's not true. You wanna see it the way you want? You got it.

- If you want to move forward with the project because you care, prepare for years of discussions. Productivity is getting worse and worse, people started even not to take care, if you're having 30 people on a project where nobody knows who is responsible for what + additional help from executives how the project can be sucessful?

- Silo mode on. i got lost with the amount of siloses created by Mott. Now we got communication failure. Usually you got a deal between 2-6 siloses - and nobody wants to take any responsibility. So you're going to silo A asking for something, they are sending you to silo B and silo B is sending to silo C and silo C to silo A, and all the time the same circle mode.

- Silos were very strictly created. Thanks to it people are saying "Not my responsibility" if anything touches something outside of their area. This is a huge problem - thanks to Mr. Mott reporting time and stupid split between operations and innovation.

- Lots of things are being moved to business. The main key is that GM is not HP where most of the people might have IT knowledge and they have to deal with self-support, or leading projects instead of concentrating on selling cars or promote business. Business needs to go forward and requires rapid IT changes to be competitive. Sometimes I got a feeling 20% of their time they have to deal with IT problems where IT told "Go help yourself" because Randy wants to cut cut cut money. You can't calculate how many sales we lost thanks to it.

- Due to lack of communication and "it's not my responsibility" the full frustration is switching to the business and right now it's starting to go up to Randy and I hope it will hit his head soon what he has done, when a business will tell IT we can't work.

- Randy is looking only for money. Take as much money from business, later shut it down and business will have to deal with it, or if you're lucky they will move functionallity to crappy central systems which are dedicated for something else, but key is metrics here. Take money from business to sponsor mess and shut it down.

- The biggest talents which left starting to go away from the company - reason "Transformation", soon we'll have only Randy's yes-men army

- Disruption in day-to-day work is normal. My best example is that once we're saying we got great redundancy between some datacenters in real time, while last time rain has fallen and sunk 1 datacenter and seems redundancy works only on a powerpoint slide. Company stopped for 2 days. 

- Mr. Mott maybe is a CIO, but in this case this shortcut really means "Cheap Information Officer". He's not a chief and he's not inspiring young people. People hate this guy wishing him all the worst. They are not seeing any sense about the changes he's doing. More funny is that he can't explain those changes as well. You can only hear couple of some basic bullshits "Better allignment", "Transforming GM", "Deliver faster" - This is my favourite one. I have not seen any project which is not delayed.

- Small projects are push into large processes. If Randy is saying he scale the processes ... It's bullshit. 

At the end... Mary I beg you - please look how IT performs... Really performs not like top executives want IT to see showing you painted green grass to blue telling you it's a warm deep blue ocean. Please.
schowdary951
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schowdary951,
User Rank: Apprentice
3/31/2014 | 10:11:27 PM
Time for an update on GM's IT
Great article. I think the readers would love to get an update on progress made at GM.
GmHPcontract
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GmHPcontract,
User Rank: Apprentice
9/4/2012 | 9:28:08 AM
re: General Motors Will Slash Outsourcing In IT Overhaul
GM is going to END the service agreement with HP in September.

The HP workers at GM were told that between now and February all HP workers both in the US and world wide would be converted to GM.

GM will be paying fines for getting out of the contract early.

GM will assume all liabilities,for the current HP workers.
Cloud Convert
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Cloud Convert,
User Rank: Apprentice
7/20/2012 | 10:09:06 PM
re: General Motors Will Slash Outsourcing In IT Overhaul
IG«÷m affraid that I agree with what Mr. HP Surviror writes.
Mr. Mott has a proven track record
* GM staffers should be prepared to see understaffed key capabilities to meet to meet financial goals. Randy will ruthlessly ensure that is the case to show positive ROI and reap the resultant benefits.

* He has a strong belief that most core IT work can be performed by just a few hourly workers if you just put enough process into it (what we are stuck with today). IG«÷ve seen first hand on numerous occasions how 100s of man hours would be spent to make a 5 minute change. The frustration with the soul crushing process (designed so that college new hires or less could do the work) has resulted in HP loosing great talent (voluntarily). His statements have lots of fluff but he has left a legacy of bureaucracy that is stripping HP of precious resources to fix. A discussion with a Dell employee indicated that they are still trying to recover from the reign of Randy

* Randy will always deliver financial results to his superiors using short term tactics. One example has left a company that once had strong intranet management, search, collaboration technologies in ruins at a company that canG«÷t afford to fix it.

* Motts G«£deliver in weeks not monthsG«• was achieved by using metrics to drive for time delivery and left no time to test applications that were delivered. Reality was that the value of test was ignored and assumed the business would do it.

* The plan of record process (POR) has crippled HPG«÷s ability to deliver and the current HP CEO has publicly stated G«£it clearly doesnG«÷t workG«•. The process eliminated any improvements to applications (even sick applications) because they would never make the cut line for return on investment as compared to some other flashy capability. Most apps would be delivered and then put on life-support until some pain threshold was exceeded.

* Mr. Mott reduced the cost to support HP assets by reducing assets and not staffing support. Applications are quickly assembled by understaffed teams and then left with G«£low cost centerG«• to support. Support means just reboot if needed.

* HPG«÷s grand data was a disaster due to abysmal management by one of his stooges and the culture style of their approach. Treating finance and existing HP staffers like idiots led to alienating people he would later need to be successful. After over a year of effort, success was decreed when just a few testers could get some data out. It couldnG«÷t scale and would crash under simple queries. He ignored existing HP workers when they tried to explain that a data warehouse would need to fix many of HPG«÷s long term data issues, brushing them off as idiots or complainers. HP spent the next several years trying to get their data warehouse to work and continues to struggle with it today.

* Probably the biggest impact crater was the culture brought to HP. Management via soul crushing metrics, inability to build relationships or even care, and management by scare tactics by his yes-men. Mr. Motts first meeting with R&D engineering was an example of how he (and certainly his lieutenants) would conduct themselves by announcing that he now owned all of their networks, software and infrastructure. From now on R&D had to only supply requirements and his team would work to find the lowest cost fit. Mr. Mott had never worked at a company that had world-wide R&D teams, and the varied technical products and needs yet treated existing HP IT and management as incompetent boobs and R&D engineers as just a bunch of complainers. This attitude, lack of staffing, and management tactics quickly infected IT..

Mr. SurvivorG«÷s comment about cronyism are right on but he forgets to mention that HP IT is still saddled with this poor management at a time they can ill afford it.
JimC
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JimC,
User Rank: Apprentice
7/19/2012 | 12:19:54 PM
re: General Motors Will Slash Outsourcing In IT Overhaul
Being a software salesperson who started in IT as a COBOL programmer 30+ years ago, I'll state that the mess began in the early '80s when the CIO position was created. Although part of the C-suite, that executive spot was often wedged between the CFO and the former top data processing spot, the Director of Management Information Systems. The VP of IT became the new title for the Director of MIS, but (s)he often answered to and had a budget controlled by a non-technical CIO who came from finance or was an LOB executive. From my perspective, the "wheeler-dealer," "wrap & roll" software sales started in May '85 when software vendor Computer Associates introduced CA-Unicenter as a collection of acquired mainframe products. The pitch was financial and made to the CIO, who would then force his/her subordinates to use what was just licensed. This CXO-level "enterprise sale" was the model used for outsourcing because the CIO remained employed while the "IT people" were simply disenfranchised drones below him/her who were thrown out into the snow. The most effective hardware/software/outsourcing salesperson today can be described as young, a golfer and having a degree in Theater Arts plus an MBA. It's become people who don't know what they're selling telling lies to people who don't know what they're buying. It works perfectly for: dropping the mainframe, big-ticket software sales (database, ERP, etc.), outsourcing, nearsourcing and data center construction.
BigSzu
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BigSzu,
User Rank: Apprentice
7/16/2012 | 11:36:37 AM
re: General Motors Will Slash Outsourcing In IT Overhaul
I just wonder if the new strategy will anyhow touch Opel/Vauxhall and the old mainframe systems. It's hard to imagine that there are still engineers that know how to administer the Rue one...
MasterSteve
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MasterSteve,
User Rank: Apprentice
7/14/2012 | 8:01:22 PM
re: General Motors Will Slash Outsourcing In IT Overhaul
As a former Sr. IT Staff member at GM, what really slows down the process of new development are 2 things: 1. There is no alignment between the various business teams - each one operates independently and differently - IT has to therefore develop different processes to satisfy the stakeholders.

2. IT itself has bureaucratic processes - the "gate" methodology requires every milestone to pass through exhaustive checks and documentation, almost like a huge waterfall methodology. Each project has to provide so many metrics and dashboards that are of no value.

Blaming outsourcing companies has become the fashion these days - US companies must challenge outsources to bring innovation. For example, most companies keep IT architecture, platform decisions, data architecture and other big pieces within the company and outsource development and testing. Where is the innovation possible here?

If companies like GM stop outsourcing and we protest too vehemently, why does GM have to sell cars in India and Brazil? Why don't you sell only to Americans? This kind of double standard will not work in our favor in the long run. Only because of outsourcing has purchasing power increased in other markets where we sell our products.
jpattyn570
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jpattyn570,
User Rank: Apprentice
7/13/2012 | 5:24:25 PM
re: General Motors Will Slash Outsourcing In IT Overhaul
I am glad to see companies going back to insourcing. One thing that I saw in this article that really concerns me is how the government can allow the "Michigan's power company" which is a critical part of the USA Infrastructure to be outsourced outside of the USA. I am not comfortable with foreign countries controlling our power, water or communications.
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