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3/27/2014
09:17 AM
Rob Preston
Rob Preston
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GM's Randy Mott: What I Believe...

CIO's five core principles underpin automaker's three-year "IT transformation" plan.

During Randy Mott's 30-plus years in IT, he has developed some core beliefs. Rely on in-house people rather than outsourcers. Get data to the right people to help them make more-informed decisions. Deliver projects faster than before. Streamline and automate IT operations to free up more money for innovative work.

Now Mott is applying that belief system to General Motors under a three-year "IT transformation" plan, during one of the most tumultuous times in the company's 106-year history. He joined GM as CIO in February 2012, when the automaker was emerging from a controversial government bailout and takeover, and now much of the public's attention is turning to GM's handling of a defective ignition switch on earlier-model Chevy Cobalts and other models that is linked to driver deaths.

Against that backdrop, Mott and team are a little over a year into the IT overhaul plan, one of whose goals is to improve data sharing and analysis to help GM identify engineering and manufacturing problems earlier in the process. Underpinning that broad plan are Mott's five core principles -- as he has expressed them in recent presentations under the heading "What I believe..." -- which I lay out below, adding a bit of my own analysis on how they relate to the modern world.

1. Real innovation happens with IT professionals tightly aligned to company strategy.
We've all been hearing this refrain for decades. In fact, IT-business "alignment" is almost always the No. 1 challenge cited by respondents to the annual Society for Information Management survey. You'd think such alignment would have happened by now.

Sure, CIOs and other IT leaders must be on the same page with every business unit, whether it's sales, marketing, finance, HR, or manufacturing. But IT-business alignment isn't a one-way street. Mott talked about a refined senior executive structure at GM that -- not necessarily by design -- is starting to align the company's business leaders with Mott's IT goals, one of which is to eliminate the sprawl of applications and data while moving to global software platforms. For instance, there's now a single head of global manufacturing (Timothy E. Lee) as Mott looks to standardize GM units on global manufacturing systems. There's now a single head of global quality and customer experience (Alicia Boler-Davis) as Mott looks to consolidate GM's quality, customer, and other data into a single global data warehouse.

Learn more about how analytics and data management are core to GM's IT transformation. See GM's Data Strategy Pushed To Center Stage.]

So it's not just about IT aligning with the business. "The business has moved toward us," he told InformationWeek in a recent interview at GM's Detroit headquarters.

2. Real business applications on an enterprise scale DO NOT come from venture capitalists.
The all caps emphasis is Mott's, not mine. This may be the most contentious point in Mott's belief system. It's trendy these days for companies in a range of industries (Capital One, GE, Ford, Wal-Mart) to set up a digital innovation shop/lab/center in Silicon Valley, and for their CIOs/chief digital officers to meet with venture capitalists and startups to tap into the latest thinking. But when Mott was identifying locations last year for four technical innovation centers GM wanted to set up across the country, he stayed away from the Valley and other VC hotbeds. Instead, he opted for suburban Detroit, Atlanta, Phoenix, and Austin, mainly for their proximity to current GM operations and/or affordable tech talent, including a dozen or so universities.

Mott isn't arguing that VC-backed startups produce no meaningful enterprise IT innovations. But he's skeptical that their systems and applications can scale, affordably, to meet Fortune 100 needs.

As Mott's team started last year to pull billions of dollars of IT operations and development in-house from four or five outsourcers, the automaker signed long-term (five-year) enterprise license agreements with 11 blue chip vendors: Adobe, CA, Cisco, EMC, Hewlett-Packard, IBM, McAfee, Microsoft, Oracle, SAP, and VMware. Mott values not only the proven scalability of those vendors' products, but also their global footprint and product line breadth.

He also values systems and applications that can be customized and integrated with others, one reason he's not a big fan of cloud services. Embracing cloud software and infrastructure is "a strategy of how do I get even, not how do I get ahead," Mott says. "And I think the companies that win in their industries are the ones that figure out how to get ahead, because getting competitive advantage takes innovation, it takes creativity, and you're not going to get that from someone who's going to make everyone on the planet even."

3. Modern, innovative companies have a good mix of experienced IT professionals and college hires who are forward-thinking and less resistant to change.
As GM moves from doing 10% of its IT work in-house as of January 2013 to doing 90% of it in-house by the end of 2015, it's hiring thousands of people while taking billions of dollars of work back from outsourcers.

As part of that effort, GM's IT organization will have brought on 4,500 new people by the end of this year, 600 of them recent college grads. Long term, by about 2018, GM will have about 12,000 IT employees, Mott estimates.

Mott and team are hiring for a mix of skills, including SAP, Siebel, and even PeopleSoft development and integration; Java and .Net development, especially for sales, marketing, and dealer apps; and Oracle and Microsoft SQL Server databases. The overall focus: Do much less "run the business" IT work, whether by staffers or the outsourcers that remain, and more new

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Rob Preston currently serves as VP and editor in chief of InformationWeek, where he oversees the editorial content and direction of its various website, digital magazine, Webcast, live and virtual event, and other products. Rob has 25 years of experience in high-tech ... View Full Bio

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David F. Carr
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David F. Carr,
User Rank: Author
3/27/2014 | 10:46:59 AM
Will the trend toward inhouse IT stick at GM?
Do you think the direction toward bringing more IT inhouse will stick at GM, or will we see the strategy seesaw back to an emphasis on outsourcing? Many organizations identified outsourcing (and skill at doing it well) as a strategic imperative over the past couple of decades. Were they 100% wrong?
RobPreston
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RobPreston,
User Rank: Author
3/27/2014 | 11:49:34 AM
Re: Will the trend toward inhouse IT stick at GM?
This will stick. Randy Mott didn't believe in outsourcing when he was at Wal-Mart, Dell, or HP either, and he stuck to that philosophy. It's a core principle of his, going back 30 years, not a trendy move. From what I understand, GM's leadership is on board. Mott thinks insourcing not only will produce more IT innovation, but it will also cost a bit less. As Mott says, IT outsourcing vendors charge for "resource + margin," so there's no incentive for them to reduce resources applied to any given project or responsibility.
Lorna Garey
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Lorna Garey,
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3/27/2014 | 1:32:24 PM
Re: Will the trend toward inhouse IT stick at GM?
At the size companies Mott leads, doing IT in-house seems to make perfect sense -- the scale is at least equal to what most outsourcers offer. For smaller companes the numbers are likely not as clear. 
ramacan1000
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ramacan1000,
User Rank: Apprentice
6/15/2014 | 10:32:42 PM
Re: Will the trend toward inhouse IT stick at GM?
You should interview the business unit leaders at GM... and ask them what they think about the insourcing...

 

GM IT has become bad to worse to impossible is what they will say..

 

GM's neighbours Ford, Chrysler etc. - all of them had insourced for many years... What happened there??
majenkins
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majenkins,
User Rank: Moderator
3/27/2014 | 2:12:43 PM
Re: Will the trend toward inhouse IT stick at GM?
I think it will stick as long as Mott is there, when he leaves, not if when, then all bets are off. I was very glad to see someone in a position of authority say what I have been saying for years. Pundits and CIOs always talk about IT aligning with the business goals but never put any onus on the business to align with the IT goals and philosophies. That is why you have so much money wasted on what you called shadow IT, things that get one thing done for one part of the business but donít achieve any larger or longer term goals.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
3/27/2014 | 5:44:17 PM
Mott misconstrues cloud services
When Mott says using cloud infrastructure and software as a service is a way to get even, not get ahead, he misconceives of what's going on out there. I agree it is a good idea to keep core IT skills in house, but they can be put to work effectively on cloud infrastructure and customizing SaaS, if that's what the CIO wants. He's thinking too much in-house resources are better than external ones. You don't have to be an advocate of outsourcing to make good use of the cloud. On the contrary, the cloud gives the internal managers control over the resource and allows them to use it as an extension of the data center. To misconceive this could be damaging to your long term prospects.
ChrisMurphy
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ChrisMurphy,
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3/31/2014 | 9:47:25 AM
Re: Mott misconstrues cloud services
His cloud skepticism definitely bucks the trend, Charlie. I can't think of any CIO I've spoken with that is as skeptical about the value to be had from cloud software. I'm looking forward to the on stage discussion with InformationWeek Conference attendees this week, to hear what kind of questions CIO peers ask.
anon9793399602
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anon9793399602,
User Rank: Apprentice
3/28/2014 | 5:05:58 AM
GM's CIO
If you are CIO of a GM, you can afford to speak whatever you want. However, this looks like classic CIO speak who is disconnected with the ground realities and how the technology world is changing. Though some of the bets he is taking will be good, overall GM is going to lose. GM needs to smell coffee and leverage digital transformation across its business processes to leap ahead of its competition. He makes valid point that enterprise software are not best served by the VC-funded companies. However, GM should look to acquire such small companies and create in-house solutions that help in excel.
J_Brandt
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J_Brandt,
User Rank: Ninja
3/28/2014 | 2:17:48 PM
Integrate
I can't agree enough with his comment, "Real innovation happens with IT professionals tightly aligned to company strategy."  Too many times you have IT running for IT's sake and ignorant of the true business needs of the organization.  If IT wants to have any relevance, they have to move beyond basic plumbing support and maintenance.
ANON1255450178610
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ANON1255450178610,
User Rank: Apprentice
3/31/2014 | 10:50:30 AM
Speed
If speed of development is so important, why is he talking about annual updates on the plan rather than quarterly?
Abdul Jaludi
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Abdul Jaludi,
User Rank: Apprentice
4/1/2014 | 10:16:20 AM
A good model for others to follow
This sounds like the strategy John Reed, a strong proponent of IT, implemented that helped make Citicorp the global leader under his watch. This is also a great model for other companies, who are having problems reigning in IT, to follow

For most companies, IT-business "alignment" is doublespeak which means "sure, we'll create a new division whose job is to 'work closely' with you, while we continue working on what's really important". The business divisions don't need a feel good team that delivers hot air while shadow IT divisions continue to proliferate, but better access to the resources already there. IT internal alignment is a step in the right direction.

Many companies which create innovation centers in these trendy locations fail to realize that many of the best ideas, which will help the company long term, will come from the workers who already understand the environment, what the problems are and what's needed. What they usually lack is access to the right people to present these ideas. Building innovation centers close to staff is a step in the right direction and a great morale booster. Integrating new with existing talent rather than replacing one with the other helps this process along. The new thinkers can help existing staff formulate and better articulate their ideas.

The ability to deliver faster is what the automakers need. If Mott can deliver them GM has a good chance of making it to top.
larry.holder
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larry.holder,
User Rank: Apprentice
4/2/2014 | 12:37:58 PM
Great article
Randy was my first project leader at Wal-Mart in the early days (I was there 1981 to 87).  We did a lot of innovative stuff, all in-house.  The environment was friendly, fun, and we got things done.  (By the way, here's a news flash to anyone who says COBOL is dead: Wal-Mart was programmed 99% in COBOL).  Randy knows the IT business, and I dare say he is as innovative and daring in his thinking for enterprise computing as Steve Jobs was for micro computing.  GM is lucky to have him.
George5647
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George5647,
User Rank: Apprentice
7/24/2014 | 6:05:43 PM
Transformation
I think Randy made couple of mistakes in insourcing in GM, and it might collapse. I got a strange feeling he is building a typical IT company across GM, forgeting he's a CIO of the automotive coorporation, with business spread across the globe. People insourced on new positions are not having any experience in automotive industry at all, nor the experience with other regions outside of the US. This is leading to much stronger separation between GM business and GM IT and at the end it might destroy all relations that have been already built between IT and business. This is a point where Randy and his ex-HP and ex-DELL guys forgot that business owns the company, not IT. Business rates IT as well. Somebody mentioned about Shadow IT. According to me, Shadow IT was an answer on a weak performance of an IT organization in general. If business couldn't get from IT what they want, they are going to suppliers leaving GM IT and all is done, working without issues, without tons of documents, processes, analysis. I think Randy's organization will be hit again with Shadow IT, when the business will get angry about delayed projects, non-working apps, forced centralized apps with a limited business engagement lead by typical IT PMs with no idea about markets and business needs. That will be the first step the system is failing. Additionally when those projects or apps will have errors and for another year IT will be fixing it up, the level of business aggression which is quite high today will reach the top and the transformation will be over.

I think the general idea of Randy's strategy is worth trying, but not in the automotive industry, but he's doing too many things in one time in huge organization where the intertia between top and bottom might be even 1 year. I can belive he was an expert 30 years ago knowing the Walmart business across US, but I doubt if he's experienced automotive person across all the globe with multi-continental automotive regulations. Cars are not the same as a pop-corn, and I think he's treating this business this way. HP is still returning to the model before transformation. Have no idea about DELL, but I keep the fingers crossed. I'm giving personally 1 year - big success or failed transformation with huge mess... 3rd time in a row? 
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