CIOs Uncensored: GM's CIO: IT Vendors Aren't Helping With Globalization

What does it mean to be global? If you want the real answer, you go to the most knowledgeable source, right? So I went to Detroit.

I was in the Motor City last week to interview the long-time CIO of General Motors, Ralph Szygenda. I wanted to talk with him for a couple of reasons: First, he's a very smart guy and one of the most effective CIOs in the world. Second, I wanted to talk about the new book, The New Age Of Innovation (McGraw-Hill, 2008), by University of Michigan professors C.K. Prahalad and M.S. Krishnan. InformationWeek has launched a blog to discuss the authors' ideas about customer interaction, globalization, and business transformation (check it out: newageofinnovation.com). GM is used as a case study in the book; Szygenda has a blurb on the back cover.

One of the principal ideas of the book is that the resources to run your business are available from anywhere in the globe; the authors represent that as R = G. It sounds obvious and simple, but it isn't. For one thing, don't confuse it with offshore outsourcing--it's a whole lot more than that. For another, globalization is hard. Ask Ralph.

"You won't find many global companies yet," he says. Most companies "have global presences, but they aren't global." The oil companies are "doing a lot of globalizing" these days, he says. FedEx? "It's global." Wal-Mart? "Not much of a global company. They do some sourcing out of China," but that's not the same as being global, he says. "Most companies today build products and [offer] services regionally, and supply them to that region," he says. "If R = G is right, it means not [being] limited to that region."

That kind of globalization is what GM has been striving for. For example, GM builds cars in the Asia-Pacific region and sends them to Latin America, or ships cars from Australia to the United States, and does that by optimizing costs--labor, transportation, etc.--to determine where in the world it should build something, an equation that can change monthly, even weekly, Szygenda says.

Above all, that's an IT challenge. "For the CIO, that's an exponential growth in digitization," he says. And for Szygenda, there's one very irritating, grating factor, one that most CIOs haven't yet had to deal with, but as globalization increases they will soon: IT vendors. "They are not global," he says.

IT vendors exhibit the same behavior as other companies: regionalism. Szygenda says he doesn't want to deal with "10 different IBMs" or "23 Ciscos" but "that's what they want you to do." He's made progress--all GM's contracts with major IT vendors are global, not regional, he says--mainly because he has the "buying power" to pull it off. Few besides GM do.

GM is an exception in a lot of ways, as Szygenda points out. "I'd say only 5% of companies are optimizing this yet," he says. But in the R = G world, more companies will have to deal with the support, integration, and complexity issues of a global IT infrastructure. "Wait until you get to five years from now, when the CIO has to put all this together," he says. The CIO will "almost become an equivalent of the CEO--except the CEO doesn't know technology."

Think locally, act globally. And share your thoughts at our blog, CIOs Uncensored.

To find out more about John Soat, please visit his page.