General Motor's Massive IT Overhaul Takes Off

General Motors embarked on a $15 billion IT outsourcing project earlier this year that's notable not just for its size, but for its ambitions.

GM's goal is to have its six top service providers working together to create one global IT organization for the company; it's insisting those providers adopt 44 standard processes for common IT tasks.

Progress has been impressive, but sometimes difficult, CIO Ralph Szygenda said during a presentation at InformationWeek's fall conference last week. The project hit full speed in June, and since then GM and its partners have performed 160,000 transition tasks, such as consolidating service desks run by multiple suppliers into a single global service desk; trained 8,100 people on 29 standardized work processes; redeployed 2,800 personnel; remapped 1.2 million assets, such as moving servers and software to new suppliers; and lined up an additional 15,000 supplier employees for work.

In February, GM handed out $7.5 billion worth of IT outsourcing contracts to Capgemini, Compuware, Covisint, EDS, HP, IBM, and Wipro to improve IT operations and integration over the next five years. In spite of some initial resistance to cooperate, companies including Cisco, Microsoft, and SAP have helped create standard processes to which GM's partners must adhere.

Despite the breadth of the deals, Szygenda said the carmaker won't relinquish too much control. "You can never outsource strategy," Szygenda said. "You can never outsource architecting systems, you can never outsource accountability in information technology."

Erase The Boundaries

As a global carmaker that's having better success at sales outside of the United States, GM decided it can't tolerate global boundaries for IT. "How do you do that and how do you drive that? You have to have global strategy, organizations, processes, and systems," Szygenda said. Standard, global processes and systems also give GM more flexility in awarding outsourcing contracts, he said.

But Szygenda's plan isn't without problems. As expected, getting vendors to work together to codevelop standard business processes has been difficult, he said. And it was complicated to design a telecom routing infrastructure that ensures calls into the newly constructed help centers are routed to the appropriate people there, he said.

While most of Szygenda's discussion last week focused on GM's outsourcing project, he said the greatest mistake during his 10-year tenure as the carmaker's CIO has been not doing a better job of forging IT relationships with dealers. Just recently Szygenda has started working with GM dealers and automotive information management vendors to closely integrate GM's systems with dealers' financial, parts, advertising, and ordering systems. "The assumption was dealers were independent and the automotive [manufacturing] world shouldn't have anything to do with them," Szygenda said. "The dealers came to me and said, 'You've got to help us; we can't do it ourselves as individual dealers.'"

GM last year posted an $8.6 billion loss, the second-worst in the company's history. The company is saddled with $5 billion annually in retiree pensions and sluggish North American sales, among other things. While those aren't IT problems, a secondary source of cost for GM is technology, and that's one area where Szygenda has control. Since 1996, Szygenda has cut IT costs by $12 billion, $5 billion of which was fed back into operations and building better vehicles, consolidating or cutting 4,500 systems along the way. GM's stock is up 79% and losses are down since the low points of last year, but Szygenda admits GM has a long way to go.

With GM's outsourcing project, Szygenda hopes to prove that CIOs can have greater control over IT supplier partnerships than they realize. But he acknowledges GM's size gives it leverage. Said Szygenda, "If you're a billion-dollar company, it's very difficult not being held hostage."