This CIO Likes Living On The Edge

CIO Sateesh Lele has just accepted the riskiest job of his otherwise conventional career. Lele, having led IT at PepsiCo's FritoLay, Avon Products, and General Motors Europe, will build the IT infrastructure for a new company that plans to make built-to-order cars for affluent Generation-Xers. "A lot of CIOs probably wouldn't say, 'Let's create this car company and take on a huge industry,' " Lele acknowledges. "I know it's not going to be a walk in the park."

That's for sure. Build-To-Order Inc., the brainchild of CarsDirect.com Inc. founder Scott Painter, faces enormous challenges, says Kevin Purty, research director of automotive strategies at AMR Research. Painter, Build-To-Order's chairman, says the company will be the Dell Computer of the auto industry, bypassing dealerships and delivering cars to consumers within days of their orders.

But Purty doesn't see how a company planning to produce just 35,000 vehicles a year at $35,000 each can possibly make a profit, considering the high overhead costs associated with manufacturing and liability. "Automotive isn't about the Dell model," Purty argues. "People aren't killed by Dell PCs traveling down the road at 60 miles per hour. The company will have to service vehicles, provide warranties, and do crash testing just like the big automotive companies."

But Painter and Lele are out to prove the naysayers wrong. Build-to-Order has received $25 million in funding from partners such as Deloitte & Touche, AK Steele, and formula race-car maker TWR Group.

It still has about $360 million to raise, but it's "not a number we haven't been able to achieve," says Painter, who raised about that much for CarsDirect. He's convinced that the concept will appeal to those ages 28 to 35 making upwards of $70,000 a year who are tired of the dealership experience and want to have input in the development of their cars.

"The whole theory of mass production was that higher volume brings down the cost for everybody, but technology in the last five years changes all that," Painter says. "We're nimble, and we don't have to deal with legacy investments in obsolete tooling and manufacturing, legacy power trains, labor unions, or the franchise-dealer system."

Lele, who reports to Painter, is charged with putting in place the infrastructure to begin production in 2005. That includes the entire IT backbone, supply-chain software, and a CRM system tuned to creating a constant dialog with customers. Lele, in fact, thinks many of his peers would salivate at the opportunity.

"For the average CIO, maintenance makes up 80% of the budget," Lele says. "To have the opportunity to use 100% of the budget for a new development is a real high to a CIO."