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Can General Motors Change How Companies Think About IT Outsourcing?

A new CMMI model for acquisitions coming out this fall could make it easier for companies to mirror its standardized approach to dealing with IT outsourcing vendors.
WILL IT GET ADOPTED?

Billions of dollars in contracts are a motivator, too. Which raises the biggest question for other companies: Is there anything in GM's model that applies to them?

Companies' experience with the CMMI development model offers some clues. Few end-user companies saw business payoff in pursuing full level 5 certification for their software development work, since it takes meticulous process documentation, such as detailing the steps taken when a defect is found. But many companies did learn from their vendors, cherry-picking the most practical parts of the model to improve how they worked with outsourcers.

For the CMMI model for acquisition being published this fall, one obstacle to adoption could be that, when problems occur in a project with a supplier, companies tend not to point the finger at their own actions. "Not all acquirers understand the need for them to improve their acquisition process," says Bob Rassa, chairman of the steering group for the CMMI-ACQ model and a director of system support at defense contractor Raytheon SAS.

With CMMI-ACQ, Rassa hopes companies will put less less emphasis on their "level." Indian outsourcers fueled this by heavily marketing their level 5 status. But Rassa says the model is most effective if companies use it to assess what process areas--things like defining the requirements or communicating changes--they're strongest and weakest in when it comes to acquiring services or goods.

IBM's Portik thinks few companies will apply the CMMI approach for outsourcing and acquisitions as widely as GM does, since almost no one outsources IT services on the same scale.

Yet companies everywhere are feeling the strains of global operations. EDS's O'Hair was working with consumer goods companies before GM and says they face some of the same problems. Portik says he's on one or two calls a week with IBM colleagues and their clients who are looking to learn about how GM manages its outsourcing relationships. Last week, the call came from a company in Singapore. Around the world, companies are trying to figure out how to do this right.