December 3, 2009
Former GE CEO Fritz HendersonHenderson's out as CEO Photo by Landov
So now what for General Motors? Last week, InformationWeek editors met with GM's IT leadership team, including CIO Terry Kline, who discussed the company's tech priorities in his first in-depth interview with the press since he was promoted to that post in October. Just as our interviews ended, GM's executives were called into a board meeting for news that shocked the business world: CEO Fritz Henderson was resigning at the board's request.
The next CEO almost certainly will be an outsider brought in under intense pressure to produce results from GM's massive restructuring, and change the company's culture even faster. We won't try to predict how that might affect the company's IT priorities. What we can tell you is where that IT strategy stands today.
Kline described three broad initiatives for the struggling, government-owned automaker: get a better, single view of the customer across its brands and products; improve the company's financial reporting systems and processes; and create a "world-class desktop," not just for the company's engineers, designers, and other power users, but also for every regular GM worker. That includes a company-wide rollout of Windows 7 starting in March, and to be finished for all 100,000 GM PCs by year's end.
That third priority jibes with a related Kline mandate: Make GM's IT architecture more hospitable to leading-edge consumer technologies, particularly smartphones. On its most recent trip to see technology vendors on the West Coast, Kline says, GM's IT leadership team made it a point to visit Google and Apple, not just Cisco, Hewlett-Packard, Oracle, and the other "usual suspects."
Kline describes Google Apps as "one crank away" from being enterprise-class, and says Google CEO Eric Schmidt asked him to make a list of requirements that would get them there. A more robust spreadsheet and a clearer (more auditable) idea of where data in the cloud actually resides are on Kline's wish list. Google Apps will be "a legitimate threat" to competing enterprise apps by the second half of next year, Kline predicts, at "a price point that is impressive."
As for Apple, Kline sees the iPhone--and other smartphones--as an increasingly critical platform for GM. Not every employee who wants one will get one, he emphasizes, but IT is making it easier for employees to use their personal smartphones for work.
In meetings in Cupertino with Apple's CIO and head of development, Kline says, those execs were eager--more than they ever were about selling hardware--to work with GM to build next-gen customer-facing apps for the iPhone (see story on p. 20 for a look at an iPhone app to sell cars). Another example: In its attempt to get closer to customers aged 35 and under, GM is developing an iPhone game for racing GM-branded cars. To do it, the company's partnering with some of Detroit's well-regarded design schools, letting college kids design what they'd like to use.
It's also trying to make employees more productive at home, recognizing that 9 to 5 doesn't fit a global business. It's testing something it calls "GM online," or "desktop on a stick." It's a virtual PC environment on a USB drive that, when used with a home PC connected to the Internet, will give employees their full Windows 7-based GM desktop, with security settings and VPN. It will save employees from having to lug their PCs home at night, let the company issue fewer laptops, and cut the pain of loss or theft. "Someone steals a 1-gig stick that's encrypted, we kill it and go buy a new one for $15," Kline says.
Outsourcing Still Reigns
GM has just 1,500 IT employees and outsources about 90% of its IT work to HP/EDS, IBM, Capgemini, Compuware Covisint, Wipro, and others. Kline, like his predecessor Ralph Szygenda, inherited that structure and must make the most of it. The work was entirely outsourced to EDS for 10 years, then in 2006, Szygenda put $15 billion in multiyear IT services contracts up for bid. To win, suppliers had to agree to adhere to 44 standard processes created for GM IT projects, making it easier for outsourcers to work together--and for GM to switch suppliers if needed.
While under bankruptcy protection, GM shrunk those contracts to reflect the company's smaller size--closing 14 factories means there's less IT to support, for example--but it kept the suppliers in place, in the same roles. Now it's pressuring them for new ideas, on everything from how to reach younger customers, to how to make those 44 standard processes more efficient.
What Kline would like to do now is bring in-house some more experienced, versatile IT professionals--the equivalent of baseball's five-tool players adept at hitting for average, hitting homers, running, throwing, and fielding. Kline values IT pros who've written code, managed servers and other IT operations, architected systems, and managed databases--expertise that usually requires at least 15 years of experience, he says. They're the kind of people who can broker disputes that devolve into finger-pointing or can act as a paramedic if something's perilously wrong. In short, they "work really well in our outsourced model," he says.
Culture Must Change
Every discussion with GM execs these days must confront the elephant in the room: culture. The subject came up in all our meetings, and it was usually mentioned in the same breath as "Fritz," who as CEO tried to rally employees around the theme of CARS--customers, accountability, risk taking, and speed.
Steven Rattner, the Wall Street exec who led President Obama's auto task force, gave this assessment of GM and Chrysler in a recent Fortune article: "Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company."
GM Fast Facts
(July 10 to Sept. 30) $1.2 billion loss
$26 billion revenue
12% global market share GM unit sales
year to date* -32% U.S. market share* 20% GM
16% Ford *Data from Autodata
Culture was no doubt part of the reason CEO Henderson, a 25-year GM veteran, was forced out, as the company looks to distance itself from its legacy amid its massive reorganization and downsizing. GM's IT team faces the same hurdle: All the group CIOs and process information officers, who lead IT for areas such as marketing, manufacturing, and product design, are GM veterans. They're by no means GM lifers, though, as Szygenda recruited IT leaders from across industries.
Kline, a 9-year GM veteran who previously was CIO of Asia-Pacific operations and the process information officer for product development, clearly has his own passion for driving cultural transformation. He wants fewer approvals. IT no longer sets cell phone policies--business unit managers decide who gets one. Group CIOs can make bigger purchasing decisions without approval, as long as they fit the strategy Kline and the CIO have agreed to. IT used to have 42 pages of monthly metrics to gauge performance; it's trying to get to two. Instead of monthly project meetings, it's quicker, weekly ones. "No decision waits more than a week," Kline says.
In contrast to the old GM, where the top-floor execs at the company's Renaissance Center headquarters in Detroit were sequestered from the rank and file and adhered to a strict chain of command, Kline thinks cultural change will require him to interact with "every single person in my organization personally, multiple times." The broader goal: "We want everyone to feel like an entrepreneur."
A key test of whether the culture is really changing is whether the IT organization can take risks. When Kline showed the iPhone game to Henderson and vice chairman Bob Lutz, he acknowledged to them that it's an experiment. "I said I don't know if any of these things will stick, but it doesn't cost hardly any money to try," Kline says. "We can throw 200 of these things against the wall, and let's see if three or four of them stick. And by the way, while we're doing these things, we're learning a lot--about ourselves, and about our customers."
Given the need for cultural change, one of the biggest jobs in GM IT belongs to Donna Cheesebrough. Her title's process information officer for business services, but her mission is to help GM employees collaborate better, and thus make these faster decisions.
Company-wide, GM is expanding Microsoft MySite to every salaried employee, says Cheesebrough. MySite, an option with Microsoft SharePoint, lets employees have their own Web pages--to post a photo, contact information, their experience, what projects they're working on, Web links, and any files they want to share with others. It's piloting Yammer, a micro-blogging application for business use that's similar to Twitter. The jury's still out, she says, on whether it will prove to be an effective real-time communication and information-sharing tool, or a distraction. But it's worth a go, she says.
Henderson, Lutz, and other execs have held live Web chats, in which employees anonymously posed questions, including pointed ones such as, "Why are you canceling the Saturn brand?" Employees liked the new openness.
But the measure of success won't be what executives do; it'll be whether the rank and file can collaborate better. GM increasingly is pushing global development. Its new Cruze sedan was developed in Germany and Korea, and is coming to North America this year as the next step in its global rollout, following launches in Europe and Asia. IT's job in a global business like that, says CTO and chief strategy officer Kirk Gutmann, is "to make the company feel smaller."
A vital piece of the collaboration effort is one of Kline's top three priorities: giving employees a "world-class desktop." How does IT justify a new operating system as a burning priority? The promise is that it will make people more productive--largely through better collaboration, including leveraging the cloud functionality of Office 10 and SharePoint 2010--and lower IT operating costs.
Like many companies, GM skipped Windows Vista and stayed on XP. Now, the company's one of the most gung-ho Win 7 early adopters we've encountered. It'll have the IT operation on the new OS by January, start the company-wide rollout by March, and finish by year's end. GM is already rolling out Windows Server 2008, and it will launch Win 7 without much use of third-party deployment tools, Gutmann says, leveraging Microsoft's management tools. About 70% of GM's applications are Window 7 ready, and Kline says he's leaning on the laggard vendors, such as SAP. "We're pushing them--because we're going to deploy," he says.
CRM, Take 2
When we heard Kline cite CRM as a priority, we thought: big software implementation. Not exactly. Gutmann says it's more like "CRM 2, or CRM 3." GM made a big Siebel investment, like many companies, about six years ago. That established a back end.
Now the effort's focused on integrating the mass of third-party data available via XML feeds to introduce new types of outside demographic data into its databases. And it's focused on connecting GM's myriad databases, which might have you--if you're an OnStar customer with a GMC truck who uses a Chevy dealer for service--as three different customers. "Because we were so brand-centric, going back in our history, a lot of these databases were built separately," Gutmann says.
The other piece of this CRM effort is pushing that data out--letting dealers use it to market more effectively, or even let customers use it in new ways, such as for pre-populating forms. Gutmann thinks GM's back-end transactional systems are solid. "That allows you to go faster, and take some risks," he says. "If it doesn't work, you just use a different interface. You're not trying to bulldoze the whole back-end transactional system, which is always years of work."
Another concern is customer retention--especially as GM closes dealerships for Saturn, Pontiac, and others, leaving customers a new reason to consider Ford or Toyota for their next vehicle. As a result of discontinued or sold brands, "we have 6.5 million customers that we have to try to retain," says Bill Houghton, process information officer of sales, marketing, and services. In addition to collecting data from dealer databases for analytics, GM is also working to collect data at brand Web sites and call centers, Houghton says.
"No decision waits more than a week."
-- GM CIO Terry Kline
Overall, GM is investing relatively more in IT for initiatives such as marketing and collaboration, Gutmann says, and less in manufacturing and supply chain IT initiatives than it has in recent years, having completed major efforts such as a five-year effort to standardize IT across its factories. But it continues to invest in those key production areas.
The coming Volt electric hybrid car is driving some investments, such as the need for an entirely new set of testing tools in the factory, to check if a vehicle's operating right before it ships. As product development teams work more globally, GM's experimenting with high-definition videoconferencing, where engineers might need to examine a precise fit or material. In the supply chain, it's standardizing apps for tracking material specs, for example, to make it easier to move work among plants.
So there's indeed change happening in GM's IT. Kline and his team have laid out some huge challenges, not the least of which is enabling a collaborative environment across 100,000 desktops. A CEO change will add to the challenge.
-- With Chris Murphy and Rob Preston
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