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Commentary

GM's Outsourcing Risk: Vendor 'Dream Team' Can't Be Anything Less Than Gold Medalists

General Motors' hand off of up to $15 billion in technology contracts to a handful of service providers--including one offshore player--represents more than just a make-or-break IT strategy. It's a test case for the notion that bitter rivals can be forced to play nicely together on behalf of a single customer.
General Motors' hand off of up to $15 billion in technology contracts to a handful of service providers--including one offshore player--represents more than just a make-or-break IT strategy. It's a test case for the notion that bitter rivals can be forced to play nicely together on behalf of a single customer.GM CIO Ralph Szygenda last week tapped EDS, IBM, Hewlett Packard, Cap Gemini, Wipro and Covisint to run his IT infrastructure for the next five years. Most of these firms usually compete head-to-head in the outsourcing market, but now they're all ostensibly on the same side-GM's. In theory, this best-of-breed approach to services provisioning is supposed yield greater innovation and higher service levels. But it remains to be seen whether these vendors really can put competition aside and act as a 'dream team.'

To be sure, Szygenda has laid the proper groundwork. To get a seat at his table, vendors bidding on the GM contracts had to prove two things-that they could operate globally, and that they have bought into standards-based approaches to most of the common practices that make up IT service delivery. Their playbooks have to be drawn from ITIL, CMM, Six Sigma and other standards intended to ensure that, for instance, both HP's and IBM's approach to network provisioning are compatible and won't bring GM to a standstill at those points where they intersect.

Will all this work in practice? Szygenda is betting his career that it will. With EDS handling the bulk of GM's work in the past, he had the proverbial "one throat to choke" in the event of a problem. Now, there is the risk of finger pointing. Szygenda likely won't tolerate that for long, but it wouldn't take long for a network outage or some other glitch to steal millions from GM's bottom line. That's something the financially troubled automaker can ill afford these days.

It's not just GM that's interested in the outcome of this grand experiment. All major enterprises that use outsourcing services stand to benefit if the work performed by GM's team of vendors ultimately translates into more precisely defined standards for IT services. But while the rewards could be industry-wide, the risk is all on Szygenda and GM.

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