IT Outsourcing - The GM Way

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Case Details:

Case Code : ITSY046
Case Length : 14 Pages
Period : 1990-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : General Motors
Industry : Automobiles
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"At a company of this size if you don't have information technology linked to business, you could waste a lot of money - not a thousand dollars or even a hundred million dollars, but billions of dollars."¹

- Ralph Szygenda, Group Vice President and Chief Information Officer, GM in 2004.

"GM is transforming into a true 'real-time corporation': marrying strategic leadership, high-speed business processes and digitisation to achieve velocity in driving bottom-line results that differentiate GM from the competition." ²

-José Carlos Eiras, CIO (Europe), General Motors in 2002.

Introduction

US based General Motors; the largest automobile company in the world was also the largest consumer of IT products and services. All of GM's IT operations were fully outsourced. In April 2004, GM invited many IT vendors to its plants to begin the bidding process for its IT services outsourcing contract. The company's earlier contract with EDS³ was to expire in June 2006. The consolidated value of these new IT outsourcing contracts was estimated to be about $15 billion.

GM had a policy of giving utmost importance to its IT outsourcing initiatives since the company firmly believed that managing IT strategically could improve its operational and financial performance significantly.

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1] "Why IT Means Business at General Motors," Outlook 2004, Number 03, www.accenture.com

2] James Hall, "The Impossible Task," MIS Magazine, January 11, 2002.

3] Texas, US headquartered EDS provides technology, applications and business process services, as well as information-technology transformation services. It generated revenues of $20.6 billion and net income of $141 million in fiscal 2004.

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