IT Outsourcing - The GM Way|IT and Systems|Case Study|Case Studies

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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Introduction Contd...

Despite the fact that the company's IT operations were fully outsourced, it maintained a dedicated IT division of 2000 people. None of the IT executives wrote software code; instead, they were responsible for managing GM's IT outsourcing activities. Known as the information systems and services department (IS&S), the department was a brainchild of GM's Corporate CIO Ralph Szygenda (Szygenda).

This division proved to be very effective in achieving its goals of making the company's IT operations more efficient. GM was able to bring down its IT expenditure from about $5 billion a year in 1998 to about $3 billion a year in 2003.

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This initiative of GM to bring down the IT budget without compromising on IT initiatives was appreciated widely by analysts in the industry.

Industry analysts hailed GM's success at achieving effective IT and business integration (Refer Exhibit I). GM claimed to be in the third phase of IT outsourcing.

The company had set policies and frameworks for multiple vendors to work on common IT projects. Analysts felt that if GM's initiatives succeeded, it could lead to the development of ERP software for managing numerous IT contracts.

Although a few analysts believed that the multi-vendor concept was too ambitious and impractical, others were convinced...

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