The Digital Economy
the development and delivery of ICT
within General Motors over the past 30 years.
Detail relating to developme
nts prior
to 2000 can
be found
in the attached case study (Ass1
.2 Case Study General Motors). When reading the case
study note that there were at least two major “players” in this story
–
General Motors and EDS.
You are to consider the roles of
both
organi
sations in your essay.
Of course
much
has happened to both General Motors and to EDS since 2000! Yo
u are
to
research what has happened and to speculate on why. There is a great deal of information
available on the internet!
Finally you a
re to reflect on
the many fascinating (and often confusing/co
nflicting) changes of
direction
these companies used in their attempts to provide ICT solutions and support over a very
long period.
This case poses a central question
–
is insourcing, outsourcing or mixed sourc
ing the best
strategy?
General Motors certainly had great trouble deciding
–
what do you think?
Content
/Assessment
As a minimum
,
you should include. Marks for each section are shown in brackets.
•
introduction to your essay.
(10%)
•
evidence of wide rea
ding about both General Motors/EDS and about IT
Sourcing St
ra
tegies
. (20%)
•
An accurate and complete history of the case, particularly after 2000.
(25%)
•
discussion of why GM and EDS acted in the apparently contradictory
ways they did over the course of time
. (20%)
•
reflection on the relevance of the lessons from the case study for similar
organizations today. (20%)
•
proper referencing (Harvard style is required)
(5%)
Submission Instructions
Your essay will be submitted through the class
UONonline
Site.
General Motors: Building a New
Information Systems and Services Organization
Prepared by Keri Pearlson
In the spring of 1998, Vice President and CIO of General Motors, Ralph J. Szygenda, drove his
new Cadillac out of the executive parking lot at the Re
naissance Center in Downtown Detroit
and headed back to his Brewery Park office. Szygenda became the first CIO at GM in more than
twelve years when he accepted the position in June 1996. As he left the Renaissance Center,
GM’s worldwide headquarters, Szyge
nda thought about the successes of his two
–
year
organization.
During 1996, GM had split
–
off Electronic Data Systems [EDS], a leading information technology
consulting and outsourcing company, and with it most of the information systems expertise
within GM
. With a staff of approximately 2000 business analysts and technology personnel
employed by GM and various outside contractors, but with little in
–
house IT knowledge, and a
budget larger than some small countries, Szygenda was charged with building an Info
rmation
Systems & Services [IS&S] organization to support the internal needs of GM as well as its
suppliers, dealers, and customers.
What made this task so interesting was the fact that Szygenda had the opportunity to structure
and staff an information s
ystems and services group for one of the largest companies in the
United States, without having to deal with many of the problems inherent in taking over an
existing organization. He, essentially, had a clean slate upon which he could design an entirely
ne
w Information Systems and Services (IS&S) organization. Szygenda reflected upon his
organizational design and the choices he made to fill some of the 300 positions for information
officers (IOs), process leaders and technology specialists and thought about
how this group
would help GM realize its goals.
Keri Pearlson prepared this case, with the assistance of Michael Taylor
and Leslie Jorgensen, solely to provide
material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a
managerial situation.
The statements and opinions contained in this case are those of the indivi
dual contributors or advertisers, as
indicated. The Publisher has used reasonable care and skill in compiling the content of this case. However, the
Publisher and the Editors make no warranty as to the accuracy or completeness of any information on this ca
se and
accept no responsibility or liability for any inaccuracy or errors and omissions, or for any damage or injury to persons
or property arising out of the use of the materials, instructions, methods or ideas contained on this case. This case
may not be
downloaded, reproduced, stored in a retrieval system, modified, made available on a network, used to
create derivative works, or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, scanning, or otherwise, except (i) i
n the United States, as permitted under Section 107 or 108 of the 1976
United States Copyright Act, or internationally, as permitted by other applicable national copyright laws, or (ii) as
expressly authorized on this case, or (iii) with the prior written
permission of the Publisher. Requests to the Publisher
for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue,
New York, New York, 10158
–
0012, USA, (212) 850
–
6011, fax (212) 850
–
6008, email: permreq@wile
y.com. Copyright
© 2001 by John Wiley & Sons, Inc. All rights reserved.
Company Background
William C. Durant started General Motors in 1908 in Flint, Michigan. Durant built GM by
bringing together many small automobile producers and components and parts manufacturers
into a si
ngle holding company. By 1920, more than thirty companies had been acquired by GM
via purchase of all or part of the acquired companies’ stock. In January of 1998, after the June
1996 split
–
off of EDS and the December 1997 split
–
off of the defense business
of Hughes
Electronics, General Motors consisted of five business units [Exhibit 1]:
•
North American Operations [NAO] built cars and trucks under the brand names:
Chevrolet/Geo, Buick, Cadillac, GMC, Oldsmobile, Pontiac, and Saturn.
•
The international busin
ess sector built and marketed vehicles throughout the world,
including some of the NAO brands as well as Opel, Vauxhall, Holden, Isuzu, and Saab.
•
Delphi Automotive Systems supplied automotive components and systems to GM and
external customers.
•
Hughes Elec
tronics Corp. was a supplier of, telecommunications and space hardware,
systems and services.
•
General Motors Acceptance Corp. [GMAC] offered financial services, which covered
vehicle financing and leasing, GMAC Mortgage Group, and Motors Insurance
Corporat
ion.
The corporate vision of GM had been carefully worded to draw together these diverse businesses.
GM’s vision is to be the world leader in transportation products
and related services. We will earn our customer’s enthusiasm
through continuous improvem
ent driven by the integrity,
teamwork, and innovation of GM people.
The word transportation was broadly defined. It included transportation of people and cargo
–
but
also extended to include the transportation of information. Therefore, in addition to GM
’s
traditional cars, trucks, automotive components and systems, the vision also included, satellites,
and telecommunication systems and services.
By the early 1980’s GM had begun automating many of its factories to include cutting edge
technology. “We’re
the largest manufacturer of controlled computers today, and we use them on
all of our cars,” said former GM Chairman Roger Smith. GM has seized the technologies of the
computer, robot, and laser to make radical changes in its automobiles, in the way its a
ssembly
lines run, and the way its workers work and its managers manage.
In an effort to more effectively organize and manage their information systems and
telecommunications activities, GM sought to partner with a computer services company. Rather
than
simply outsource, GM managers were concerned that they remain competitive in the global
environment and they felt they needed to own their information systems organization. Early in
1984, GM executives met with executives of EDS, including founder Ross Per
ot and others, to
discuss GM’s acquisition of EDS.
General Motors IS&S
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