You may already know about General Motors’s effort to bring 90 percent of its IT efforts in-house over the next several years will result in the hiring of thousands of new employees around the world. But the endeavor is not about saving GM money ; according to GM Chief Information Officer Randy Mott; instead, GM is focused on improving its ability to design software and data systems used to make vehicles.
Prior to the transition, which is not fully complete as of this writing, only 10 percent of the automaker’s IT functions were performed in-house, with GM relying on outside contractors for the rest. Mott’s goal is to flip those numbers. To accomplish this, GM announced in September the creation of its first IT Innovation Center; located in Austin, Texas, the center will result in the creation of 500 new jobs. The facility’s announcement was followed by a similar announcement of an Innovation Center in Warren, Michigan in October along with a statement that 3,000 HP workers that previously performed work for GM will transition to the automaker from the technology giant.
Mott, who served as the CIO at Walmart and Hewlett-Packard, said that GM has a better understanding of its IT needs than outside contractors. He recently provided the Detroit Freep Press with five reasons he believes in-sourcing will be more effective for GM:
1. Too Many Applications
Outsourcing (not necessarily internationally, but rather to third party firms) has resulted in too many software applications (programs). Mott estimates that The General has more than (a whopping) 4,000 applications around the world, many of which can be eliminated:
“We want to simplify the environment,” he said. “We have lots of applications that are redundant.”
2. Better Applications Improve Decision-Making
2. The General needs to increase the speed with which it develops products and makes decisions. The automaker’s executive team is not satisfied with bulky systems that hamper innovation.
“We need more speed,” Mott said. “The companies that win are going to figure out how to do more, how to do it faster and how to be more responsive so the business can change and be imaginative in the marketplace.”
3. Better Understanding Of The Business
According to Mott, third-party IT contractors have little knowledge of the auto industry, of GM’s business, or of the challenges facing each. Its own development staff, however, will allow GM to deliver IT innovation in the context of how it will improve vehicle development.
“They need to clearly understand the automotive business,” Mott said. “They are going to be most effective in doing their jobs if they understand how these things fit together.”
Mott also theorizes that having developers in the U.S. will improve collaboration; he believes that projects move faster and teams work better if they’re located in the same place.
4. GM Has The Scale To Do It Alone
Anyone with experience in managing a large amount of (big) data understands the complexity and cost involved in running a data center. Thanks to its size, GM is more than capable of running its own data centers — as opposed to renting space from third party providers.
GM is already building a data center at its Warren Tech Center in Michigan; the facility will be one of two data centers used by the automaker to serve its worldwide operations. What is perhaps even more shocking is that GM is consolidating from 23 data centers it runs currently to only two.
“We have the element of scale to do that, and we think we have the motivation to do it better,” Mott said.
5. GM Can Obtain Talent
The General believes it can attain high-quality yet cost-effective IT talent in the areas in which it will build its IT Innovation Centers. According to Mott, the automaker will leverage major research universities to generate talent (read: Austin, TX).
“I feel very bullish obviously that I can find the talent – both at productivity and an efficiency level,” he said.
GM will hire developers, project managers, and other IT professionals as it moves away from the outsourcing model.
The GM Authority Take
Just as it’s doing with vehicle platforms and engines, GM is simplifying its IT operations — while improving their quality, efficiency, and overall effectiveness. More efficiency and simplicity, faster decisions, a shorter time to market, and a better understanding of the needs and wants of internal and external customers is the name of the game.
And from my personal experience, third-party IT workers are sometimes responsible for serving multiple accounts, thereby reducing dedication to the company/client (GM) while possibly eliminating any competitive advantage, since the IT pro ultimately works for the service provider (such as HP) and not GM.
For additional context, consider that Ford recently opened its own development center in the Silicon Valley. While not fully staffed at this point, the fact that an automaker has an IT presence in world’s computing epicenter should demonstrate just how seriously The Blue Oval is taking software development and innovation around the practice. Luckily, GM isn’t just following suit; it seems to be one-upping Ford in the area.