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General Motors To Slash Outsourcing In IT Overhaul
gManZboy writes "GM's new CIO Randy Mott plans to bring nearly all IT work in-house as one piece of a sweeping IT overhaul. It's a high-risk strategy that's similar to what Mott drove at Hewlett-Packard. Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers. This will require a hiring binge. Mott's larger IT transformation plan doesn't emphasize budget cuts but centers on delivering more value from IT, much faster--at a time when the world's No. 2 automaker (Toyota is now No. 1) is still climbing out of bankruptcy protection and a $50 billion government bailout."
In-house staff provide a number of advantages:
Quicker response from people who actually work for the same orgainzation
Dedicated staff rather than whoever is free at the moment
Familiarity with how your business operates
Longer term institutional memory
Which taken together provide long term cost savings, mostly because you are investing in your own resources.
At least you are less likely to be training someone who will be working for your competitor on his next project.
They should be done with hiring right around the time they file for bankruptcy again.
It's been about 5 years or so since all IT was outsourced.
We're right on time for managers to start the in-house cycle again.
Good luck in the next 5 years and see you all again on the jobmarket in 2017!
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Not sure how you are measuring size but:
"Volkswagen has retained its place as the number one car company in the world, according to the Forbes Global 2000 companies survey."
"US poster boy General Motors came in seventh position among the car makers"
Forbes’ top car makers for 2012
Volkswagen – 17
Toyota – 25
Daimler – 37
Ford – 44
Honda – 59
BMW – 61
General Motors – 63
I presume that Slash Outsourcing is Slashdot's latest unwanted "channel" to go with that Business Intelligence nonsense?
Forbes is free to rank companies any way they like. But when people say "Toyota is the #1 car manufacturer" the're simply talking about production totals.
There's no -1 for "I don't get it."
It is all about having control over your intellectual property.
From the article, "Data center consolidation: GM plans to go from 23 sizable data centers worldwide to just two, both in Michigan. "
Note the locations, or should I say location. Is Michigan so big you can get physical diversity?
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
Given that this is GM, this might set off a few ideas in MBA-land that will be beneficial to IT at large. A huge company bringing IT back in house? Amazing how things come back around... kind of like the cloud.
I actually work for a service provider (not doing hands-on support but engineering work for customer projects.) If you are absolutely, completely not dependent on IT, or too small to have your own IT department, outsourcing is one way to go. Big companies I've been at that outsourced IT have almost always had a negative experience that only gets worse as time goes on. You can mainly attribute this to "no one cares about your IT infrastructure more than you do (or should.)" I do my job professionally, because I'm just that sort of IT person, but I've seen countless experiences where vendors try to weasel out of extra work by hiding behind contracts and procedures. Or, they throw up huge roadblocks because YetAnotherWierdProprietarySystemThatThe50YearOldYouFiredKnewEverythingAbout breaks every few weeks and it's too expensive to hire expertise and still make margin on the contract.
There's lots of reasons to avoid outsourcing if you rely at all on your IT -- A Team replaced with the F Team after the contract is signed, bottom of the barrel talent, cost, etc. etc. I'm sure GM ran into all of this and more, and got sick of wasting money. (Didn't EDS start out as the GM IT department way back when?) It's nice to see some different thinking in the marketplace now -- I know when I worked direct for a company, I felt way more plugged into what was happening, and on the hook to deliver. After all, if they can't deposit my pay into my account, I have a great motivation to fix the A/P system. :-)
I'm thinking specifically about the MyVolt site. Ok, it's mostly a bunch of ads and info on the Volt - obviously mainly motivated by brain-dead marketing, since it's also the main place owners go to check their car's status.
So, you push the log in button. Though there's room on the page, oh no, we have to pop up a window to log in on - meanwhile, the animations on the page behind are still loading and running blocking code that makes my other web apps stutter. After maybe 10 seconds, you get the log on window, with it all filled in (thanks firefox) and click the log in button....and you wait, and wait, and wait. Meanwhile, the button you clicked doesn't grey or disable, and clicking it again breaks it. Finally, you're logged in and it starts trying to talk to the car to see what the state of charge is for you. This takes at least two minutes, often ending in "we failed to contact the car, try again?". During those two minutes, it's busy drawing an animation of the state of charge, in blocking code, so my other realtime (stock trading and TV) apps stutter. And, if there was already valid info on the SOC meter, it gets wiped up while you are waiting. It can take over 5 minutes to find out state of charge on this app! Every single page element is reloaded from scratch and re-initialized in response to every single user action, often wiping out valuable data you had already showing each time. And yes, it logs you out every 30 min - during which time you may or may not have gotten the data you wanted. This site must hit 5-6 different (all slow) servers for each redraw. It's obviously done by drag-drop-monkey tools by someone who doesn't even know how to do that, plus a lot of pretty but useless art from some marketing idiot - owners don't need to see more crappy ads for something they already own (are you listening too, Amazon?).
Anything, and I mean even a site writen by a 13 year old retard who was the nephew of a GM exec would be superior. Thank god, the Volt runs linux in a cluster...that was done mostly inhouse and by IBM, who at least have a clue.
Why guess when you can know? Measure!
Forbes has an article claiming same thing
And they are the king of cost-cutting. They outsource many other things, but still insist on keeping their IT in-house.
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There is inferior bacteria on the interior of your posterior.
What was high-risk was outsourcing to the likes of IBM, HP, CapGemeni, wipepro, etc. who outsource the work to India or China. That information is then able to be used against GM. Real stupid on GM's part.
I prefer the "u" in honour as it seems to be missing these days.
Americans do not want these jobs? You trolls are just amazing.
I prefer the "u" in honour as it seems to be missing these days.
If Americans want them how come no qualified people apply for them? The only people who are willing to do the work are from India.
Seriously if they screw this up they just get another bailout. It's a win win for them.
I love Jesus, except for his foreign policy.
I have a simple rule:
Out-source monkey work. If it's something you can write instructions for that're sufficiently clear and detailed that a moderately-housebroken monkey can follow them successfully, it's a candidate for outsourcing.
In-source anything requiring intelligence, business knowledge or judgement. If you're depending on the people doing the job to know what they're doing and do it well then you want people that you have control over, you don't want people who answer to someone else. To find out who they answer to, ask one question: "Who signs their paycheck?". That's who they answer to.
Regardless of the above, in-source anything where a failure will cause a business interruption. If it's going to stop your business from operating if it's not working right, you want the people responsible for it under your control and answering to you. That way you can decide whether it's worth the overtime to keep them in until it's fixed. You do not want that decision left in the hands of someone whose business isn't being impacted by the problem and who won't suffer if the problem continues.
pfft! I'm in Canada and I WOULD apply to them
Does anyone really believe that the tens of billions of dollars that the govt gave to GM actually fixed the problem? Their cost's are still too high relative to the competition. They have spent way too much money on a pink elephant (the Volt), and there are a lot of people that will never purchase another GM product while the Govt has any stake in the company. I was only half kidding about the 3 years. Europe is heading into another recession (or worse). China is slowing down and the US economy stinks (and may get a lot worse if things in the rest of the world go to shit.) An IT re-org is nothing more than re-arranging the deck chairs.
Because there are a lot of IT people that have been outsourced and they will believe anything if it hints that the whole process was a mistake. In this case, the IT department may or may not have been part of the problem, but it certainly wasn't the main reason that GM is a failed company. Hiring lots of IT people won't fix the problems but it may make it worse since the company will have considerably less flexibility in staffing.
Having a great IT department doesn't mean a thing if you have disfunctional managment, inflexible and expensive unions and uninspiring designs. It can make a great company better, but it won't make a bad company good.
You only outsource general functions like IT, payroll, maintenance and so on when you are small enough that it makes economic sense to do so. When the amount and kind of service you need is such that it would cost more to employ people in house than to outsource it, you do. However when you get large, it is silly to outsource. You can get it cheaper in house since you are large enough to need the equivalent of many full time people working for you, and if they are outsourced it is just another layer of cost.
A small business of 5 people? Ya you probably want to outsource IT needs (and other stuff). It would be infeasible to hire an IT person and have 17% of your staff be IT. A company of twenty thousand people? Don't outsource it, you will need a hundred plus IT people anyhow, might as well have them work directly for you.
That's why you posted as Anonymous Coward! :)
Seventy-five percent of GM's sales are overseas, and their fastest growing market is China, where they are beating Toyota. GM American autoworks export almost nothing. This multinational company, like many other US multinationals, will not be bringing its foreign income back to Uncle Sam. Therefore, bringing IT 'in house' means hiring where their sales growth is -- China & the rest of Asia. Who knows, they might buy Wipro. Remember, they once bought and sold EDS.
The biggest thing working against them, I think, is that working for GM usually means living in Detroit. Honestly, I would rather work for Walmart IT in the heart of Alabama.
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Of course the "13 year old retard" would not have to listen to all the marketing and management bureaucrats, so he starts with an advantage. Maybe you should just install a separate browser just for the volt so it doesn't screw up everything else :)
I do on-site IT for 3 different outsourcing companies that service wal-mart. Everything central office may be done in-house but when it comes time to lay hands on a workstation, cashregister, server, router, etc, they often can't wait or won't pay for someone from Texas to fly to some small town in Canada.
Set a a phony outsourcing company. Get outsourcing contracts from competing companies. Absorb their core knowledge. Profit!
[quote] Mott's portfolio management process was a culture shock at HP, since it centralized IT control and forced business managers to prioritize projects. Mott will fight to quash "shadow IT." [end quote]
bummer. good start with hiring americans, getting rid of ibm/banglor kiddos etc. but quashing shadow IT... shadow IT is the only thing that works in this pathetic industry. ask any trader what they think about "non-shadow" official IT. they HATE it. that's why every trading floor has it's own IT, where developers sit next to traders and response time to a problem is measured in minutes, not weeks like with non-shadow IT. Mott got that right with outsourcing being a total disaster, but instead he is going to dig another hole for GM's IT just as deep by centralizing the IT.
That is what college CS for IT get's you people with no perspective on how the rest of the world does IT.
Where a tech school or even community colleges get's you teacher who have done / are still doing real IT work in the field.
Domestic IT workers simply became cheap enough to compete with 3rd world economies.
Several years ago I pulled a brief stint as a contractor to IBM, who was a contractor to GM. The previous GM-IBM contract for system administration was apparently fairly lucrative for IBM. GM renegotiated and cut their cost in half. So IBM decided to replace their team of dedicated IBMers with cheap contractors for sysadmin. Most midlevel managers stayed on, some of the old techies were available sporadically for phone consultations. About 6 weeks into this deal, the IBM contract manager called us all together to explain that these new sysadmin jobs we were filling would all be outsourced to Brazil. We would be responsible for training our replacements over the next 6-12 months. The consensus among our crew was that IBM was bottom feeding from some cut-rate tech school in Brazil because those folks did not know their way around a Unix system, let alone coping with all the app layers running on them. I didn't stick around to see the end of that episode.
He led an aggressive and successful multi-year data center and app consolidation program at HP that required getting buy-in from business units across the corporation, and then following up to make sure people delivered.
Then one of the short time CEOs that came after Mark Hurd left decided they needed to bring their own senior team in, and he was gone. From the outside, it sounded like HP's loss.
If Americans want them how come no qualified people apply for them? The only people who are willing to do the work are from India.
Qualified Americans cost more than minimum wage?
Mott thinks GM has too many IT people running and supporting the business and not enough doing new development.
"We're really upside down on that when 75% of the people are spending their time trying to make sure the same thing happens today that happened yesterday," he says.
This is simply stunning - no sarcasm here, either.
I'm just saying this this is perhaps the smartest thing I've heard from a CIO.
Ever.
Damn, this Mott dude sounds like the Anti Dilbert.
Bingo. When I read the headline I did not jump to conclusions that this would end up creating more work for domestic IT pros. My first and gut reaction is exactly what you predict. This is no way means that GM is not going to continue using cheaper overseas labor. It just means that they are going to have a more direct role in things.. cut out the middle management so to speak.
They aren't going on a hiring binge until they fix their jobs website. I just tried applying there today, but I couldn't get their website to assign a password to an account it told me I used before . . . an account tied to my email address, so maybe I have to simply create a whole new email account just to apply at GM. And yes, I tried multiple ways to log in, and yes, I'm an IT professional.
I was at HP when Randy Mott was CIO.
I remember clearly how we couldn't get ANYTHING done for IT (short of doing it ourselves) because his policies had outsourced EVERYTHING. _all_ of our IT resources on-site were outsourced.
Maybe he's realizing how much he screwed it up back then?
I don't know why he gets such credit for being so good: in my opinion he's a horrible CIO.
But those Toyota programmers did such a good job on their own latest cars! You know, poeple like going fast and all. Asia is the place to be, lol.
Wrong. Lots of qualified Americans apply for the jobs. The problem is that management games the system so that a) it's not possible for any of the applicants to meet all of the requirements (ex. 5 years of Windows 8 development experience) or b) the salary is below market value for the skills desired. Management then moves to the stack of resumes from H1-B workers (largely from India). Workers that usually lack the proper experience but will work for peanuts. I have been in many meetings where this exact scenario has played out and I roll my eyes knowing exactly what is coming down the pipe - sub-standard work and communication nightmares. But the bean counters are happy so there you go.
I hope this trend continues. I have worked on IT since I graduated in CS 13 years ago and I have always worked as an outsourcer. I have worked mostly in large telcos and banks, and in Europe, but over the years grew very tired of this trend.
Our real employers don't seem to care much about us because we keep shifting from customer to customer, being bought by the day. They often do not want to invest in training because we keep changing areas and if we leave, it is usually easy to pick someone else to put in the same position.
At the same time, the customers do not really care about us. Of course they will not invest because we are someone else's employer and they are paying big money for us. I also don't want to provide training or perks to the plumber that goes to my house to do work. Sad thing is, I've often spend 3 or 4 years in a customer, pretending to be part of their team but never really having the same perks. Often I could not do simple things like park my car in their car park, have the free lunch in the cafeteria, trainings and so on. Yet, they expected a lot from us as we are expensive and would simply contact our manager at the meat-selling company if they wanted someone else in the same chair.
This means that people feel no loyalty at all to the outsourcing company (see them mostly as commercial people who sell and a fat structure eating the profits you generate) but feel a lot closer to the customer... yet, there is no love back as the customer always treats us differently and eventually will dismiss the teams or award the contract to the next IT Consultancy company.
And of course, all over these years, the customers have paid a melon for each month of my work and I got paid an olive by the consultancy company, that absorbs the margin. It's actually a business model that closely matches a pimp/wh0re relationship.
I got fed up with it all and ended up moving to a different country when I got an offer to work directly in a company, not as an outsourcer. I am a lot happier with this setup. I keep most of the money my work generates, with no useless middle man, and I finally feel a part of the company/customer/teams, with equal rights. This results in me simply wanting to do more for them and provide some extra sacrifice and effort.
The IT outsourcing model is evil and should end. 90%/10% sounds extreme but a lot more IT should be in-house. I think time and the market will show that and solve this, but right now, it sucks to be a consulting drone in IT consultancy, taking bullsh1t from your managers/commercials and being stuck in dead-end jobs doing stuff that no one from the "customer" wants to do.
Outsourcing solves one very real problem; accountability. In house work has very little and no real penalty for missing service levels hence they rarely even publish them or meet them. When you're paying green money to someone else though you can throttle them if they miss any arbitrary contract term. So an awful lot of work goes into meeting those service levels.
Let's not forget that GM HAD an enormous in house IT function that was eventually spun off into Perot Systems and Hughes Aerospace. GM deemed it didn't want to actually be in the IT business when it could not determine if it was doing that work efficiently.
I hate GM, but I think that you are comparing apples to oranges. Tesla sells boutique cars ( 2300 roadsters in all, 4000 model s so far) and has borrowed 360 million from the US government. Tesla has been given advantages that GM never had while they produced the ev-1. The tesla battery pack (the majority portion of an ev's cost) is supplied by panasonic who is receiving a lot of government subsidies to build the next generation batteries. GM and Tesla are not competing using the same source of funds.
Having worked at GM corporate managing outsourced IT functions I was astounded at how much GM overspent on IT. IT wise, GM was not that large and had a state of the art data center sitting empty in Warren.
From past experience outsourcing IT and software development puts a limit on how much software development actually takes place in a company, at times from what I've experienced it seems that all IT does is provide support and if there is any development both companies do not see eye to eye, keeping IT/Development in-house is crucial to integrating software development with the company operation as a whole. Writing good software allows a department to function more efficiently and allows better inter-departmental operation. In GM's case this is the right time to do this, people are looking for work especially in the Detroit area (not sure if they will find good IT personnel and developers since many of them have moved out of the area), and the economy is recovering slowly, this will put GM ahead of its competitors. Best of Luck to them!
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That was 2010 numbers. In 2011 GM retook the lead after Toyota had a bunch of sudden acceleration bad press. In fact, 2011 was GM's record year for sales. 2012 isn't done yet, so we don't know who will win this year.
And will they all be required to join unions?
If the budget of your IT needs is greater than the revenue of most companies, then it's probably worthwhile to take your operations in-house. I've always thought that whoever can sell ongoing, perpetual IT consulting to a company in the GM class can pretty much sell anything to anyone. "Pay us 2-3x what you'd pay your own staff. And by the way, we have no incentive to do things more efficiently." If you can pull off that sales pitch, you've got the Captain in you. I can understand going the outsourcing route for single projects and short timespans, where you can spin up lots of people in short order to get it done. I don't get why you would use them for nothing but staff augmentation for years and years.
Oops. I misremembered it.
It's farther from Detroit to the Macinac Bridge than to the western boundary of New York STATE (or a few of its western cities, such as Erie.)
But New York State is wide. Going to New York CITY beats the trip to the Big Mac by more than a factor of two - even shortcutting through Canada.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
Is this correct? Detroit lost power, and I'd believed that the parts of the state covered by Consumers, not DTE, lost power
I think we're on different blackouts. I'm talking about the one in 1965. The one in 2003 DID get Michigan, too.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
Retaining IT staff within the organisation is akin to buying a house... It's a long-term investment, and a much better alternative than renting.
"Everyone knows that vi vi vi is the number of the beast" -- Richard Stallman
from one loser to another? must be a quicker route to a golden parachute