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How Elon Musk Approaches IT At Tesla
onehitwonder writes "In short, they build it themselves. When Tesla Motors needed to improve the back-end software that runs its business, CEO Elon Musk decided not to upgrade the company's SAP system. Instead, he told his CIO, Jay Vijayan, to have the IT organization build a new back-end system, according to The Wall Street Journal. The company's team of 25 software engineers developed the new system in about four months, and it provided the company with speed and agility at a time when it was experiencing costly delivery delays on its all-electric Model S."
S - end
A - nother
P - ayment
More competition to the likes of SAP can't be a bad thing.
Don't bother clicking through - nothing but the same summary.
Many, if not most, IT initiatives with homebrew tech fails. It's nice when it pays off, but almost always it is over budget and under spec. If the CEO got lucky, good for him, but his CIO shouldn't be sitting in the big chair if he didn't at least warn him it could all go horribly wrong.
#fuckbeta #iamslashdot #dicemustdie
By Rachael King
Reporter
Half Moon Bay, Calif. — Leave it to Elon Musk to buck conventional wisdom. When Tesla Motors Inc.TSLA +7.29%, the Silicon Valley-based automaker he founded, needed to improve the backend software that runs its business, he decided not to upgrade the company’s software from SAP AGSAP.XE 0.00%. Instead, he told CIO Jay Vijayan to build it himself.
“Initially, I was very skeptical,” said Mr. Vijayan, Thursday, at Constellation Research Inc.’s Connected Enterprise Conference in Half Moon Bay, Calif. But, in the end, “Elon was right,” he said, adding that the new system gives his company the speed and agility it needs. His team built it in just four months.
Guus Schoonewille/AFP/Getty Images
A view of a Tesla car on an assembly line
Last year, Tesla was facing delivery delays of the all-electric Model S which it introduced on June 22, 2012. At the same time, Mr. Vijayan’s team of about 25 software engineers was working hard to build a system that could support ramped up production. The improved information technology systems are important for managing high volume production of the Model S, according to company filings. The system went live in July 2012.
Backend software, known as enterprise resource planning software, can make or break a company. SAP has become the world’s largest business software company by building incredibly complex software that can manage customers, suppliers, and the entire lifecycle of a product. SAP says that it is a leading provider of technology for the automobile industry, with nine out of the top 10 companies running SAP applications.
The software is widely used by other large companies as well. Hewlett-Packard Co., for example, uses SAP software to manage the operations needed to sell its printers, servers and PCs. H-P CIO Ramon Baez, also attending the conference, told CIO Journal that it operates at too large a scale to build its own custom enterprise resource planning software.
“You can shoot yourself in the foot if you don’t know what you’re doing,” said Mr. Vijayan. “You need the right team,” he said.
Yet, Mr. Vijayan was in a tough spot. It can take more than a year and millions of dollars to roll out SAP software because of all the integration required. For example, NTT Data is currently undergoing a two-year, $20 million enterprise resource planning consolidation. Tesla didn’t have the time needed to undertake such a project. By creating a custom software project, he was able to get it up and running quickly, partially because it didn’t need integration of disparate applications. Because Mr. Musk made a clear decision, it also helped Mr. Vijayan get immediate cooperation from business leaders.
Yet, there will likely be challenges ahead as Tesla grows. Building and running a lightweight enterprise resource planning system can be done when a company is relatively small but the problem is making it scale, Ben Haines, CIO at Box Inc. told CIO Journal.
“I’m super confident that it’s going to be able to scale very well,” said Mr. Vijayan. “It’s now one of the best systems we have.”
Maintaining it another. One of the hardest things to do is keep up with tax and regulatory changes in your software. You have to be aware of a change before you can implement it.
the major advances in civilization are processes which all but wreck the societies in which they occur - A.N. White
When every organization did the same thing, had in-house staff to support it, and didn't have to bother with consultants. It can be a problem to keep track of all the different legal changes in the various locations though.
You don't get ahead in SPEKTOR by saying "no" to Hank Scorpio. You get fed to the sharks.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
Do we really need to qualify the Model S as "all-electic"? This is a story about Tesla Motors... of COURSE the car is all electric.
Menards, the home improvement store chain, does a similar process.
If it is remotely possible, every piece of software is written in house. From scheduling, project management, even an FTP client was all written in house, and sucks.
They even used to alter the pinouts on RJ-45 Ethernet cable jacks to prevent "non-Menards" hardware from being connected to the networks at the stores. Nevermind that this required almost a full-time person to "make" the cables required for a nationwide chain, or that the cables they sold on the shelf wouldn't work in the store, it was MORE SECURE!
If it is the sort of thing the people developing themselves will have to be using (I don't mean same company, I mean literally the exact same people writing code has to use said code), then I think I have seen greater success. In other words, the new thing is born out of people writing their own out of a sense of frustration with what they do day to day. A critical facet for this is that such projects are 'skunkworks' and are never on the radar until they already are pretty successful. One thing making these things look good is that when they tank, usually only a handful of people even know it existed. They are developed at a 'when its ready' pace with annoyance driving progress forward in the absence of some management pressure to deliver.
If business executive says 'the cost for this software is too damn high' and then assembles a team to effectively complete with the vendor solution, that generally pans out poorly almost all the time.
I bet it uses a beowulf cluster architecture. Just make sure some idiot from accounting doesn't spill a bowl of hot grits on the server. Even with a journaling filesystem like ext4, or the superior ReFS, hot grits can petrify most sys admin types.
I wish these Tesla folks the best of luck on this homebrew. In the end though the ROI and TCO will surely be much worse than a suitable off the shelf package from an established vendor like Microsoft or IBM. It may not matter, though, because Tesla will likely flameout and become the next Solyndra
Wow - that's why the CEOs make big bucks...tough decision...SAP, or build your own. Having used SAP, I would gladly farm the build out to a group of freshmen coders...chances are very high the product would be better anyway.
(PS - that's freshmen in high school)
The conventional wisdom is to use packages for anything that's not unique to your business, and build anything that is critical to your company's success. If your company is extremely innovative (meaning that you're trying to innovate everywhere -- how teams are built, how they interact, who makes decisions, etc.) then you really have no choice but to build everything. That's the situation Musk is in. His company is fiddling with pretty much everything, hoping to invent the "company of the future." That _doesn't_ mean it's a good idea for every CIO to follow his path. In fact, for _most_ CIOs, this would be suicidal.
Context is everything.
"Very fast, without using a gasoline motor"...?
Most data centers are now looking at green servers, or extremely green servers, including DC power for blade farms, just as a cost-cutting measure.
It's like building a Tesla superhighway from Vancouver BC to San Diego CA with fast battery swap facilities so that you can actually drive an electric Tesla from one border to the next. People said it couldn't happen, but Tesla made it happen.
Btw, the Tesla that burned was just a few miles from here, but our news has lots of cars and trucks burning all the time - they're actually SAFER than gasoline cars.
-- Tigger warning: This post may contain tiggers! --
but "enterprise" (aka Patronage Fiefdoms) prefer to spend big money on invoices from other "enterprises" rather than trust their own people to do anything. That way if anything goes wrong they can just blame the vendor, have someone to sue, etc. It's pathetic but we have a lot of pathological culture in our large organizations. Starting with them being run by people who don't know how to do jack shit but get hired as "executives".
Given that they only spent a few months on it and don't have experience building broadly applicable SAP systems, we can be pretty certain you are correct in this statement:
> Their system is probably custom-tailored to their business processes. Not only would it not be appropriate for many other businesses ...
It's probably still true if we change a few words:
> Their system is probably custom-tailored to their current business processes. Not only would it not be appropriate for many other businesses, including Tesla a year or two from now, ...
Generally, you should build within your core competency, and buy generic systems for generic tasks.
Tesla should design their own cars, especially electrical subsystems of the cars, but buy trashcans, spreadsheets, and SAP.
Their SAP needs aren't that different from the next company down the road.
In a gray area, where you need something customized to your needs, but it's mostly the same as what other companies use, FOSS fits the bill. You get the 95% of common functionality free, then build the 5% that's unique to your needs.
The key thing people should get from this is that shoe horning a 'generic' monstrosity like SAP into any business is no way to meet a company's individual needs. SAP may do many things 'good enough' but it also does many more things like 'crap', because it's generic. If you simply want to burn money on untrained monkeys, SAP is for you and you'll pay for it (through the nose) for the remainder of your days. But if you're serious about your business and making the most of your IT resources, you don't hobble the company with an infrastructure that 'sort of fits'.
Does that include the time required to learn German?
In my experience, the biggest problem is when the CIO is not allowed to refuse requests. Once that is cleared (and the CIO is competent) then projects get finished on time and on budget.
In this case, it sounds like Elon had a lot of confidence in Jay's ability as CIO.
Tesla does a tremendous amount of the work in-house. This includes things like the class A metal stamping, battery packs and a slew of custom parts and electronics. Most auto makers warehouse pre-stamped body panels and parts. Tesla warehouses raw rolled steel and aluminum. They make the parts as needed. They have one of the most automated factories in the world so it's unlikely that an outside supplier would be able to do it cheaper.
While they do have a lot of things they get from other vendors, it's a fairly small list in comparison to most transportation manufacturers. In addition they have a relatively small number of products they make (including parts for other auto makers). Because of this they simply don't need SAP. It's a size and scope that you could do in-house. GM or Ford could never scrap their logistics suite and have a replacement in 4 months.
"exactly meets the needs of the business" is important for some things, a huge waste of time and money for others. Those "some things" where it matters are generally the core competency of the business - what sets them apart from competitors. Google search needs a database that exactly meets their needs for searching a huge database. MySQL won't meet their need. For 99% of businesses, building a custom database engine would be stupid - MySQL, MS SQL, or Oracle would meet not only their current needs, but also their future needs.
Future needs can be a huge hidden expense for custom work; you've saddled the company with a requirement to build 2.0, 3,0, etc. on down the road if your business is built on something custom. So you should ask yourself "does the next company down the block have a similar need as we do?" If so, you and the company down the block should probably be sharing the development cost by both buying the same off-the-shelf software. You don't custom design your own trash cans, and most software is the same - yours should be about the same as the other guy uses.
If off-the-shelf software provides 95% of what you need but you need 5% custom, that's where FOSS is a perfect fit.
You get 95% of it done, tested and ready to go, for free, and you just develop the 5% that you need special.
ANYTHING is better than SAP, so this doesnt mean much.
They're always good for a laugh.
We've had a client who, for years, has been threatening to move off to his own little CRM system that one of his in-house techs cooked up. He does this, mostly, because he thinks he's going to frighten us into giving him a free upgrade of his current software.
We always make sure to mute the phone when he does this, so he doesn't hear us laughing at him.
His tech's solution is basically a Fox Pro front end on an excel spreadsheet.
And it doesn't even do a tenth of what the client needs, let alone come close to the functionality of his current package.
Sure, Musk can actually afford to hire a group of REAL programmers. But, still, they're reinventing the wheel, and there's no guarantee the system's going to grow with the company.
Chas - The one, the only.
THANK GOD!!!
Sure they built it in 4 months...
But likely spent the last 9 years figuring out why SAP was bad. Hence they knew what they wanted (by now)... Hire some good s/w developers and voila... you'll have a better system from the get-go. That's business systems 101: it's all about domain knowledge. Sure they built it in 4 months, but I see it took them 8.6 years to create it... by understanding why the SAP solution sucked and the experience on what worked and what didn't.
If they started from scratch with no SAP experience.... well I'm sure we'd see a different story. The same story as Oracle, MS, HP, IBM, and SAP (i.e. their in-house systems suck big time).
Now some new MBA graduate will disagree: now new systems can be built in 4 months, muck did it... then again...
I can see the risk aspect to this at a 'normal' company with the typical suit and tie CEO who rose up from sales or marketing. Somehow, though, Tesla probably has some things going for it it that other businesses don't.
For one, a CEO who has built an Internet software based business in an era where you built it yourself because there was nothing else to base it on. The entire company and product they are producing is unlike anything else out there and a lot of what they produce they have to produce themselves from scratch, so there's a culture of "do it yourself" already in place.
Given the nature of the product, I would doubt there are many employees at Tesla, especially in the technology side of the business, who are there solely because it is a paycheck and there's free coffee. Most of the employees are probably there at least partly because of some belief in the product itself or the (potentially) environmentally transformative nature of the product, which makes them likely to be more highly motivated to see the company succeed than the typical employee who is motivated more by a sense of career achievement, compensation, etc.
I would also bet the employees in any technology-oriented capacity at the company are smarter than the average bear. Given Musk's drive and background, the technology hiring standards and internal respect for IT are probably much higher at Tesla, than at a company that makes run of the mill widgets.
So while I agree that home-brew systems have a better-than-average chance of failure at a typical company because of tech-ignorant management, IT staffs of average ability and motivation, Tesla has a lot of things going for it that make it more likely they will succeed.
At that rate in the valley, they just paid around 1.25million for that system... 25 devs sounds like a big time nowadays....
That's probably true, from the very little I know about SAP. Is there not a good off-the-shelf or customizable alternative?
I don't think it matters that their leadership _can_ do it. Do they _want_ to become an enterprise software company?
If not, it's a distraction from the goal. If they want to be an electric car company, they should focus their energy on electric cars, not email, SAP, staplers sandwiches or anything else they _could_ build.
Disclaimer - Some have posted that SAP is CRAP and there is no reasonable alternative. I find it hard to believe that there is no off-the-shelf software to fit the need, but if so, that would justify building it, just because they have no reasonable alternative.
This sentence from the summary is just great:
“When Tesla Motors needed to improve the back-end software that runs its business, CEO Elon Musk decided not to upgrade the company's SAP system.”
Someone should make a poster from it.
To me one of the 'hidden' returns on a gamble & investment like Tesla has made is a social one. I can't even imagine the pride the IT team at Tesla feels to go from resetting user passwords to bragging to their friends that they built from scratch an operating ERP system. In a podcast Jay Vijayan mentions that the upfront costs were similar in analysis, but the later savings in cost can be 're-invested' into the people and organization. To me it seems a no-brainer to embark on this investment, since the returned value is something that can't be reasonably purchased. (IMHO) podcast here: http://www.metisstrategy.com/interview/jay-vijayan/ -Ryan
It's who's selling the solution. The sales people cater to the execs/management and know the buzzwords that make the all tingly.
If the suggested solution comes from IT/Bottom up it's usually a lot of details they can't grasp and don't really care about.
...that if you do something like this, numerous ISO standards and other auditing bodies follow a formal ERP methodology. There are also issues of compliance with GAAP (Generally Accepted Accounting Principals) and most assuredly, the IRS.
People "run there business like everyone else" for a reason.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
CEO Elon Musk decided not to - that's why your car is covered in shit.
Elon Musk is the alpha-dog to rule them all. And not surprisingly, he hires alpha-dogs and superstars in all his businesses. THIS is how they achieved the near-impossible, by engineering and launching their own man-rated launcher and spacecraft all by themselves.
We know that small teams of highly-motivated and highly-skilled people can achieve great things. So it should really come as little surprise that they can pull writing an in-house SAP replacement in such a ridiculously small amount of time.
Guess we're seeing just how well the 'only hire A-players' policy works...
It isn't a backend system-- it is a tweet.
"Those "some things" where it matters are generally the core competency of the business - what sets them apart from competitors."
I tell you a secret: in this day and age, what sets a company apart from competitors is the way they capture information, how they analice it and what they do with it. It is not manufacturing, it is not marketing, it is not distribution and it is not selling.
On a side note, Nicholas Carr was utterly wrong.
"partially because it didn’t need integration of disparate applications."
I would say that the only way Tesla was able to do this was because they didn't need to integrate disparate applications. Most SAP integrations and installations fail because they have to connect to every other system within a company. Tesla has no legacy so therefore it would be easier to do so. I would say this, there are a few cloud-based SAP solutions available that could have been brought up in the same amount of time or less given what little constraints it appears to have been put on them.
I guess you're unfamiliar with Bezos and unfamiliar with how and why Amazon began. Books are not what makes Amazon special. The idea of books came after Bezos designed the system that makes Amazon special.
Bezos studied engineering and computer science at Princeton, graduating magna cum laude.
He then went to work doing IT for Wall Street . From beginning to end, he's been about expanding computer technology. He didn't build infrastructure in order to sell books, he used books and other easily shippable products to monetize a computer based distribution system. You may notice they sell a heck of a lot more than books - because books are an readily replaceable accessory to their actual business. That's why they don't write books, they buy them because books are not what makes Amazon special.
The idea for Amazon came to him while he was traveling a across the country and he heard that the supreme court ruled internet sellers don't have to collect sales tax. He decided to combine that with his skill at building large scale infrastructure and put together a mass market system selling stuff on the internet at a discount. What to sell using the system he designed? It should be valuable enough to ship. You don't sell concrete or soda online, shipping would be a problem. Electronics have high value per pound, but quickly lose value in the warehouse. The post office has a special extra low shipping rate for books, so books were good product to start with. The product was chosen to fit the distribution infrastructure. The infrastructure wasn't built to put his (nonexistent) bookstore online.
I wonder if this Telsa product will go up in flames?
What one fool can do, another can. (Ancient Simian Proverb)
Actually there's a company UNIT4 that positions themselves as having the best ERP solution for fast changing organisations.
(disclaimer : i'm a happy customer)
Just curious...
This type of Wall Street Journal 'article' should not be allowed for posting.
Dear Mr Musk. Please produce an inexpensive model electric car that get about 45 mile range and with a top speed of around 50mph! I nee a get around town car. That's all. Just something I can go run around in that recharges using an extension cord. Please Please. India already has one called "REVA". The ZAP car also runs on 6 lead acid batteries. Please please. Low cost. Get around town vehicle. That just may save your company sir !