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."

Comments

No article

[Anonymous Coward]

Don't bother clicking through - nothing but the same summary.

A risky gamble

[girlintraining]

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.

Re:A risky gamble

[m2pc]

We just went through this exact same exercise at the company I work for. When our antiquated, poorly-designed MRP system started causing too many headaches, we carefully counted the cost of moving to something like Salesforce.com or SAP, but ultimately ended up writing out own system from scratch. After running the two systems in parallel for 6 months to ensure the new system had data integrity we were comfortable with, we cut it off. Having just closed our first month "live" on the new system, I must say it's a real breath of fresh air for both the IS staff and the rest of the company. Gone are the days waiting for the slow moving MRP company to update their slow system to add features or fix bugs for us. Our hands were tied with the old system, and now the door is open to all sorts of possibilities. People are constantly saying "wow, we can do xyz now!" or "this wasn't even possible before with the old system". The daily complaints about the old system have been replaced with daily feature requests and positive comments.

The small team that built it remains on staff, and if something doesn't work, we fix it. If someone requests a feature that makes sense to the overall design goal, we sketch it out, schedule it, and implement it. We carefully weigh everyone's feature requests and implement only those that make sense for the overall "greater good" of the system. That way we keep feature creep down while building something that helps people get their job done faster. In the time between bug fixes and feature request, we are constantly polishing the system to make it more efficient. We now have a DEV environment where we can test out new ideas and features and release them to production only when they are ready.

Since we built ours with FOSS technologies, it's been a joy to integrate with our other trading partners (suppliers, our web store shopping cart, etc). The money we are saving on not having to pay for licensing costs (recurring yearly, never ending), we have invested in hardware and infrastructure to run the new system.

Perhaps the biggest benefit is when the system is released, the company will have a team on staff that knows the system inside and out, because they built it.

I would highly recommend any company considering buying an out-of-the-box ERP system to consider having an in-house team build them a custom solution. With the right group of developers, it can be a really rewarding experience for everyone!

Re: A risky gamble

[Anonymous Coward]

I love that you're so dependably wrong about everything.

article

[Anonymous Coward]

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.”

Re:Now Open It

[CastrTroy]

The question is, does the company even know what it's going to be doing 10 years down the line? Does SAP make it any easier to change as you company evolves over the next 10 years? SAP isn't something you can just install and forget about it. It's just a set of tools. It's like a database server, web server, development environment, or operating system. Similar to SharePoint, except bigger. It doesn't do anything on it's own. You have to do a lot of work to make it work for you.

Social ROI

[polandr]

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