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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."
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Don't bother clicking through - nothing but the same summary.
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.”
Did you see where it only took 4 months? I haven't seen an SAP **upgrade** that went that fast, much less a deployment.
Of course, the reason for that isn't the (complete) ineptitude of people at SAP, or the superstar statusing of the engineers at Tesla.
Its easy to build a one-off solution that works for what a company needs on day one, do it quickly and be successful. Its vastly harder to build a one-off solution that still works for what the company needs done ten years down the line. And damn near impossible to build a one-off solution that just magically has equivalent success and value to other companies just by open sourcing it.
SAP upgrades can easily take that long, but SAP can easily run organizations an order of magnitude bigger, and two orders of magnitude more complicated than Tesla.
IMO, the key thing people should get from this is the importance of making sure you buy what you actually need. If Tesla could replace their SAP system in four months with 25 engineers, odds are pretty high they had overpurchased when they went with SAP to begin with.
>> SAP can easily run organizations an order of magnitude bigger
..."
> I lost it at easily.
I misread it as "SAP can easily ruin
Also FatPhil on SoylentNews, id 863
"Tesla should design their own cars, especially electrical subsystems of the cars, but buy trashcans, spreadsheets, and SAP."
Correct.
MBA-grade correct.
And that pesky Bezos should focus on his company's core competencies, selling books, and let the generic part, like IT, to the good known providers on the field, as all other e-companies in these dot-com boom days are doing.
After all, even if he ends up with a excellent IT group, what would he do with the spare capacity? Losing tons of money, I say.