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Speed: Automakers rely on IT to build cars faster (and cheaper)

By Linda Rosencrance
August 12, 2002 12:00 PM ET

Computerworld - For General Motors Corp., Ford Motor Co. and DaimlerChrysler AG, the bottom line is, and always will be, to sell more cars than the other guy. To win that race, especially in the current economy, an automaker has to build cars better and faster than its competitors and sell them at a higher profit margin. To accomplish those goals, all three automakers are relying more than ever on IT to streamline operations, cut costs, improve quality and speed up production.

The biggest of the Big Three, GM, is pushing to become the world's first digital manufacturing company by embedding digital technology into virtually every one of its core business processes and linking them on common computing platforms. The idea is to shave time and costs off everyday operations by connecting people, processes and technology in real time.

CIO Ralph Szygenda says the ultimate goal is to revolutionize GM's culture and change the way consumers, suppliers and dealers do business with the company. The only way to do that, he says, is to marry the adroit application of IT with the opportunities provided by the Internet to change processes as well as culture. It's a transformation that's already well under way with several Internet applications.

Ralph Szygenda, CIO at General Motors Corp.
Ralph Szygenda, CIO at General Motors Corp.

GM's SupplyPower Internet application enables 12,000 suppliers to conduct various purchasing transactions online. Its DealerWorld Web application connects car dealers to GM so they can bid on leased vehicles that were returned to other dealers and are now owned by GM's financial services arm, General Motors Acceptance Corp. GM's BuyPower is a consumer Web site that provides data on all GM models.

For the past six years, Szygenda and his team have been cleaning and rebuilding GM's worldwide IT house. When they first started, GM's business operations weren't very well integrated with IT. In fact, they were separate business units, Szygenda says.

"We had to change the speed of how we do things at GM," he says.

So he and his team of 1,700 Information Systems and Services (ISS) employees ripped out 3,500 of the company's 7,000 legacy systems and replaced them with $1.7 billion worth of Internet applications. Today these are the foundation for GM's business web, which links the company with its suppliers, dealers, customers and employees. GM's ISS group develops applications, but Electronic Data Systems Corp. in Plano, Texas, its primary outsourcer, builds and implements them.

The business web also incorporates innovations such as customer data warehouses, integrated service centers and customer relationship management applications. Those features are intended to create value by attracting and retaining customers through cross-selling and optimizing customer interactions with the company, Szygenda says. There's also a significant financial payoff: Since 1996, streamlining IT has shaved about $800 million per year from GM's annual IT budget, which is $3 billion for 2002, allowing the automaker to recoup its initial investment of more than $1.7 billion twofold.

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