GM splits IT services work, pulls together rivals

06.02.2006
In awarding billions of dollars worth of IT outsourcing contracts last week, General Motors Corp. did three things that may have ramifications for many other users: It officially adopted a multisourcing strategy, it set relatively short contract lengths, and it insisted that the chosen vendors adhere to a set of standards it defined for IT processes.

GM began parceling out what could amount to almost US$15 billion worth of IT work over the next five years, picking six vendors that will split about half of the projected total. Electronic Data Systems Corp. will remain GM's largest outsourcing vendor, with $3.8 billion in new contracts. The other winning vendors include Hewlett-Packard Co., IBM, Capgemini, Compuware Corp.'s Covisint Inc. subsidiary and India-based offshore services firm Wipro Ltd.

But the numbers are only a small part of the story. GM has spent the past two years working to bring together the various vendors and get them to agree to follow similar operating procedures, CIO Ralph Szygenda said. In the resulting contracts, the automaker set standards for about 40 IT processes, such as software development, asset management, computer operations monitoring and end-user notification when problems occur.

During a conference call, Szygenda bluntly described IT as "an immature industry" because of its lack of standardization. Ensuring that the vendors "use the exact same processes" in delivering IT services to GM was the first thing he set out to accomplish, he said. "We did that first because we have to make this look like one GM, not five or six or seven IT companies," Szygenda said.

He added that he thinks at least some of the vendors involved with GM will use the standardized processes on other customer accounts.

Gartner Inc. analyst Linda Scardino said GM's push for standards among its outsourcing vendors is a big step toward the "industrialization of IT" for delivering services to users. "I think it will be influential," she said. "We all have been watching and waiting to see what GM is going to do."