General Motors Corp. CIO Ralph Szygenda is in the midst of negotiating the largest corporate outsourcing deal in history, worth about US$15 billion. Electronic Data Systems Corp. now handles two-thirds of GM"s outsourcing, and this rebidding of the EDS pact may have implications for other companies, Szygenda believes, because he wants all the vendors to work to common standards. Szygenda, in an interview with Computerworld, also discussed the importance of IT at GM and what IT leaders need, in terms of skills and education, to survive in today"s corporate environment. (This interview was conducted before Tuesday"s announcement by GM that it plans to lay off 25,000 workers.)
You"re familiar with the arguments raised by Nicholas Carr and his comments about whether IT matters. What"s your take? IT matters a lot. Is there going to be some commercialization, standardization or products and services? Yes. There are certain areas of the business, like ERP systems ... that will become commodities. I think that"s the point he was trying to make. He overstated it, though.
In fact, [IT] will be bigger than ever. Having premium products at lowest price versus premium price -- and it"s kind of the Wal-Mart model -- that"s one [trend] driving the industry. The other one is globalization. And all companies like GM, even though they had operations throughout the world, they were kind of regional. Now they are running throughout the world, and they globalize them. Given those two things, companies are going to redo all their processes again, reautomate them, and I guarantee you at that point IT is not dead.
Do you see IT heading toward any particular architecture faster than some others? Is grid computing, for instance, on your radar? It"s always on the radar. Everything is on the radar. But again, I"ve been around 35 years, so I"ve seen all kinds of changes in the industry. ... Except for the Internet and probably for distributed computing, the PC, I"ve seen things that have been evolutionary but I haven"t seen things that have been revolutionary. ... Grid computing is not revolutionary. The first environment I worked on was advanced scientific computing. ... Effectively, it was multiple parallel processors. So grid computing is not a new concept. It"s just one that is doable and can work.
How do you ensure that IT is aligned with the business at GM? IT people have to be business people to start with. There is no chance of just being a technologist anymore. In what I call precision information technology, that means every dollar that you invest in information technology better deliver business results or you are not going to succeed. ... To do that, you have to understand the business as well. At General Motors, if you look at all the people who work for me, they are great business leaders and great technologists. In the future, [they"re] going to be [the] only survivors, and that"s going to be hard for a lot of people because they didn"t have both of those capabilities. With more off-the-shelf capability, with ERP capability, with offshoring and outsourcing clearly the one aspect that will succeed and continue, will be the information technologist that knows how to transform businesses, not just do technology. ... They will always have a job; they will never have to worry about it. But you have to have both capabilities.
How do you find those people, and what kind of advice would you give to someone moving up the career path? When I started at Texas Instruments nine years ago, I hired the top 30 executives [and] it took me 300 interviews to get those 30. It was very hard to find both business and technology perspective. I think the first is you have to be an expert in technology. That won"t go away. ... Whether you build it or you buy it, you"re the new IT broker. You"re going to try to buy technology to solve a business problem. The second element is you have to know business.
What are some of your IT goals for the next year? You always have process goals. One is globalization at General Motors. General Motors is a 100-year-old company that has been in every part of the world. But today we are redesigning the company. It used to be ... you would design, build and distribute a vehicle all within a country or a region. Today, we will design a vehicle in Korea. We will build it under four different nameplates and variations in maybe eight different manufacturing facilities and distribute it to 124 countries. That changes the whole model of distribution. That"s a major issue.
GM has the most sophisticated logistics process in the world. We buy $90 billion in material and services and, just in time, it has to arrive at factories throughout the world. We can never close down a factory because there isn"t material there. So that"s one thing that we are working on. Then, effectively, [the company is working on] better design of vehicles and productivity. We already cut product development time down from 48 months to 18 months. It"s got to even be shorter -- I"m still looking for the one year to design a vehicle.
But the biggest thing is we are ending a major contract that we had with the split-off agreement with EDS, and now I"m bidding out over $15 billion of IT business over the next five years to every major IT company in the world. It"s the largest corporate bidding of information technology in history, so I have many, many people working on that. Within the next year, major companies will realize what part of that business they"ve won.
EDS was the only company in 1996. EDS now has about two-thirds of GM"s IT business, but one-third has been moved to other people. That business is up and EDS can win as much as they have now or more, or another company can.
At the same time, we"re running standardization of IT processes that all those companies will use at General Motors. It will be the first standardization of IT companies working together and those companies have been at GM working tighter for a year and a half. So IBM has been sitting next to Accenture, next to EDS, next to Microsoft, SAP -- in rooms together -- defining processes that will run the IT business at GM and their businesses together and doing a thin layer of common processes that they will all use. ... At the end of that, there is a potential they will use those processes in all other transactions whenever they work together, which could basically drive common processes into the IT industry -- which I believe will drive the growth of revenue for these companies drastically. Right now, I think the IT industry is stymied by growth because of lack of standardization and commonization. When I bring in, let"s say, Accenture and EDS to do business at a company ... the first six months they have to figure out how they are going to work with each other. ... Then they ask the customer to pay for it. That won"t work. What that does is slow down the business.
What are you looking for in the winning bid or bidders? They have [to have] the competency to help transform General Motors and to work as a team member with other information technology companies. It isn"t lowest price -- you"ve got to realize that information technology is a catalyst for change at General Motors. The whole end goal ... is to build the greatest cars and trucks, not to build great IT -- it"s just an enabler. Whoever who can help me do that, do that together ... that"s going to be the company that wins at General Motors.
When do you expect to make a decision? By the beginning of next year we will start announcing.