GM IT restructuring: I’m not convinced

Information Week has published an interview with GM’s CIO discussing the impact of the bankruptcy on the two-billion-IT operations of this huge corporation .
After reading this article, I’m pretty sure that GM’s IT is doomed. The chances are slim that they will turn themselves into leaner and agile organization as it should be in 21st century.

The article reveals “In 2006, GM awarded about $7B (!) in IT contracts to EDS, Capgemini, Hewlett-Packard, IBM and others, and earmarked another $7 billion or so for additional contracts in following years. Szygenda has a history of demanding that outsourcers change their operational practices to fit GM’s needs. One example is their creation of global teams to work on GM accounts”.

Now let me explain how I read this interesting paragraph. These leeches , a.k.a. global consulting firms were charging $200p/h for mediocre consultants and were able to suck $7B worth of blood out of GM and are ready to continue enjoying the party. If you’ll tell me that I’m going over board with $200, let me explain how it might looked on paper – five inexpensive offshore resources at $40p/h each. Can you imagine, in India you can hire a project manager for only $40p/h! It’s like dream come true.

But let me ask you, my dear typical Fortune-500 CIO, “Why did you need that project manager in the first place?”
“Yakov, don’t act silly.  He’d manage a team of 4 developers for this job”
“Why did you need this team?”
“It’s required as per the approved architecture and the project plan provided by our consulting partners”
Sure, it started even before the project plan with dead souls from overseas (see http://yakovfain.javadevelopersjournal.com/dead_souls_from_overseas.htm )was carefully baked into it.

Most likely, it started when these nicely dressed salesmen showed up at GM armed (and dangerous) with beautifully prepared powerpoint presentations showing “where you are now” and “where you want to be in a year, two years, and even five years”. Yes, they knew all the answers. And here’s the road map that will bring you from point A to point B with the help of Global Leeches Ltd.
The visitors would continue, “If you’d hire American resources for the same job, it would cost you $15B, but we can deliver the same suite of products and services for mere $7B.”

Sounds like a good deal, and the orgy of the vampires begins.

The Information Week’s article states that GM awarded $7B in 2006, but you’ll never learn such classified information as how much of this amount was spent on the projects that failed.
Another hint that GM’s IT is doomed is the statement about creation of the global teams. The combination of two innocent words global and team gives me goose bumps.  I don’t believe in global teams.

I’m one of the partners running a small company, and we’ve learned our lesson and would never hire a global team. We cherry pick individuals, put them through THE SAME tough interviewing process as local candidates would go through. We manage individuals. This model works for us just fine.
During the last (tough) year, majority of our clients were not large corporations, but the small ones, and we found the explanation. Solutions that we offer are based on simple architectures that do not require bringing a bunch of consultants lead by a full time manager.   We give our customers an economical solution.

Interestingly enough, when we present our solutions to small companies running on a very limited budget, they are well received by these companies that must count their money. But if we’d present the same solution to a large IT shop, it would not fly. Why? Because individuals and small companies appreciate real costs, track record and simplicity as main artifacts of “real cost of ownership”. Large organizations are more concerned with imaginary artifacts of “savings”, “discounts” and “proven architecture” while keeping large outsourcing budget as it’s easily justifies their IT portion of “managing”.

People in the enterprise architectural committee will quickly “get the message” and will look for technical solutions that can be illustrated with some “serious” architectural diagrams that would help in proving… the need of having a full time architectural committee. But realistically that would inflate the efforts to the extent that would help these individuals in achieving their career objectives pleasing the C-level management at the same time.

The rest of the answers by Mr. Szygenda (GM’s CIO) just confirms that he’s not a leader that GM needs at these trying times. He quotes the statements of the CEO who believes this and that. We know were his believes brought the company. The CIO uses the words could and probably too often.

I see no hope there.

Yakov Fain

One thought on “GM IT restructuring: I’m not convinced

  1. Hello Yakov,

    I worked for almost 7 years for one of the biggest automotive suppliers in EAI global team. GM was one of our main customers btw. The biggest problem in IT was not the technical problems but IT management. It is sad, how such as big IT organizations can be lead by completely morons.
    I left company last year, (other words: my position has been outsourced to India to completely unprepared to these job rookies).
    The result of outsourcing is total drama – EAI/EDI systems are unstable, EDI/xml messages are completely wrong, customers are unhappy.
    How much company saves? Nothing. Experiences are gone forever. They are paying much more then before for normal staff.
    All they gain is that now nobody criticize IT management and laugh loudly on IT phone conferences.

    Now, I am leading a small company and I am having a lot of fun reading about problems with outsourcing IT in global organizations.

    See how outsourcing IT can lead to serious problems
    http://www.youtube.com/watch?v=h1eFN0F7W4k

    cheers,
    Adam

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