News Column

'Insourcing' More Effective Than Outsourcing: GM

July 20, 2012
General Motors

General Motors' gradual shift from outsourcing most of its information technology services to conducting the work itself is not about saving money, GM Chief Information Officer Randy Mott said.

The move, which will involve thousands of new GM jobs throughout the world and fewer positions at the company's IT contractors, will improve GM's ability to design the kind of software and data systems it needs to make popular vehicles, Mott said.

Mott, who previously held CIO positions at Walmart and Hewlett-Packard, said GM has a better understanding of its IT needs than outside contractors.

That's why he's ordered the company to move 90 percent of its IT services in house over the next several years. Today, GM employees conduct only 10 percent of the company's IT work. The automaker relies on contractors for the rest.

Here are five reasons GM believes 'insourcing' will be more effective than outsourcing:

--Outsourcing has led to too many software applications. Mott estimates GM has more than 4,000 applications throughout the world, and many can be eliminated.

"We want to simplify the environment," he said. "We have lots of applications that are redundant."

--GM needs to expedite product development and decision-making. The company's executive leadership is frustrated at bulky technology systems that slow innovation.

"We need more speed," Mott said. "The companies that win are going to figure out how to do more, how to do it faster and how to be more responsive so the business can change and be imaginative in the marketplace."

--IT contractors don't understand the auto industry. Mott said IT contractors have little knowledge of the demands facing the auto industry. By hiring its own IT development staff, GM can empower workers to deliver IT innovation in the context of how it will improve vehicle development.

"They need to clearly understand the automotive business," Mott said. "They are going to be most effective in doing their jobs if they understand how these things fit together."

--GM can afford the cost of running its own data centers. The automaker is building a data center at its technical center in Warren, Mich. It will be one of two data centers the company will use, instead of the current 23.

IT industry experts say a company as big as GM can afford to manage its own data infrastructure, while smaller companies can't afford to invest in developing IT systems.

"We have the element of scale to do that, and we think we have the motivation to do it better," Mott said.

--GM believes it can find cost-effective, high-quality IT talent in Michigan and elsewhere throughout the world. Mott said the company would lean on major research universities to generate talent and seek out talent in regions of the country where IT companies are concentrated.

"I feel very bullish obviously that I can find the talent both at productivity and an efficiency level," he said.



Source: (c)2012 Detroit Free Press. Distributed by MCT Information Services


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