Ten times more productivity. One thousand percent more data. Nearly 10,000 more employees.
That’s the result — so far — of an information technology transformation that General Motors began in 2012, a massive effort to undo years of outsourcing those increasingly critical functions and rebuild them in-house from virtually nothing.
For GM’s global chief information officer, Randy Mott, an IT veteran and mathematician who joined GM specifically to execute that plan, those numbers add up to a successful first stage of the project. Now Mott’s job is to unlock the potential of the operation he’s created, to bolster GM’s bottom line, and help position the automaker to be a leader in connected and autonomous vehicles.
“In pretty much every respect, the transformation is complete,” Mott, who’s based in Austin, said during one of three in-person or telecommunication interviews. “Now we’ve been really focusing on, how do we drive innovation?”
Pinpointing many of the projects implemented since CEO Mary Barra’s predecessor, Dan Akerson, handpicked Mott to lead the automaker’s IT operations is daunting. They include simple timesaving efforts, ways to streamline dealership and brand websites and complex tools for manufacturing and supply chain logistics that already have saved the automaker perhaps billions of dollars. Among the biggest early achievements was that GM now says it knows the exact profitability of every vehicle that rolls off an assembly line.
GM also has created a private internal cloud — nicknamed Galileo — to improve its business and IT operations, including four innovation centers and two data warehouses. They are handling triple the number of projects that the automaker used to commission simultaneously and completing them in half the time.
“IT is core, I think, to GM’s revival, and I think it will be core to their success in the future,” Akerson, who retired in January 2014, said in an interview last week. “We did map out a five-year plan, and I’m pleased to hear that much of it has taken form. We knew what we wanted to get to, and it’s been achieved in large measure.”
The IT operations arguably can influence every part of GM’s business. While not the driving force behind monumental decisions such as exiting unprofitable vehicle segments and markets, including the sale of GM’s European operations, IT is helping Barra and other senior leaders to make quicker, more well-informed decisions than executives ever could before.
In next week’s issue
Read what GM’s IT transformation will mean for its dealerships, as well as more reflection on the project from former CEO Dan Akerson.
“The reality is, we’re an enabler,” Mott said. “That’s our job. I think we’ve done that, but I think we can do it even more and better.”
Now, more than 80 percent of GM’s IT employees develop tools and find ways to be more efficient, rather than just “run the business,” as vendors had been doing previously, Mott said. It’s a major reversal from 2012, when 90 percent of operations were outsourced to 35 agreements with outside companies and the automaker had only about 1,400 IT employees of its own.
GM’s two enterprise data warehouses in suburban Detroit — consolidated from the 23 outsourced centers there were in 2012 — house 88 million gigabytes of data, 11 times more than the automaker had produced five years ago, according to Mott. That excludes data from a fleet of more than 100 autonomous Chevrolet Bolts in California, Arizona and Michigan tested through Cruise Automation, which the wholly owned subsidiary stores locally.
|These are some of the ways GM has transformed its IT organization over the last 5 years.|
|In-house IT employees|
|Time spent on innovation|
The amount of data will continue to increase, as nearly every vehicle GM sells globally is connected through OnStar, 4G LTE or a host of brand apps and websites. The automaker has more than 6 million vehicles equipped with 4G LTE.
Les Copeland, GM’s CIO of global data strategy and services, says the company is the leader in the amount of data brought in from vehicles.
“We’re second to none in our industry,” Copeland said after a demonstration of GM’s new Maxis internal data system here. “We are very much geared toward leveraging our data to drive business outcomes.”
Maxis, essentially an advanced search engine of GM and third-party data, is one of the most substantial initiatives recently developed by the IT organization. GM could use it to project future warranty or recall costs, break-even points during a recession, or market and vehicle segment trends. Manufacturing executives could monitor capacity and vehicle production by plant or anticipate plant downtime based on current and historic sales trends.
“What typically yield the biggest value are when you can predict outcomes or you can prescribe what to do,” Copeland said.
Charlie Russell, GM’s senior manager of analytics and data services, described Maxis as a data “gateway” for all employees “to find the data they need anytime, anywhere, to make data-driven decisions.”
Maxis was introduced during an IT town hall attended by Barra in August, after a beta launch with IT data employees in June. It officially launched this month.
Maxis is one of more than 800 projects the IT operations are expected to deliver in 2017, up from more than 700 annually the past three years and “a couple hundred” before the insourcing, Mott said.
He said GM was the only company in his 40-year career, which has included Hewlett-Packard Co., Dell Inc. and Wal-Mart Stores Inc., that did not have a backlog of IT work. It now has two years’ worth.
GM scored a “critical win” in the first years of the insourcing effort, Copeland said, by gaining the ability to know the profitability of each vehicle based on its vehicle identification number. An outsider may think it’s a simple task that the automaker should have been doing for decades, but the outsourced IT operation and vast number of components in a vehicle had prevented it.
“When I came in, we did not know the product profitability of a model within Chevrolet,” said Akerson, who became CEO in 2010 two months before GM went public. “Now we have the profitability right down to the car by VIN number. When I look back on it, I marvel at what we were able to do in my term, because it was not easy.”
The implementation of such programs has allowed GM to better concentrate on its future and “transportation as a service,” while many of its rivals, including Ford Motor Co. and Toyota Motor Corp., have more recently announced investments in IT operations and data storage.
“I look at mobility and IT as conduits for each other,” said Kristin Schondorf, executive director of automotive and transportation mobility at EY, the consulting firm formerly known as Ernst & Young. “IT is important as you start to become a service organization. It becomes very critical.”
This month, Ford broke ground on a $200 million advanced data center in Michigan to support the company’s “expansion to an auto and mobility company and expected dramatic increase in data storage needs,” it said in a statement. The investment is in addition to a data center that’s part of a multiyear investment at its Dearborn, Mich., headquarters, for which the company has declined to provide a dollar amount.
Last year, Toyota opened a data-harvesting startup in Texas called Toyota Connected, in connection with what it called a “global cloud ecosystem” and “mobility services platform.” The company manages global cloud services — which incorporate networks of remote servers to transfer, store and process data — for Toyota.
Many of GM’s decisions in recent years, data-driven or not, have done little to drum up enthusiasm for the company on Wall Street. Mott and others hope the IT operations help change that.
The IT transformation, Mott said, was self-funded and each year never exceeded spending of the previous year. “That was a requirement,” he said. “Obviously, we’re trying to grow [earnings] to the Street.”
To underscore the direct impact that individual IT projects can have on overall business results, some employees’ cubicles at the innovation centers have companywide goals posted in them.
Mott declined to specify the amount of GM’s IT investment or savings expected from the IT initiatives, but both could be in the billions. GM’s IT operations were estimated to have a $3 billion budget when Mott began insourcing in 2012.
“It’s very competitive for our industries, and quite frankly, most industries, as a percent of revenue,” Mott said of the investment GM made. “It’s competitive, and it’s not a drag on our performance.”
GM’s revenue last year was $166.4 billion, 9.2 percent more than when the company started the IT insourcing. Its earnings before interest and taxes were $12.5 billion in 2016, up 16 percent from 2015.
IT growth, talent
GM’s IT transformation helped position the automaker for emerging initiatives such as its Maven car-sharing service, the acquisition of self-driving startup Cruise Automation and development of over-the-air software updates.
The impact on GM is expected to continue rising with every vehicle it sells and each Bolt it adds to its autonomous fleet. GM, Copeland said, has identified “four years of opportunities [to] potentially drive key business outcomes.”
He said those include vehicle data to analyze performance and quality of certain systems or conditions; market forecasting and strategy such as consumer behaviors, pricing and incentives; competitive analysis and benchmarking; and assessing new business opportunities such as service offerings and product entries.
Mott said GM’s IT organization is able to handle all of those initiatives, including over-the-air updates that Barra said will be possible by 2020, at its “current expenditure level.”
“We spend a significant amount of capital every year on just refreshing the technology,” Mott said. Every two weeks, the IT operations review and implement new or updated programs for their employees. He said the constant stream of new technologies has helped the automaker attract and retain high-demand talent.
GM placed its four IT innovation centers in Austin; Chandler, Ariz.; Roswell, Ga.; and Warren, Mich., to be near well-known IT incubators and within 200 miles of more than half of the top computer-science universities in the U.S.
The company has hired more than 3,000 recent college graduates from about 100 universities, including actively recruiting at 40, Mott said. The new employees are allowed to choose which center to work from, as the automaker has added nearly 500 telecommunication systems for day-to-day meetings. Each center has its own unique characteristics and common workspaces, similar to those made popular by Silicon Valley tech companies.
Mott, 60, said he plans to continue with GM for at least the next four or five years — long enough to see the new hires help shape the industry’s “next-generation innovation.”
“This next chapter in this industry is a new and exciting chapter, and being a part of it is about what I want to do,” he said. “The objective is not to keep cleaning up stuff. The fun part is actually working on the business-enabling kind of technologies.”
Fuente: Automotive News