GM IT Steers Through the Economic Storm

The global financial crisis has thrown businesses across all industries into disarray, with the auto industry being one of the most tempest-tossed. And perhaps no company is suffering to a greater degree—or more publicly—than General Motors.

With a multibillion-dollar federal bailout package in the offing, GM is consolidating and tightening its operations, reducing its number of vehicle lines and putting new plant openings on hold. IT, like all parts of the company, is under the microscope.

"Costs get scrutinized harder and harder every day. Projects that are discretionary are getting put on hold," GM CTO Fred Killeen said in an interview with eWEEK.

In keeping with its classic role of supporting business operations, when an older plant is closed or a new plant opening is delayed, IT must keep in step. "A lot of the IT costs that we have are tied to the facilities we have," Killeen said.

Since GM's IT business model is based on outsourcing, contracts with outsourcers are written to be flexible enough to scale up when an acquisition is made or down when a plant is closed and the scope of work provided by the outsourcer is correspondingly curtailed. That kind of flexibility will come into play if talk about GM selling units such as Hummer and Saab and consolidating brands like Pontiac is borne out.

But the world's No. 2 auto maker can't focus exclusively on damage control. To emerge from the current crisis as a strong player and aspire to regain its status as No. 1, GM must plow ahead with new vehicle designs as crucial new model years loom on the horizon beyond the turbulent 2009.

"It's critical they do not delay their future product programs," said John Wolkonowicz, senior auto industry analyst for North America at IHS Global Insight, an analysis and research firm. "They need to keep those on track. At the end of the day, this is all about having the best products. 2011 is a critical model year for both GM and Ford."

Although he has plenty of work to do to help his company ride out the financial storm, Killeen is not losing sight of the need to align GM's IT initiatives with the company's larger strategic goals. "If you don't invest in the future of the company, you won't have one. In a crisis, you have to decide what you need to be here tomorrow and then what you need to be here in the future," said the CTO.

Killeen and his GM IT team, headed by CIO Ralph Szygenda, are avoiding panic and carrying through with many current initiatives—in some cases, with renewed emphasis. "The core principles that we have really have not changed. We have always had a strong focus on efficiency and technology that supports globalization. Maybe our sense of urgency and focus has increased," Killeen said.