GM Takes Wraps Off Outsourcing Model - ' Page 2 ' (
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Contract winners will face stiff standardized requirements.
"There are firm cost metrics; all suppliers work as one team. These are the processes to run a GM business," said Szygenda. System delivery must be done according to the CMMI (Capability Maturity Model Integration) framework; service delivery and support must conform to the ITIL (IT Infrastructure Library) framework. There are also standards for architecture management, standards management and contract management.
The third-generation initiative evolved from GMs outsourced IT model, which began when the company acquired Electronic Data Systems Corp. in 1984. GM found EDS as a captive provider to be inefficient, however, and spun the Plano, Texas, company back out in 1996, the same year Szygenda arrived to take the IT reins.
In the EDS era, GM had 7,000 information systems. Szygenda said IT costs went up every year, and, in 1996, GMs IT costs were the highest as a percentage of sales in the auto industry. EDS still has two-thirds of GMs IT work, but, since 1996, GM has reduced its IT costs from $4 billion to $3 billion and reduced its total IT systems to 2,600.
EDS CEO Michael Jordan said in remarks in Boston last week that he expects EDS will continue to have a significant piece of GMs business. "Were pretty optimistic we can retain a high percentage of the work weve got," said Jordan, adding that he believes GM intends to spread the work among EDS and two or three other big outsourcers.
Click here to read why Stan Gibson says outsourcing is growing up.
As GM has been pushing its vendors to standardize, EDS has come up with a strategy called Agile Enterprise to standardize its own services around several key vendors, including Microsoft Corp., Sun Microsystems Inc., Dell Inc., EMC Corp. and Cisco Systems Inc. Jordan said the Agile Enterprise concept works at GM, where, he said, there is a 75 percent overlap between Agile Enterprise technologies and GMs needs.
Szygenda said the outsourcing plan could become a model for GMs competitors and suppliers but that was never his intention.
"I never started this to change the industry. It just happened. Standards committees never make it happen. It usually takes one company to change the industry," he said. "This may be the largest bid in history. This could be the discontinuity that gives GM a lead."
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