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Soon after the merger of Daimler-Benzag and Chrysler Corp. six years ago, Susan Unger was named CIO and head of global IT operations of the merged company. Since then, she has carried out the global unification of DaimlerChrysler AGs IT organization and the implementation of many common IT systems worldwide. In an exclusive interview with eWEEK Executive Editor Stan Gibson at DaimlerChryslers U.S. headquarters in Auburn Hills, Mich., Unger explained her approach to IT management.
You have strong ideas about delivering IT value. Can you explain?
About four years ago, in the midst of the dot-com hype, I was presenting at the Automotive News [World] Congress. I had a different message, which was that in the “e-world,” you have to have business value. It was kind of funny at the time because I was a voice in the wilderness talking that way. People said, “She doesnt know anything here.”
We focused on B2B [business-to-business] initiatives. Its amazing. A number of my peers have had pretty major write-downs of a variety of IT projects. We have had none because we were kind of religious about ROI [return on investment]. Our organization has never felt that we do IT for ITs sake—it has to have business value.
A few years ago, there was a certain hysteria, a belief that all auto sales would happen online and that the auto dealer was going the way of the dodo bird.
Absolutely. But a car appeals to emotion. You want to touch it and drive it. However, the Internet is great for providing information. Ninety percent of our customers have used the Internet as a source of information.
What is your single biggest IT project right now?
Were implementing a software product from Dassault [Systèmes AG] called DELMIA. Whats really cool is that when an engineer is designing a vehicle, we can use the product to create a virtual manufacturing environment—including your work cells, your line, your equipment—and simulate your workers installing a wiring harness or whatever else. We believe [DELMIA] has the same capabilities that [Dassaults] CATIA [design collaboration software] had 15 years ago. It will revolutionize the automobile industry. The other big thing is the DealerConnect project, which we believe is two years ahead of any competition. It gives the dealers a portal on which they can do all of their work.
One of the first projects was unifying both companies e-mail systems. Where is the e-mail system today?
We are 100 percent on one e-mail system today. We use [IBMs] Lotus Notes. We picked it primarily for the groupware function. Before the merger, there were 17 different e-mail systems. Were on Notes 6.0 at this point. We have close to 10,000 different applications on Lotus Notes, from product development to manufacturing to sales and even after-sales.
Do your engineers collaborate globally—for example, sending CAD drawings around the world?
Yes. We have an e-engineering portal. We have a lot of things that we need to collaborate on between Mercedes, Mitsubishi and the Chrysler group. Even though all of us were on the same CAD system, we were using different versions: Chrysler was in 3-D CAD; Mitsubishi was on 2-D. We had to retrain the engineers.
Then we had to collaborate. Thats where the e-tools came in. That was one of our first e-projects; we call it the e-engineering portal. This portal allowed our engineers to get CAD information and parts information. We have close to 20,000 internal people using that today, from engineering and finance to advance product stream to service and after service.
The Crossfire is a good example of how we have used the e-engineering portal. We had a challenge to get the whole thing done in 18 months with no incremental IT budget. We had to collaborate between Karmann [which builds the Crossfire], Mercedes and the Chrysler group, and we were able to do that with a lot of the IT tools. We have expanded that e-engineering portal in the past year to our suppliers.
Next Page: Quantifying the benefits of the Covisint online auto parts exchange.
Covisint Benefits
That raises the topic of the Covisint online auto parts exchange. Can you quantify the benefits that Covisint has rendered to DaimlerChrysler?
Last year alone, we had close to 200 online bidding events. We saved anywhere from 15 to 20 percent of what we would have spent otherwise. More important was the time factor. You could have stuff wrapped up in a matter of days instead of months with the old processes. Last year, we doubled the online bidding that we did on Covisint.
Youre known for team building. Do you do team-building exercises?
We dont do things like Outward Bound. But we have a top IT leadership event for about 65 people. One year, well have it in Europe; the next year, in the States. Twice a year, in addition to that, we have what we call IIC—Innovation Integration Council. About 230 attend. The networking aspect is extremely important.
Are you implementing RFID [radio-frequency identification]?
We had a pilot last year on it. In a factory, you have paint booths and high temperatures, so you have to protect the tags. It costs about $20 to put a tag in a case. Plastic doesnt work because it wont withstand the heat. We think that, over time, when the cost comes down significantly and we can get a better case for the tags, it will have huge applications for the industry.
Are you using bar codes as a placeholder for RFID?
Exactly. Bar codes can communicate the information that the robotics technology needs. However, with Mercedes, if you get a special child seat option, it uses RFID. If theres an accident, it communicates so that the air-bag pressure is significantly less than what you would normally experience.
Are you satisfied with the level of cooperation among vendors, such as IBM, Sun Microsystems Inc. and Microsoft Corp.?
Yes. We actually have meetings with them two to four times per year. We use the Balanced Scorecard method to evaluate them. It focuses on customer satisfaction, quality, technology and our price points.
Lets talk outsourcing. How much outsourcing do you do?
Probably our biggest supplier today is T-Systems [International GmbH]. They do a whole host of things, including hosting mainframes and servers, but also our network in Germany and applications in the commercial vehicle group and in the marketing arena. We also have dealings with IBM, HP and Sun.
If we can use packaged software, were going to use it rather than create our own in-house version. To reduce customization, we have a rule that there can be no more than 15 percent changed for a piece of packaged software.
Have you looked at GM Corp.s approach to outsourcing?
Like GM, we operate globally. I wouldnt say their strategy is so different from ours. Their biggest supplier today is EDS [Electronic Data Systems Corp.]. Theyre as much involved in the different packages like IBM, SAP and PeopleSoft [Inc.] as we are. I am a real big believer that at the end of the day, if a supplier doesnt deliver, my customers are not screaming at the supplier, theyre screaming at me. If you dont put the proper controls in place, youre going to get what you deserve.
GM CIO Ralph [Szygenda] did a good job on this. Before he came, pretty much everything was run by one company [EDS]. One of the first things that he did was to bring in some senior management to put a control on that. I think that was an important thing. We never gave away the keys to the kingdom.