General Motors has written the book on acquiring IT goods and services—literally.
When he embarked three years ago on his landmark outsourcing strategy of handing work to a number of suppliers that would both co-operate and compete, GM CIO Ralph Szygenda said he believed he was entering new management territory where new skills would be needed to manage the various suppliers.
Following the penning of a series of new outsourcing contracts with the likes of Electronic Data Systems, Hewlett-Packard, IBM Global Services, CapGemini and Wipro in June, two GMers now have come up with an extensive manual—called CMMI-ACQ (Capability Maturity Model Integration for Acquisition)—of best practices for acquiring IT hardware, software and services. The work was done with the Software Engineering Institute of Carnegie Mellon University, in Pittsburgh.
The work has ramifications far beyond GM. As organizations globalize, they are finding they must standardize processes so they can repeat them with little modification in different locales around the world. The new methodology is thus poised to fill a void in IT management for big IT buyers worldwide.
"Companies and government agencies throughout the world can leverage this model to become best in class," said Szygenda in a statement. "And IT suppliers can leverage this model to provide more robust and efficient support to their business customers."
"The model provides a foundation that everybody really needs, no matter the characteristics of the organization," said Deborah Yedlin, global director of verification and validation for global systems delivery in the Information Systems and Services unit of GM, in Detroit. The core purchasing methods can be customized with unique practices for different industries, Yedlin explained.
The vendor community also stands to gain from the new methodology, said David Scherb, business development manager for SEI. "Software developers were pleased to reach a high level of maturity with their model. If a customer doesnt understand how to speak about requirements, then a chaotic acquirer can screw up what the developers are doing," Scherb said.
For its part, GM is using it to commoditize transactions with suppliers, Yedlin said. "And its equally attractive to the suppliers. A lot of time is wasted, so the more efficiencies that can be driven into those processes, the better," she said.
Yedlin worked on the project with Hubert Hofmann, global senior manager for global systems delivery in the Information Systems and Services unit. Kathryn Dodson, programme director for the Enterprise Programme Office of EDS, and Gowri Ramani, enterprise strategist for HP Services Consulting and Integration Management Practice, also collaborated on the project.
The initial draft of CMMI-ACQ includes best practices for initiating and awarding supplier agreements, managing the acquisition of products and services through a set of standard measures, acceptance criteria, and supplier deliverables.
Beleaguered GM needs a boost wherever it can be found. The automaker has been struggling to turn the corner of profitability as it has seen its once-unassailable U.S. market share erode steadily in recent years.
GMs drive to increase expertise in IT acquisition comes at what could be an opportune time for the company, as GM shareholder Kirk Kerkorian has spurred talks between Nissan Motor, Renault and GM on expanding the Franco-Japanese partnership to include the American auto giant.
As it is, global acquisition of high volumes of parts and services is one of the key efficiencies enjoyed by the current partnership between Nissan and Renault. That acquisition muscle could be further strengthened should GM bring its new skills to the table in any future three-way partnership.
"We met with GM suppliers for two days. At first they were worried, but with CMMI-ACQ they said they can work with [GM] easier," Scherb said.
The Department of Defense and the Department of Homeland Security have expressed strong interest in the project.
"The new CMMI-ACQ is intended to provide specific guidance to acquisition and program management offices. At US-VISIT [United States Visitor and Immigrant Status Indicator Technology], we are piloting this new model because we believe it will better fit our needs and should help speed process improvement," said a US-VISIT spokesperson at the DHS. US-VISIT is a DHS program to tighten border security.
"DOD now intends to pilot it in government and industry acquisition organizations (including IT) to measure its impact and value," said Kristen Baldwin, assistant deputy director for software engineering and system assurance at the DOD.