GM Takes Wraps Off Outsourcing Model

CIO Ralph Szygenda believes GM's IT management business model will be in wide use for decades.

Two-and-a-half years ago, General Motors Corp. unveiled to eWEEK its third generation of outsourcing—a plan in which contracts would be parceled out among different suppliers that would have to compete for the work and then cooperate in getting it done.

/zimages/3/121638.jpgIn an exclusive interview here, GM CIO Ralph Szygenda said the time has come to select the vendors that will bring that plan to fruition. Although contract winners wont be named until next month, Szygenda took the wraps off the contract categories for which providers have been competing.

Because of the unusual dynamics of the outsourcing model, which attempts to meld competition and cooperation, Szygenda said he and his staff have worked closely with major providers in drawing up ground rules under which they can both compete and work together.

"For the last two years, we have been preparing this transition, transforming how were doing things with all the suppliers. There was a two-year quiet period," he said.

/zimages/3/28571.gifBusiness process outsourcing is growing at a rapid clip. Click here to read more.

Szygenda said he believes he and his team have developed an IT management business model that will be used widely in the decades ahead, one that will not only make IT governance more effective but also enable IT providers to streamline their own operations in becoming more standardized.

"A lot of the growth in the IT industry is stymied because of lack of standardization on things that dont matter," he said. "Companies need to work together. They should be graded on innovation and value."

GM, based here, will award about 40 contracts. A key requirement for successful bidders will be their ability to deal with GM on a global basis, Szygenda said. "Theyve had to show me their global model," he said. GM can now make a product in virtually any country—and sell it in virtually any country. One GM vehicle is made in South Korea and shipped to 120 countries, said Szygenda.

"Very few suppliers have a fully global reach. Some may be strong on some continents but not on others. So they will team with other companies," said Dan McNicholl, GMs chief strategy officer. The result, McNicholl said, is that in each of the 40-odd segments on which GM is entertaining bids, there will be two or three principal bidders, each with up to 10 subcontractors.

Contracts fall into the broad categories of application management, infrastructure management, integration management and other services.

The numerous applications run the gamut from sales and marketing systems to CAD and visualization systems to human resources to the OnStar in-vehicle communications system. Integration management ties these disparate realms together and may include an umbrella role for an integrator to coordinate all corporate IT activities.

Next Page: Stiff standardized requirements.