GM Takes to Offshore Outsourcing

GM CIO Ralph Szygenda discusses the state of the outsourcing industry, how GM manages outsourcers and offshore outsourcing.

Ralph Szygenda is group vice president and CIO of General Motors. Having joined GM seven years ago to spearhead the effort to take control of GMs IT systems from former subsidiary Electronic Data Systems, Szygenda is now readying GM for what he calls the "third wave" of outsourcing. eWEEKs Eric Lundquist and Stan Gibson interviewed Szygenda at GM headquarters in Detroit, where he discussed the third wave and other issues, including the state of the outsourcing industry, how GM manages outsourcers and offshore outsourcing.

With regard to return on investment in IT, how do you identify the opportunities and make sure the money is available?

We have never been totally obsessed with ROI. Theres an analytical and an intuitive aspect with every company and information technology.

Analytically, you can identify a benefit, but you have to execute it. The other thing is intuitive. Between the CEO, the business unit head and me, we have to be crazy not to know the right thing to do.

What you assume is, if you have a very literate senior management team, the intuitive approach becomes much easier. However, if executives are very aloof regarding business processes and IT, they may want amazing returns on operations and analysis. They may want big ROI because they dont understand information technology. IT is hard to understand. Its still black magic to most people.

Executives need to learn that IT is not magic—in other words, just because youve built systems doesnt mean youre going to be successful. I have people that have built 2 million lines of code, but if they havent changed the business—which I measure them on—then its a failure.

When I talk to Kirk Gutmann, Im going to look at product development lifecycle time, Im not going to look at whether he put in a Unigraphics system that worked. Thats the least of my worries. He knows that.

How does the management process work at the executive level?

The senior exec team, [GM CEO] Rick Wagoner and I will sit down with the process owners. They will come in and talk about competition, where we think were ahead or behind, and then well get down to what we can do in IT.

Some of its so clear. If we know were behind a competitor in a particular area, we dont need to study ROI to know what to do. We make a lot of intuitive judgments at GM. If we didnt six years ago, do you realize how long it would have taken me to figure out every analytical thing, given the size of GM? We would never have done anything.

By the way, I have 1,700 of the best people in the world. If something goes wrong it is always a GM executives problem.