Unlike competitors, GM refuses to cut IT budget

INFORMATION TECHNOLOGY
At a glance


In the past five years, GM has


  • Linked all of its employees worldwide with GM Online, a workstation computer system

  • Increased the bandwidth on its computer networks

  • Partnered with America Online to provide Internet access to GM employees

  • Hired 600 information technology specialists

  • Created e-GM

  • Created consumer shopping site GM BuyPower

  • Launched telematics service OnStar

  • Created supplier portal GM SupplyPower

  • Created Covisint with Ford Motor Co. and DaimlerChrysler

  • General Motors is bucking a trend. Unlike its two domestic rivals, GM is not cutting IT spending, personnel or reorganizing its IT department.

    E-business is too embedded in GM's business processes to make any changes now, says Ralph Szygenda, GM's () chief information officer.

    This year, DaimlerChrysler () whacked 20 percent of its IT work force as part of the measures taken at the Chrysler group to restore profitability.

    But Karenann Terrell, director of Chrysler's e-business unit, said e-business activities are not on the chopping block.

    "After what happened Sept. 11, there has been absolutely no change in the commitment to e-business and those initiatives," said Terrell, director of the group's eConnect platform. "Those, in fact, have been strengthened and reinforced as core elements to help us become a fiscally healthy company."

    Ford Motor Co. () wants to cut costs and retain talented IT workers by hiring some of its contract workers.

    About 5,800 IT specialists work at Ford, but only about 40 percent are Ford employees. The bulk are contract workers.

    Ford also is dialing back the launch of its planned in-vehicle telematics.

    Slashing IT spending is an emerging trend this year across all industries.

    A survey this fall by AMR Research Inc. () of Boston indicates that automotive companies will reduce IT spending by about $2 billion in 2002, except in the area of network security. That is down from about $36 billion.

    GM, which launched a drive to transform itself into a digital company in 1996, plans to continue its initiatives unabated.

    Since he arrived at GM in 1996, Szygenda says GM has reduced the number of computer systems from a staggering 7,000 to 4,000.

    Because of such efficiencies, GM now spends $600 million less each year on information technology than it spent in 1995, he says. GM has saved $1.5 billion since the IT restructuring began.

    "We're getting better results because we're working as one company, not many companies," he said. "We're not running those 7,000 information systems."

    Some of GM's competitors are cutting back because they added e-commerce initiatives without much thought, he says.

    "They thought it was the in-thing to do," he said.

    "A lot of other companies have tried to address an e-commerce movement without looking at the total integration."

    E-GM, a separate business unit created in 1999 to develop e-business initiatives in sales and marketing, is being phased out, Szygenda says.

    The move is not a budget cut, he says, and e-GM employees are being moved back into other parts of the company.

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