General Motors and Delphi Automotive Systems Corp., in a massive effort to rewire their global operations for the Internet age, signed separate contracts worth $510 million to build new data and communications networks.
The system will be based on Internet technology and open a fatter data 'pipeline' to accommodate growing global traffic for important tasks such as the sharing of engineering drawings.
A single communications standard will make it easier for GM engineers around the world to collaboratively work on projects, said Bob Chaffin, director of finance and contract management at GM's Information Systems & Services unit.
'This allows us to take advantage of the roundness of the globe,' he said. 'It's always daylight somewhere.'
GM and Delphi selected AT&T Corp. to build and manage the new networks in five-year outsourcing agreements. The GM contract is worth $350 million and will link engineering design groups in the United States, Brazil, Germany and Singapore.
Delphi signed a $160-million agreement with AT&T, a deal that will also complete the physical separation of data and voice traffic from GM. Delphi, spun off from the automaker this year, has been using separate and secured systems since the spin off but was sharing network lines, said Gary Robertson, Delphi's chief technical officer.
Delphi, North America's largest parts supplier, will use the new voice and data network to speed communications with its automaker customers and to manage its own far-flung supply chain.
'To do that, you've got to be able to communicate rapidly without errors,' Robertson said.
Chaffin said AT&T was selected because of its 'global footprint' - the ability to build and manage networks in various regions, often with local partners. For example, AT&T will work with British Telecom to jointly operate the new network in Europe, Asia and Latin America.
Electronic Data Systems Corp., which built much of the current GM network when it was owned by GM, will assist AT&T in putting the new network in place. Chaffin said EDS did not bid on the contract for the new Internet-based system.
GM is looking for a rapid payback for the new network, which should take about a year to build. Rather than try to fix the old system, which was a patchwork of various technologies, GM decided to start from scratch. Although he declined to offer estimates, Chaffin said GM would wind up saving money over the life of the AT&T contract.
'The right thing to do is to build a whole new voice and data network from the ground up,' he said.