DETROIT — General Motors' previous in-house information technology operation didn't go as planned. Two decades later, GM officials are confident they have the right setup to ensure everything runs much smoother this time around.
GM's earlier effort was profitable but controversial, ending with the automaker's spinoff of Electronic Data Systems Corp. in 1996. GM had purchased the Texas company for $2.55 billion in 1984, but its executives publicly clashed with EDS founder Ross Perot and later paid him to cut ties.
"It's way different," Randy Mott, GM's global chief information officer, says with a laugh during a teleconference interview between GM IT facilities here and Austin, Texas. "Although they were in-house, they were still operating as a third party inside of GM."
Mott, a veteran IT executive, has reason to smile. Since joining GM from Hewlett-Packard in February 2012, he has rebuilt the company's IT operations from the ground up and integrated them with the automaker's core business — far from the EDS silo that handled GM as a client.
Before Mott's arrival, 90 percent of GM's IT work was outsourced, with third parties doing more to just "run the business" than to implement measures that could make GM more efficient or increase its bottom line.
GM, Mott argues, continues to lag in some IT areas, including manufacturing, because of EDS and the outsourcing, a legacy of previous CIO Ralph Szygenda.
"We're still playing catch-up on the investment that we've made as a company in IT," Mott said. "Now we're closing that gap quickly ... but it still takes time."
Former GM CEO Dan Akerson, who hired Mott, told Automotive News in November 2012 that outsourcing IT was one of the company's biggest strategic blunders — "kind of like the U.S. military hiring another country to be the U.S. Marine force."
But at the time of the GM-EDS separation, the automaker wanted to concentrate on its core business, and the IT firm believed it was losing out on fast-growing Internet-related business opportunities because of its affiliation with GM. The proceeds from the separation were utilized to shore up GM's underfunded employee pension plan.
The spinoff followed years of cultural clashes between traditional GM employees — accustomed to a slow-moving bureaucracy — and the newcomers from EDS who were used to much faster speeds. That included the well-publicized tensions between GM CEO Roger Smith and Perot, who once compared trying to change GM to teaching an elephant to dance.
"There was kind of an 'us versus them' type of attitude," said Autotrader senior analyst Michelle Krebs, who covered the companies at the time. "Then, of course, you had all the politics going on at the top with Ross Perot and the board. It was just ugly politics."
As part of GM's acquisition of EDS, Perot joined GM's board of directors and became its largest individual stockholder. He also retained control of EDS as its chairman.
An assistant for Perot, who has not spoken much publicly about GM since being paid $700 million to resign his positions at the automaker in 1986, was "not available for an interview."
"Perot was trying to make change, but it wasn't always in the best way," Krebs said. "You had the stuck-in-the-mud bureaucracy of GM, and it's come a long way since then."
GM's current IT operations appear to have avoided such clashes and business hurdles as Mott created the in-house operations on a "blank canvas" with the support of senior leadership, amid vast cultural and mobility changes under CEO Mary Barra.
"IT is about changing the applications you use and do in your business, which, if you really want to get the biggest bang out of that, you're also changing your underlining business processes," Mott said in a separate interview.
"If you're just trying to change IT, and the business is not trying to change ... then you're kind of battling uphill."