General Motors To Slash Outsourcing In IT Overhaul 232
gManZboy writes "GM's new CIO Randy Mott plans to bring nearly all IT work in-house as one piece of a sweeping IT overhaul. It's a high-risk strategy that's similar to what Mott drove at Hewlett-Packard. Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers. This will require a hiring binge. Mott's larger IT transformation plan doesn't emphasize budget cuts but centers on delivering more value from IT, much faster--at a time when the world's No. 2 automaker (Toyota is now No. 1) is still climbing out of bankruptcy protection and a $50 billion government bailout."
Re:In-house staff do have advantages (Score:4, Interesting)
Truth. This happened to one of my employers. We ended up buying out of the contract.
Cost a major buttload plus screwed the company up for years.
Then they went on a re-engineering binge.
Put the final nail in the whole thing.
What a bunch of clowns running the thing. They got their ideas about IT from playing golf with other CEOs.
Re:Just about time (Score:5, Interesting)
I worked for a large electric utility in IT. We had to submit competitive bids against private companies to provide IT service. We usually were under bid and the IT contract was awarded to an outside company. Usually the service the utility received from the IT people they hired was good at first but soon the response started to slow. Now, when you have customers coming in the front door trying to pay bills and the customer service rep's computer is down, that is the worst of the worst scenarios. I makes an unhappy customer and no way to easily collect payment from the customer. Five or more customer service reps without the tools to do their job is not good. A few times like this while having to wait for the contract IT guys to show up, usually underscores to management the value of having in house people who are able to respond immediately. So like someone said, it went in cycles. In house - contract - in house - etc. They figure when times get tough that they'll take the savings, until the service just gets too bad and the the multivibrator of management flips again.
Re:In-house staff do have advantages (Score:5, Interesting)
Another big advantage: No middle-men.
The way that IBM makes money managing GM's IT infrastructure is to pay their people less than GM paid IBM, say 25% less. So if you're GM, you can go to the guys who are currently doing your work and getting a paycheck from IBM, and say "Hey, how would you like a 15% raise to work for us doing the same job you've been doing all along?", get a lot of people to say "Great deal!", and you've just gotten a 10% cost savings.
Re:In-house staff do have advantages (Score:2, Interesting)
This is far to general a point to prove using studies. Basically, no study can get around the fact that the choice of whether or not to outsource is highly influenced by existing conditions in the company, which in turn are correlated with the outcomes the study is trying to measure.
So basically we have MBA types (who are biased towards the fashion of the day), vs IT types (who are biased towards whatever they perceive as maximizing the demand for IT employees). IT professionals, like all people, develop a bias towards their own profession, and will therefore oppose measures that they perceive as reducing the demand for IT professionals, such as outsourcing, which consolidates IT tasks into a single company, allowing them be done with less people. Highly skilled IT professionals will also oppose moves that shift demand from highly skilled IT professionals to low-skilled IT professionals.
Many arguments, some good, some bad, will be made, but the debate will always be muddied by people's inability to separate their own interests (maximizing the demand for whatever kind of skills they happen to have) with the interest of the company (maximizing profit). The quality of debate is also lowered when people are allowed to get away with using weasel words like "short term profits" and "long terms savings" -- at least nominally, companies are expected to maximize total futures earnings (discounted at the interest rate), and unless you can prove that they don't, it is simply a cop-out to label every decision you don't like as "maximizing short term profits".
Hooray! (Score:5, Interesting)
I'm thinking specifically about the MyVolt site. Ok, it's mostly a bunch of ads and info on the Volt - obviously mainly motivated by brain-dead marketing, since it's also the main place owners go to check their car's status.
So, you push the log in button. Though there's room on the page, oh no, we have to pop up a window to log in on - meanwhile, the animations on the page behind are still loading and running blocking code that makes my other web apps stutter. After maybe 10 seconds, you get the log on window, with it all filled in (thanks firefox) and click the log in button....and you wait, and wait, and wait. Meanwhile, the button you clicked doesn't grey or disable, and clicking it again breaks it. Finally, you're logged in and it starts trying to talk to the car to see what the state of charge is for you. This takes at least two minutes, often ending in "we failed to contact the car, try again?". During those two minutes, it's busy drawing an animation of the state of charge, in blocking code, so my other realtime (stock trading and TV) apps stutter. And, if there was already valid info on the SOC meter, it gets wiped up while you are waiting. It can take over 5 minutes to find out state of charge on this app! Every single page element is reloaded from scratch and re-initialized in response to every single user action, often wiping out valuable data you had already showing each time. And yes, it logs you out every 30 min - during which time you may or may not have gotten the data you wanted. This site must hit 5-6 different (all slow) servers for each redraw. It's obviously done by drag-drop-monkey tools by someone who doesn't even know how to do that, plus a lot of pretty but useless art from some marketing idiot - owners don't need to see more crappy ads for something they already own (are you listening too, Amazon?).
Anything, and I mean even a site writen by a 13 year old retard who was the nephew of a GM exec would be superior. Thank god, the Volt runs linux in a cluster...that was done mostly inhouse and by IBM, who at least have a clue.
Re:Design Flaw? (Score:3, Interesting)
Yes. Michigan is enormous. It's farther from the Detroit to the straits of Macinac than it is from Detroit to New York City, and the straits are only a little over halfway to the border.
It also has an unusually high-reliability power grid. (It had to be designed for some severe storms and icing.) During the great northeast blackout the problem propagated to the Detroit Windsor boundary, Detroit Edison's equipment detected it, and cut off from the east coast. Pick a spot (like the west side of Ann Arbor) where Detroit Edison and Consolidated meet and you can get redundant feeds from both company's grids (as Compuserve did long ago), in addition to your backup UPS and generator. (Ann Arbor is also a good spot for communication connectivity, too.)
Michigan's topography breaks up the weather patterns enough that even a few tens of miles of separation often make the difference between a heavy storm and clear skies.
Wal-Mart doesn't outsource their IT (Score:5, Interesting)
And they are the king of cost-cutting. They outsource many other things, but still insist on keeping their IT in-house.
Re:Why is this labelled "Troll" (Score:2, Interesting)
That article is nearly three years old, and bases it's conclusion on GM missing the "green wave". They've since introduced the Volt, among other fuel-efficient models. If the author's base assumption had been borne out, if GM had stuck their heads in the ground and continued to churn out Hummers, then he probably would have been right. But as it stands, I doubt even the author still stands by that article.
Re:Wal-Mart doesn't outsource their IT (Score:5, Interesting)
+1
Wall Mart is the case study for Business Intelligence, Data warehousing, Data Mining, etc... They analyze every little trend in their inventory, sales, customer traffic, etc.
I remember reading one time they placed beer next to diapers during the week at night because that's was when young dads make a quick run to restock, coming out with diapers in one arm and a six pack on the other.
There is no way you can outsource that and remain competitive.
Re:Wal-Mart doesn't outsource their IT (Score:4, Interesting)
Oh and this too...
http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/ [forbes.com]
Re:In-house staff do have advantages (Score:5, Interesting)
Posting A/C because I'm still working at HP...
Mott was the king of cost cuts. When I started at HP in 2001, HP IT was awesome -- call a number, get an American tech who had a clue. They would even come to your desk, if necessary. Mott "transformed" IT by:
-Laying off lots of IT workers
-Forcing most of the remaining IT workers to move to a single location in Texas, or be fired. No telecommuting allowed
-Making it impossible to purchase any software not on a short "approved" list. Even if it was $20
-Requiring almost all IT issues to be entered into a web-based ticket system -- an overloaded system that was often slow or down
-Limiting telephone support to nearly nothing. Login screens directed employees to "use a co-workers PC to enter a ticket"
-Requiring users to categorize their own tickets. However, the categories were impossible to decipher and I estimate well over 50% of tickets were mis-categorized. Further, mis-categorized tickets were summarily closed as "Resolved" with no hint on what the correct category might be. Further, even if you categorized your ticket correctly, but the level 1 tech didn't find your issue in his checklist, your ticket was closed as "Resolved" -- even though they had NOT resolved your issue.
-Eliminated desk-side support, forcing 6-figure engineers and managers to do time-consuming IT tasks such as re-imaging rather than paying less expensive IT staff to do the same thing. Further, for hardware failures they shipped you a new PC via UPS/FedEx so you had no working PC for several business days.
I'm sure all these things saved a ton of money -- for IT. However, it cost the various other HP business units giant wads of money in lost productivity. Since the productivity didn't show up on IT's cost sheet, it didn't matter to Mott.
Re:In-house staff do have advantages (Score:5, Interesting)
There's a deeper side to this. Back when EDS was still EDS, they were doing a pretty good job for GM. The problem is, HP bought them, and started to apply the same goals/metrics to the services side (formerly EDS) that they use for the product side (that was losing money, and makes fucking printers in the first place). Side note: here is where my self-control keeps me from using terms like "fucking incompetent faggots" and "galactic assclowns" to describe the piss-chugging buttmonkeys that displaced EDS' leadership. As a result, the quality of service that GM got dropped...and the value proposition of outsourcing went with it.
Now, in all fairness, the fact that HP's leadership couldn't figure out how to get wet if they were dropped in the middle of the ocean is probably only part of the problem. Their ass-pounding mediocrity is probably also compounded by the current political situation and the drive to bring jobs back to the USA. So it's not entirely the fault of a bunch of circle-jerking sycophantic pole-chain-smokers. Just 99.99% their fault.
Guess who I used to work for before I quit? :)
Re:In-house staff do have advantages (Score:4, Interesting)
... They'd pay high, but you had to shave all facial hair off and dress exactly as their code dictated. After a probationary period they cut those they didn't see fitting in - which meant you ended up with a bunch of conformists who wouldn't take a risk, by pointing out something may not have been a good idea or there was a weakness in a plan somewhere. Good ol' Ross Perot - run a company like the army.
I was working in a mechanical test lab (as a frequent guest) when EDS first appeared at GM -- mid 1980's. A bunch of idiots with brush cuts tried to take over the engineering computing as well as the business computing. Went around putting EDS stickers on anything that looked like a computer. What a disaster, took a year or more to throw them out and get the dedicated real-time control systems back working properly. This may explain (in part) why GM's car engineering got such a bad reputation back then. Plenty of smart GM employees that were not able to do their job.
Re:In-house staff do have advantages (Score:4, Interesting)
Re:It's how you want to go when you are large (Score:5, Interesting)