General Motors wants to be the '$150 billion startup'June 17, 2013: 12:01 PM ET
Not only has the automaker gone through bankruptcy and restructuring, it is attempting to rebuild its technology organization.
By Doron Levin
FORTUNE -- General Motors' hiring of Randy Mott in February 2012 as the automaker's chief information officer had a lot to do, not surprisingly, with the breakdown of a crucial GM computer the year before.
Dan Akerson, GM's (GM) chief executive officer, told the Wall Street Journal in an interview that he had been appalled by the failure. He was shocked, he said, to realize that so much responsibility had been given to outside vendors. GM must become a leader in IT, he decided, not just a reliable, multimillion dollar customer.
Mott had been bounced from Hewlett-Packard (HPQ), a major vendor to GM, in the 2011 executive shakeup by new CEO Leo Apotheker, who himself was soon fired. "My job is to make IT move at the pace of business, not the other way around," says Mott, in an interview at GM headquarters. "You have to think of GM as a $150 billion startup. IT isn't here to manage daily operations, it's a strategic tool to drive the business forward."
Mott's main claim to fame was his role for 22 years as a Wal-Mart (WMT) IT executive and chief information officer. A math major at the University of Arkansas, he was integral to the development of Wal-Mart's renowned supply chain management system, which helped vault the retailer to No. 1 status in the U.S. and worldwide. He left Wal-Mart in 2000 and worked as chief information officer for Dell Inc. (DELL) for five years before joining HP.
That ability to transform the basics of the way business is done for an industry, which Mott helped to carry out at Wal-Mart, is what Akerson is seeking for GM. He gave Mott broad authority to fire most of GM's vendors and spend hundreds of millions of dollars to build new infrastructure. Instead of 23 data centers operated by vendors, GM will own and operate four regional software and application development centers in Atlanta, Austin, Phoenix, and Warren, Michigan; and two data centers, both in the Detroit area.
Poor use of IT may have contributed to GM's 2009 bankruptcy. During the insolvency that led to the bankruptcy filing, government officials said they were dismayed to discover that the automaker's systems for reporting and analyzing financial and business data seemed dysfunctional.
Mott intends to introduce advanced tools that will allow planners to look at the auto business from a fresh perspective and in a global context. He said GM needs to solve and analyze complex relationships -- and pose hypothetical scenarios -- that involve transfer pricing, profit margins, currency fluctuations, and capital cost. Just because GM is posting a profit in Canada for instance, doesn't mean that investment capital would be better spent in that country than in Brazil. Moreover, GM must be developing software and applications that are as relevant for engineers in Germany as in China.
"[Akerson] sees IT as a competitive advantage," Mott said. "Our competition is far less outsourced than we were. Companies are using IT to change the business, not simply to run the business. That was his read."
Mott declines to say how much GM spends on IT annually, but estimates have pegged the sum at $3 billion or more, perhaps as high as $4.5 billion. In any event, GM may be spending more to develop software and applications than any private company on earth.