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IT Maturity, Inc. Newsletter #19

GM’s 2012 IT Transformation, an Evaluation based on the IT Maturity Method!

picture 228x312In this newsletter we do an analysis of GM’s new IT Transformation plan to give the reader an example of how the IT Maturity Method can be used to both evaluate and dramatically improve an IT organization. While the detailed internal operations of all IT organizations are kept private, and thus a detailed IT Maturity Method assessment cannot be provided, GM’s recent release of their general strategy does provide an opportunity for the reader to see how usage of the IT Maturity Method would dramatically improve a macro level IT Transformation plan.

InformationWeek discusses General Motor’s new IT Transformation plan (http://www .informationweek.com/news/global-cio/interviews/240002892?pgno=1) in its July 9, 2012 issue.  They outline seven initiatives. In this newsletter we do an analysis of each of the initiatives from an IT Maturity Method perspective.

  • Initiative #1 In-sourcing 90%: Part 1

    The first initiative is to change their outsourcing model from 90% to 10%. In Crain’s Detroit August fifth issue (http://www.crainsdetroit.com/article/20120805/FREE/308059966/it-insourcing-earns-gm-praise-but-no-trend-expected#), Frances Karamouzis, a vice president and analyst for New York-based Gartner said that “Thirty to 65 percent is what I call the safe zone” for outsourcing. In the same article, Bruce Belzowski, an assistant research scientist with the Transportation Research Institute at the University of Michigan, states "We always thought GM was revolutionary in its outsourcing. What happened to cause one person to say, 'We need to bring it back in'? Are IT strategies that flexible?"

    From an IT Maturity Method the question is not whether to outsource or not, but rather what and how to outsource. Further, the GM IT Transformation makes a critical characterization blunder, they discuss all in-sourcing from a software development perspective. IT’s business is NOT software development, it is instead Business Enhancement. The concept of IT as software development is archaic, and was of importance decades ago when software was just starting to be understood. Today there are an untold number of exceptional Commercial Off The Shelf (COTS) IT systems available for almost any activity. The challenge today is finding the right combination of (and integration of) COTS and IT systems to enhance the different processes of significance to specific business endeavors.

    While, there are always good reasons to keep some IT and software activities in-house, there are also many reasons to outsource. Number one being that software development is NOT the primary business of most organizations. GM moved away from in-house software development many years ago for this very reason. GM does not stand for General Software, but rather General Motors.

    Further, GM is responding incorrectly to the problem they are experiencing. They are running into issues managing vendor relationships, or more appropriately “Vendor Integration”. In response they are swinging the pendulum back without moderation, where they should instead be looking at how to do Vendor Integration better.

  • Initiative #1 In-sourcing 90%: Part 2
  • Initiative #1 In-sourcing 90%: Addendum (10-20-12):
  • Initiative #2 Centralized Data Warehouse
  • Initiative #3 Portfolio Management
  • Initiative #4 Data Center Consolidation
  • Initiative #5 Application Consolidation
  • Initiative #6 Hiring
  • Initiative #7 Software Centers
  • Overall Conclusion

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