As gas prices slowly crept up to the $4.00 mark this year, sales of new trucks and SUVs hit a record low sending some automobile makers on a hunt for ways to keep the bottom line from taking a nose drive. Three years ago, the $64 billion Chrysler LLC took take steps to deal with an impending downturn in the market by launching a recovery and transformation plan. In early 2007, the company began the corporate journey toward financial health and operational well-being. The plan includes changes throughout the entire enterprise and throughout all of the organizations with IT being one of them.
Jan Bertsch, Chrysler's senior vice president, and global CIO, says, "Our IT goal is operate more efficiently and more effectively. The business case specifically for IT was very clear. Because the competition continues to get stronger, IT really needed to focus on several things, one of them being the need to leverage global resources to support our growth initiatives."
Enterpriseleadership.org recently sat down with Bertsch, who is a also Chrysler's treasurer, to talk about the strategic changes and partnerships that will make IT more responsive to the global needs of all its constituents. Here is what she had to say:
EL. What can briefly describe your key responsibilities as CIO at Chrysler?
JB. I'm responsible for the direction of our global systems' hardware strategy and planning. This comprises all of the company's systems application development, our data center operations, telecommunications, and network operations on a global basis. IT has the dual role of keeping our global operations running, but also being a key partner with our business. We try to use IT to help the enterprise respond to changing customer and business partner needs, as well as to help fuel our international growth. Our structure today combines centralized services as well as shared services.
EL. Can you describe how the current structure of IT supports all of global business operations?
JB. Our applications group aligns with the main businesses of Chrysler, which includes our sales and our marketing systems, our after sales systems, our product development, our procurement and quality systems, as well as manufacturing and supply systems, and human resources, finance, tax, and legal. Our shared services group provides these standardized services and support to all of our applications across the organization. These applications include our applications architecture, and our IT compliance of our processes, such as Sarbanes Oxley. Databases and business intelligence belong to our shared services organization.
Our infrastructure group provides the foundation for all of the work, the hardware, the software, the data center, and the networks across the company. We operate and support all of our partners across the business, in all of the plants across the countries with all of our data centers. We interface with all of our suppliers and parts depots as well and our dealerships. That's our organization today.
EL. How is the structure of your IT organization going to change because of the IT transformation?
JB. Going forward, we want to focus on continuing to support the design, and the manufacturer, and the sales and the service of our vehicles. At the same time, we want to improve the business intelligence and operational excellence that goes along with that. We'll continue to focus on critical company initiatives. For example, we'll support the strategies of our business partners by carrying out the following strategic initiatives: determining the prioritization and the source of funding to speed delivery, and to enhance the quality of our services across the company; and also helping the company to improve its efficiencies, and to achieve its revenue goals through more innovative and more efficient use of technology.
EL. What's your enterprise architecture and does it align with the overall business model?
JB. Our technology architecture goal is to provide the capability for the interoperability between our diverse platforms we have. We achieve this with a number of efforts, including a common development in infrastructure platform, a product strategy that includes simplification and a drive towards common IT services. Our applications architecture focuses on a consistent consistency of design.
We want to enable common processes and common business services, which span all of the areas, with a service oriented architecture approach to the development. We'll focus on service enabling many of our legacy systems, which have coding for a significant amount of business processes. We have the goal to improve upon the simplification of that and work with some of external service providers that we recently announced. These external partners will help us to combine those solutions in divergent areas to become agile solutions. There's a big focus on that aspect.
EL. What were some of the signs that prompted the IT transformation?
JB. Because of the rapidly changing industry, changing marketing demand, and changing customer demand, we thought the need for IT capability could flex better with business demand if we had an alternative solution to how we work today. Of course, we all need the ever-increasing demand for innovation and technology improvement. Our IT transformation was one part of the corporate plan, but I see it as the next step in our continuous efforts to operate more efficiently and effectively. An IT transformation gave us the tools and the flexibility to drive business growth, not just to react to the situation.
EL. Who are the IT partners and what do they bring to the table?
JB. We decided to look at those areas within IT that had the biggest opportunity for improvement. We took time to assess where we felt we were market leaders and where we weren't. For example, we've operated our mainframe and server support areas efficiently with third-party resources. However, we manufacture automobiles, not provide IT services to major corporations. We knew that other technology companies in the industry could probably service us better in those areas because of their scale of business.
We first identified some areas where we felt we could drive improvement in the organization. We went out and market tested those areas. We also market tested some global players that had the capability to handle a company Chrysler's size, and that we felt would be good business partners with us. Based on our market test, we found that where we thought we had opportunities, we did have opportunities. At that point in time, we did due diligence and settled on suppliers. We awarded business on the applications side of our services to Tata Consultancy Services, and also to Covancys, a part of Computer Sciences Corp. We awarded our infrastructure business to Computer Sciences Corp. We're now in the process of transferring our internal business processes to our new business partners.
EL. What is involved in the handoff of business processes from IT to the partners?
JB. For example, Tata will handle some of the applications maintenance work. We identified what work will go to them, and then we'll work with them on transferring business processes and the know-how. Because we're in the middle of this, I don't want to go into too much detail. On the applications side, some of the work will take place in other locations and might not require as many people. Tata might provide offers to some people to work locally. On the infrastructure side, Computer Sciences Corp. has provided interviews to our on-roll people and has made offers to some of those people to work either on the Chrysler account and perhaps later on to work on another account. We also have contract houses who've elected to work with our business partners.
EL. How will the transformation change your governance process?
JB. There will be a reasonably large change in that area when we transfer the business. This transformation allows us to better focus on identifying internally the strategic business processes we could benefit from, and we could improve some of our innovative solutions. We'll be less involved with the day-to-day operations, and we'll be more involved in the strategic processes going forward. We'll further collaborate with our business partners. We'll gain a better understanding of their pain points, their desires, and the way the business moves. As a result, we'll be able to better leverage our global service providers' wealth of experiences in these new technologies, and to identify quickly projects that will have the greatest payback and the surest ROI. We'll have more time and more ability to improve our governance process, to improve the prioritization of our projects, and to improve the quality of the innovative solutions we can bring to our business partners.
EL. Do you have any strategic business processes where IT can make big improvements?
JB. Sales and marketing is an area where there is some capability to improve our volume planning operations. This is area also works very closely with our logistics and purchasing operations to improve our forecasting techniques for what we should be building and, therefore, what we should be buying. We always seem to have many good ideas. However, we're somewhat precluded from being able to participate all of them because of capital requirements. Because we're going to be working with partners that have the capacity to invest in those new technologies, our revised governance structure will enable us to better prioritize these business processes.
EL. Does your financial background enable you to see things differently than a CIO who has grown up in IT?
JB. Having a finance background helps me to dive into the business case to analyze each of the improvements or projects we're looking at. I've always professed that changing IT or anything for the sake of changing it doesn't make any sense. You need to have a sound business case to justify it or else we shouldn't be doing it.
I don't imagine that being in finance really differs from the experiences of most CIOs today. I see more CIOs with a strategic background, usually in finance or in business management. To be successful in a CIO role, you have to know the entire business, and you can't be a successful CIO just being a good technology person. You have to understand the strategy. You have to have a good financial sense about you. I see more people with those some skills taking on this role in many industries.
EL. What process improvements you are making to become more responsive to customers' needs?
JB. We're in the process redefining our IT landscape for the new delivery model we're talking about in the future. Both IT facing and the customer facing processes will focus more on becoming customer friendly. At Chrysler, we know that the perception of the customer is everything. We spend a lot of time with our dealers, with our systems, and with our processes to try to enhance the customer's experience with the dealership -- either online or in person. I think one of the key changes will be in the level of participation that we to target in the alignment of our IT strategy with the business strategy. We don't like reacting to business requests. Instead, we like to be an integral part of the solution to our issues and our goals. We'll measure our contribution in the future, not only in terms of our IT delivery metrics, but also as an innovative and cross-functional partner of our business.
EL. Have done any previous outsourcing?
JB. In the past, we told the partner what we wanted them to do. Now we're saying: 'Listen, we have something to deliver. Let's work with you to figure out the best way to deliver it. We're open to suggestions.' We're doing this a much larger scale now. We're also looking at doing that with certain functions within our organization. However, we're still maintaining relationships with the suppliers, and maintaining the governance, the compliance, and much of product planning up front in house. I know that many people who outsourced in the past might've outsourced too much and now they're bringing a portion of it inside. We tried to be cautious about that as we go to our next steps -- making sure that we transfer those parts of the business that our partner is best at and maintaining those parts we know we are the best at managing.
EL. What is your timeline for the IT transformation?
JB. Last year we started in earnest right after the separation of Daimler and Chrysler. We determined what we were going to do to by year end. We selected our partners early in 2008. We should be completely done with this portion of the transformation by late summer. It's a quick timeline, but we felt it was important both for the respect of the people and to maintain our business knowledge transfer as much as possible. Our new business partners agreed with that.
It's not going to stop there. We're relying on our relationship with our new business partners to continue to identify opportunities. Already in the process, our partners are now coming to us, identifying some things that we had either not thought of, or hoped would happen shortly after the transformation. Some of those are based on best practices that the business partners see. Other ones may be based on pure scale -- where we might be able to reduce the requirements for hardware because we're now dealing with companies that have a larger base that we had. Together we'll pursue more good opportunities as we continue down this path.
Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
