Quelle: CIO USA
In November 2001, the North American sales force for eGM - a groupcreated with much fanfare in 1999 to push e-business projects andprocesses throughout General Motors - was dismantled and rolled backinto GM's traditional business units. Then in February 2002, eGMPresident Mark Hogan was reassigned to a newly created post in GM'sdesign and development group; what remained of eGM was put under thepurview of GM North America President Gary Cowger.
Industry skeptics say the dismantling of eGM is one indication thatthe automotive giant is retreating from its e-business ambitions,putting aside its dotcom dalliance, and returning to the real world ofplastic and rubber and steel. "When they formed eGM, it looked likethe Internet was the wave of the future," says Paul Eisenstein,publisher of The Car Connection (www.thecarconnection.com), anautomotive industry e-zine. "Every company thought if it got intoonline retailing it was going to make money." Then the Internet bubbleburst. The situation at GM isn't an isolated one, Eisenstein says;other auto companies along with GM are redefining their e-businessstrategies.
However, GM executives, including CEO Rick Wagoner and CIO RalphSzygenda, say the changes at eGM are not indicative of a wholesaleretreat from e-business. "The intent from the beginning was to createa separate function for two to three years to drive [e-businesscapabilities] across GM," says Szygenda. Contrary to what criticsclaim, Wagoner and Szygenda say eGM's dismantling is a sign ofsuccess, asserting that e-business has become an integral part of thecompany's fabric.
By putting a positive spin on eGM, are Wagoner and Szygenda engagingin a bit of revisionist history? Even if that's the case, it doesn'tmatter. The dispute over eGM is meaningless, essentially a tempest inthe auto industry's largest teapot. Regardless of eGM's fate, GM'se-business initiatives have succeeded in changing how the companymakes business decisions.
In Need of an Overhaul
Headquartered in Detroit, GM has long needed a change in fortune.Consider this famous fact: GM's share of the U.S. auto market droppedfrom 50 percent in the 1960s to a low of around 27 percent in 2000.Last year was the first year in a long time that GM's market sharerose, however slightly (to 28 percent, according to automotivepublisher Wards Communications). Meanwhile, GM is often hamstrung byits own size, which makes decision making and change slow; by vehicledesigns that critics frequently characterize as uninspired; and byhigh labor costs and other overhead. On top of that, the NorthAmerican auto market, which accounted for roughly $107 billion of GM's$141 billion in revenues last year, is expected to decline by as muchas 10 percent in 2002.
Skeptics say those are the kinds of problems that e-business will notsolve. "The alleged benefits of the digital age fail to address thetwo real problems in the industry: overcapacity and real manufacturingbottlenecks," says Scott Hill, an analyst covering automotive stocksfor Sanford C. Bernstein in New York City. E-business is not the onlyaction GM has taken to revive its fortune. GM's zero percent financingin 2001 and ongoing layoffs to reduce costs are two examples. Thecompany also lured Bob Lutz (who helped Chrysler create buzz cars suchas the Viper and PT Cruiser) out of retirement to refresh GM'sindifferent car designs, and in early 2002 it announced a completerestructuring of the design organization. The other OEMs (originalequipment manufacturers, as the Big Three are known) have problems oftheir own - quality concerns in Ford's case and leftover merger issuesin DaimlerChrysler's.
In the face of these changes, e-business leadership remains acenterpiece of Wagoner's list of strategic priorities. The approach,in GM's catchphrase, is "launch and learn," a philosophy that Wagonerdescribes thus: "Let's get out, take on projects and trials indifferent places around the world, and see what works." A look at thecompany's vast portfolio of e-business projects shows that GM iscommitted to continuing with that approach.
What's on GM's Plate
GM's key e-business projects divide into two categories: Consumer anddealer links concerned with selling cars, and supplier links concernedwith designing and manufacturing cars. By interconnecting more closelywith those constituencies, GM aims to drive costs and time out of thevalue chain - all the way from vehicle design to post-sale care and,crucially, the demand as well.
For consumers and dealers: onlinesales strike a chord among consumers in Brazil; U.S. dealersflock to web-based auctions.
General Motors Acceptance Corp. (GMAC)BuyPower. GMAC is GM's finance arm. BuyPower is aconsumer website that provides data on all GM models. Userscan get details on the cost of options, such as tintedwindows, and save such information in a personalizedfolder. The site also points potential buyers to nearby GMdealers, indicating the cars those dealers currently have ininventory. Since September 2001, BuyPower has delivered anaverage of more than 2,000 leads to dealers perday. According to data from J.D. Power and Associates, 20percent of dealer leads generated through BuyPower convertinto sales. That compares with slightly less than 13 percentof leads generated through the top independent site,Autobytel.com.
Retail.com/AutoCentric. This pilot, run inthe Washington, D.C., area in 2001, was aimed at generatingmore leads for GM dealers, using the BuyPower "locate toorder" model but presenting information about cars frommultiple OEMs, not just GM. GM's motivation lay in thediscovery that there is little overlap (about 4 percent)between BuyPower users and those usingmanufacturer-independent sites such as Autobytel.com. Theplan was to create a joint venture called AutoCentric inwhich GM and its dealers would each hold 50 percent equitystakes. GM formed a partnership to use Autobytel.com'sfunctionality as the engine underlying the effort, which wasinternally dubbed Retail.com. The pilot, initially scheduledto run 90 days, was extended by several months, but GMultimately pulled the plug with the admission that "thebusiness model just doesn't work right now." Dealersreported that AutoCentric didn't result in a rise inqualified leads, and the appeal of the equity stake ideawent down the drain with dotcom share deflation.
Direct Sales Over the Internet. GM pilotedthis process in Brazil with a new car model called theCelta. Nearly 70 percent of the model's 112,000 sales (byyear-end 2001) were consummated online. Consumers canpurchase a Celta either by accessing the Web from home or byusing kiosks at Chevrolet dealerships throughoutBrazil. Buyers can also customize their Celta via theWeb. The dealer serves only as a drop-off point for thepreordered vehicles.
According to GM, Brazil is a price-sensitive market where more than 60percent of all auto sales are economy models and more than 65 percentof new car buyers have Internet access. Maryann Keller, author of twobooks about GM and the former president of Priceline.com's automotiveservices group, entirely dismisses the Celta's success as a tax dodgefor consumers who benefited from a quirky legal loophole (onlinepurchasers skipped a tax normally levied on the factory-to-dealer legin a conventional buy). GM says that loophole has since been closedand attributes the price advantage of the online purchase - about $700less than the showroom sticker price - to efficiencies built in to thesupply chain. The Celta's manufacturing process was designed from thebeginning to reflect Internet demand rather than just to crank outcars and push them into showrooms and parking lots.
OnStar. GM's satellite-based service cantrack vehicles and unlock car doors from outerspace. Launched in 1996, OnStar was put under the eGMumbrella and now has 2 million subscribers, although it isnot yet profitable, according to published reports. The costto subscribers ranges from $17 to $70 per month, dependingon the level of service. On a practical note, OnStarprovides GM with something OEMs have never had: frequentcontact with customers. GM hopes that will prove to be aplatform for delivering more services, as it already has inthe case of location-based weather and traffic updates,which were added based on user feedback.
The GM Owner Center. Launched in January2002, this free online service stores maintenance recordsand manuals for current GM owners, and also provides servicereminders and vehicle-value-estimation tools. The site had14,000 registered members one week after the officiallaunch, which covered only certain GM models. Support forother GM brands is being rolled out in the first half of2002.
DealerWorld. This online portal includesapplications such as the just-launched VIN (vehicle IDnumber) Lookup, which allows dealers to simplify theformerly cumbersome process of determining what incentives abuyer qualifies for on a given model. GM also recentlyrolled out a package of services and tools that includestemplates for the dealers' own websites, which provide aconsistent look-and-feel and reduce dealers' burden of sitemaintenance.
GMAC SmartAuction. This Web-basedsystem allows all GM dealers to bid for leased vehicles thatwere returned to the dealer and are now owned by GMAC. Thisprocess is cheaper and faster than live auctions (shaving 30to 45 days off the normal selling time) and also reduces thelikelihood of damage to autos because transportation to anactual auction site is eliminated. GM has sold more than188,000 cars that way since launching SmartAuction in early2000.
For Suppliers: Streamlined purchases, faster productdesigns
Covisint. This purchasing exchange, formed by the troika ofDaimlerChrysler, Ford and GM, is the most-publicized of GM's links toits suppliers - but it is likely not the most valuable one. GM reportsthat it has conducted more than 600 auctions on the site thus far. In2001, the company did roughly $100 billion in auctions on the site,achieving a reduction of 3 percent in its per-transaction costs forthose deals, according to published reports. Because GM's majorcompetitors also use the site, it's natural to assume that Covisintis, competitively, a wash. That's not necessarily the case, says KevinProuty, research director of AMR Research in Boston, whose clientsinclude the three major OEMs. Prouty says Covisint may provide anadvantage to whichever OEMs use it correctly.
It's one thing to put materials like staplers out for bid. It'sanother to toss out a long-standing power-train supplier for a cheaperbid only to spend time making sure that power train is up to snuff.That is a process that Prouty describes as "commoditizingrelationships" with suppliers - a mistake he says American OEMs have ahistory of making.
Instead, Covisint, if used correctly, has the potential to accomplishthe opposite by building closer relationships with suppliers,according to Prouty. Companies can simply use the exchangeinfrastructure to execute deals more efficiently. Will GM do this? "Itremains to be seen how they're going to use it," says John Waraniak,who handles Covisint for Johnson Controls, an $18 billion automotivesupplier based in Milwaukee. "You want to reduce the cost andcomplexity but complement the relationship."
GM SupplyPower. This customizable, secure Web portal providessuppliers with relevant GM news, guidelines and specifications, andcontact information. SupplyPower covers a lot of ground, includingmaterials, manufacturing, logistics, purchasing and finance, and ithelps reduce the personnel and time required to exchange informationwith suppliers.
Shared "Virtual Factory" Tools. Massive visualization tools allow GMto determine the cost and effect of various changes to factories,factory floor configurations and tooling. They simulate everythingfrom the rate at which material can be unloaded from trucks with agiven dock configuration to the likely traffic patterns on roadssurrounding the shop.
Joint Product Design. In 1998, GM's design-to-production cycle tookthree years. Competitors required two at that point, according to KirkGutmann, GM's product development information officer. Today GM hascut its cycle to a year and a half. Gutmann says the competition isstill faster by a few months, but the playing field is morelevel.
The dramatic reduction of the design cycle started with GM getting itsinternal systems in order, a process that involved standardizing on asingle system (Unigraphics), a single product data management system(I-Man) and a single data model for all of GM's 14 design engineeringcenters. After getting the ball rolling on intra-GM collaboration,Gutmann's group started working toward achieving closer links in thedesign process. Co-designing a given automotive part helps ensure thatthe supplier can meet the specifications for that part and also beginthe retooling and production process earlier. GM shares both designtools and data files with suppliers, and partially or fullyunderwrites the cost of software licenses for selectsuppliers.
It's going to take some time for true co-design to pervade the autoindustry supply chain; a 2001 research study by the Center forAutomotive Research found only 12 percent of the respondents were injoint product design with other suppliers. Meanwhile, the competitionwon't stand still. DaimlerChrysler, for example, has formed a B2Binfrastructure group dubbed E-Connect and recently boasted timereductions of 60 percent to 90 percent in certain steps of its designprocess. Nevertheless, GM has made great progress in thisarea.
No small irony: A retiring GM lifer recently commented to Wagoner, "Ifyou keep it up, you'll be able to make cars as fast as we did in the1950s," when vehicle complexity and regulatory requirements weresimpler and the cycle took one year.
The Big Picture
With GM forging so many e-business connections, the fate of eGM is amoot point. In fact, GM's B2C efforts are far less important than theB2B work. And the approach to e-business projects reflects afundamental change in GM's thinking, which should prevail regardlessof eGM's future.
On the B2B issue, GM's supplier-oriented initiatives are more crucialprecisely because of the dire need for a refresh of its auto lineup."The reason their U.S. market share dropped was because they weren'tbringing out cars people really wanted to buy," says Keller. It's anopen question whether GM's upcoming designs will reverse the trend,although Lutz helped overcome similar criticisms when he took the helmat Chrysler in 1986, and author Keller says Lutz has already startedto make an impact by accelerating certain promising forthcoming modelswhile nixing others. GM's internal revamp and collaboration withsuppliers have put GM back into the race.
Still more significant is the change of GM's mind-set. "You need adifferent attitude than when you're developing a car and you have tomeet safety standards, where you can't afford not to be right," saysWagoner, when asked what GM has learned from its e-business ventures."[In e-business] we'd like to be right every time, but the cost wouldbe that we'd be slow, expensive and probably last-to-market in a lotof areas."
By running limited pilot versions of e-business projects, GMexperiments in a cost-effective manner. Asked about how his groupdetermines the right amount of resources to allocate to each project,Szygenda says his team holds sometimes-heated priority-settingdiscussions, but he ultimately boils it down to "gambling." Ask GMexecutives about the goals they set prior to launching variousinitiatives, and the answers are uniformly nonspecific. That's trueeven in a clear success like the Celta, of which GM's Hogan will onlysay, "I guess we might have hoped for 50 percent of those sales tohappen online, so we've been pleasantly surprised." That attitudereflects a significant shift of mind-set for a traditionally slowindustrial giant in a traditionally slow industry.
Expect GM to continue to invest in e-business. The IS group hasdelivered the lineup of e-business initiatives without breaking thebank, partly because of the small-pilot approach and partly becausethe IS budget prior to 1996 was so bloated that Szygenda's group hasbeen able to pay for all the company's e-business plans while stillcutting the yearly IS budget by $600 million to $700 million, to justover $3 billion today. Furthermore, GM holds equity stakes in 38Internet-based and software businesses - stakes gained without spendinga dime, by providing those vendors with product development guidanceand one of the world's biggest customers. (That contrasts with Ford,which bought its way into Internet equity via a $50 million purchaseof Internet Capital Group stock in 1999 - stock Ford later dumped forless than $1 million.) In all, GM's e-business work benefits greatlyfrom continuity of leadership. Szygenda has been the CIO of GM for sixyears. Ford, on the other hand, has had three CIOs during the sameperiod.
By paying for initiatives without crippling company finances, GM istaking a smart approach to e-business. The company takes acceptablerisk, runs pilots, learns and pulls the plug when necessary. Criticssay GM is too ponderous to act quickly, but regardless of the fate ofAutoCentric or eGM itself, GM has entirely defied those critics withits e-business efforts.
In the end, though, e-business won't amount to more than a small hillof beans if GM can't significantly raise its share of the market.E-business can't do that - at least not directly.
No matter how impressive GM's approach is to e-business, market shareultimately remains in the hands of the design group. Until GM putscompelling vehicles on the market, all the digitization in the worldwon't turn consumers' heads. However, e-business links and processreengineering are steadily chipping away at the time required to getthose new designs from the drawing board to the showroom. SoSzygenda's organization - with all the pain and sweat and theoccasional missteps that come with the territory for e-business - ismaking GM's core business activities faster, cheaper and moreeffective.
That's what IT is supposed to do.