10/31/2023

Volkswagen of America:
Managing IT Priorities

Current Conflict/Dilemma at VWoA?

• Which projects to choose?
• 10 Business units proposed more than 40 projects with total funding
requirement of $210 million. However, budget was only $60 million.
• Already have completed the project selection process – A three phase
process of selection…
• After the due process, the VWAG’s supply Flow project was not selected
and dropped out…
• Questioning on new project selection and priority process?
• Many Business Units are left with none of their projects got selected…
• Asking for a special request to exempt at-least one of their projects for
funding.

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Why did they get a large number of

proposals?
• Hint: 1992 to 2002 period…
• IT organization was shuffled many times in last decade…
• Outsourced to Perot Systems during this period
• GEDAS USA was created by transferring 28 employees of the VWoA internal IT depts
• E-business teams
• Business Process, Technology and Organization(BPTO and PMO setup)
• Marketing and Selling activities were the funding priority
• IT was considered as a source of overhead and was the least priority

Rabbit

Jetta
Valley of
Despair

Beetle

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Purpose of Setting up the BPTO and PMO?

• IT projects seemed to plagued with schedule and cost overrun.
• It was a third attempt to rebuild IT function at VWoA with a purpose
• To setup a business unit within VWoA which acts as single point of governance for all
IT issues
• Dr.Matulovic was transferred from VWAG HQ Germany to USA who
• created the BPTO department with 23 people
• Also setup Programme Management Office(PMO) to take over management of all IT
projects
• To have a qualified project manager
• To follow project mgmt. standards
• Gradually on-schedule and on-budget projects became the norms i.e.
Doing the projects right
• Next attention: Are we doing the right projects?

How did the projects get selected earlier?

• Formal or informal? : Informal
• Was there any linkage between projects and corporate goals?: No
• Who was responsible for Project Priorities and selection?: e-business
teams in consultation with GedaUSA
• Only important projects got selected
• Was anything wrong in the earlier project selection process?
• No linkages with enterprise goals
• Fairness issue
• Proper utilization of Fund? – Many good projects went unfunded or
unnoticed.

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The strategic Change by New Chairman in

2001(Exhibit-2)

Importing
22 models
by 2008

• To support the growth in product

offering and the associated sales and
service value, VWoA’s CEO, Mr.Klauss Implications
institutionalized NRG program to VWoA
• The aims of the NRG program were
to define the goal, function, and org.
changes required at VWoA to support
and enable new global product
Importing
diversification strategy.
9 models in
2002

VWoA core processes & major functions

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Let’s understand the new process of project

selection
• Business Architecture aka Blueprint
• was expected to play an imp role in formalizing governance and prioritization process
• Providing a means of categorizing org. activities and relating them to the org.
strategy and ability to execute the strategy
• It included
• A hierarchical and prioritized view of all major goals(56) across the enterprise
• An enterprise-wide function model that displayed all major activities in the
corporation
• An enterprise-wide information inventory
• An organization model mapped to the functions
• A current-state systems inventory mapped to the major functions of the enterprise

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Let’s understand the new process of project

selection
• Role of ELT, PMO, BPTO, ITSC, DBC?
• Phase-I: Calling for projects, Communicating Process, and Identifying
dependencies
• Informal re-grouping (Enterprise projects)
• Rationalizing BU projects
• Preliminary timeliness and dependency analyses
• $210 million project proposals were reduced to $170 million

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Let’s understand the new process of project

selection
• Phase-II: Formal Project Requests for Business Units
• Predefined project proposal template
• Categorization based on investment and technology types
• Investment Types(SIB/ROI/OCI)
• Technology Types(IT platform/ BU point Solution/Enterprise Solution)
• BUs link to business goals
• Phase-III: Transforming Business Unit Requests into Enterprise Goal
Portfolios
• 2 day offsite meeting
• Draft schedule (all projects without capacity constraints)
• Current year project focus/defer some projects/ move some to enterprise projects
• BU’s ranked top 3 projects
• Linking BU projects to NRG goals
• Decided how to allocate $60 million

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Executive’s ranking of enterprise Goals for VWoA

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Advantages and Dis-advantages of New Process

Advantages Dis-advantages
• Visibility into the process • Time consuming process, can be
• More formal process done once in a year unlike earlier
process which was dynamic and
• Confronts trade-offs, addresses ongoing..
them deliberately • Core projects were not selected
• Linkages to NRG goals or • Unfair?
enterprise goals
• Transparent? • Complex process
• Fair? • Fund allocation was not done a
priory for SIB/ROI/OCI
• Less political • Discretion

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Why did Supply Flow project drop out?

• Ranked lowest in NRG Goals
• ELT was responsible for NRG Goals and Ranking…

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What to do?
• Shall we include supply flow project?
• Shall we accept special request for BU projects to get one-time
exemption?
• Getting fired vs Credibility?

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Questions?
hasmukh@iimidr.ac.in

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