IT is critical in GM's turnaround

GM Europe CIO Alejandro Martinez Galindo is using technology to turn the car giant’s fortunes aroundPhoto: GM

With a century of history and a recent bankruptcy behind it, General Motors – the company behind car brands such as Cadillac, Chevrolet and Vauxhall – is in the middle of an epic turnaround.

In June 2009, General Motors declared itself bankrupt in the biggest industrial insolvency in US history after running up losses of around $90bn.

Fast-forward almost two years and, following significant restructuring, including the closure of factories, reduction in the size of its dealer network and benefits for retiring workers, GM has returned to profitability.

IT has its own role to play in improving the car maker’s fortunes: GM Europe’s CIO Alejandro Martinez Galindo describes his main aim as “first and foremost to support the turnaround of General Motors in Europe”.

“As a CIO, you can just go to your shop and try to run it as efficiently as possible and try to bring innovation. Or, you can really feel the heat, and go to the operations and bring different business models that generate revenues. You need to be an active member of the turnaround of the company,” he told silicon.com.

A recent addition to silicon.com’s CIO50 list of the UK’s most influential heads of IT, Martinez Galindo is based at GM’s European HQ in Bracknell, where he heads a tech team of 300. “Our responsibility is starting with the product development and engineering, all the manufacturing, the supply chain, all the selling, the relationship with dealers, distribution of parts and accessories – it’s the entire shop,” he said.

GM’s ongoing project to reinvent the company – “you name it, we are touching all the core areas of the business. This is reinventing ourselves, changing the DNA of our company, changing the way we do business” – means IT is undergoing a significant transformation.

Martinez Galindo is currently overseeing a restructuring of IT in GM Europe, a process that started three years ago and has been significantly ramped up in the past 18 months.

“In a nutshell I am halfway done with a major revamping of the entire IT landscape in Europe which means infrastructure and applications,” Martinez Galindo said.

The transformation work is based around…

…six areas: use technology to contribute to revenue and margin growth, improve brand perception, create capital efficiencies by simplifying technology, boost productivity, encourage innovation and address security and compliance.

There have been some fairly traditional projects taking place as part of GM Europe’s tech revamp. Under the productivity and efficiency pillars, Windows 7 was rolled out to 23,000 users in just four months towards the end of 2010.

The Chevrolet Camaro

A rebooted technology strategy is on the agenda at General MotorsPhoto: GM

“That was a nice exercise to show the organisation’s capabilities – we can do very complex projects without disrupting the business in a very short time,” he said.

The Windows 7 implementation has given the organisation an opportunity to use more collaboration tech – such as SharePoint – and unified communications tools associated with the Microsoft OS.

“It’s quite interesting to see how technology has really changed the way people work. Our employees can work without the traditional boundaries of the organisation – they don’t need to be connected to the network and they can access all the systems and all the tools remotely,” Martinez Galindo said.

Against the background of GM’s recent financial woes, its no surprise that cost-cutting should be front of mind for the IT team at its European arm.

“We have been playing with technology to substantially reduce our costs. The first thing is you need to run your IT shop as efficiently as possible, which means the reduction of all the waste. We have done a major cost-reduction crusade to try to optimise our systems and services without diminishing the operations,” Martinez Galindo said.

Through a programme of consolidation of hardware and software, IT operations costs have been reduced by 35 per cent in the past four years.

Hardware consolidation is continuing through datacentre consolidation, greater use of virtualisation and addressing end-of-support-life issues – that is, making sure the company’s servers, workstations and network equipment doesn’t become obsolete and lack technical support, allowing GM to avoid the need to pay for extended vendor support.

Outsourcing operations

One of the major factors that has allowed GM Europe’s IT team to get on with the transformation is that many of the operational processes – as defined by the IT team – have been outsourced through various global outsourcing contracts with the likes of Capgemini, IBM and TCS.

Desktop operating systems, phone systems, satellite communications, firewalls and datacentres have all been outsourced and now follow the sunrise – meaning support and services are always available when needed.

“That’s one of our strengths – we deploy…

…sunrise work around all the IT shops and our suppliers follow sunrise work in other countries. You can expect to have the same services if you are in Brazil, Argentina, Dubai, China, Russia,” Martinez Galindo said.

Despite the handing over of many processes to outsourcing companies, GM IT staff are still accountable for the running of IT operations and have to manage a complex governance framework.

“If we have an outage, my team manages the crisis and brings all the proper actions to go back into production. We’re very, very hands-on in the operations,” Martinez Galindo said.

When it comes to the cloud, GM is taking a hybrid approach, making use of both hosted software, which it uses for its CRM, as well as a global private cloud and is gradually deploying technology – such as sales, after-sales, financials and HR applications – into the environment as and when it makes sense. However, this doesn’t mean it will make sense for everything. The company is likely to follow a number of hosting strategies which will also encompass public cloud and dynamic hosting.

“The good part of being part of a company the size of GM is that it’s a global internal cloud, so that’s extremely powerful. Economies of scale matter in this business,” Martinez Galindo said, referring to the private cloud.

“As part of our revamping of the applications, we do capacity planning, the engineering, and we find the right time to bring them into the private cloud or the virtualised environment,” he added.

Product design and technology

Product design is one area taking advantage of technology with GM Europe optimising its vehicle development cycles through greater use of IT. The use of data, simulations and virtual reality is allowing engineers to see how vehicles will behave and identify potential quality issues without having to build a prototype.

“We have reached a high level of sophistication that is first reducing our vehicle development cycle and second reducing our cost of producing vehicles. Today we can do crash simulations in a virtual environment and analyse things before you even start to build a part and you can engineer in the specifications,” Martinez Galindo said.

GM telematics technology such as Chevrolet's MyLink system

GM is developing telematics technology such as Chevrolet’s MyLink systemPhoto: GM

The importance of this technology means GM has been “very active” in investing in supercomputer technology to support the design work, according to the CIO.

GM is also working extensively on telematics, or the long-distance transmission of computerised information, through its US-based OnStar division, which among other things could see technology that allows people to check the charge level of their electric car remotely.

“It’s an amazing technology. I think it’s a clear statement of GM investing in the future and new technologies,” Martinez Galindo said.

Everyone is a CIO

While Martinez Galindo may be GM Europe’s head honcho when it comes to setting IT strategy, he’s not the only CIO.

“I ask all my members of staff to think and act as the CIO of their own area and that has triggered very interesting behaviour around accountability, empowerment and innovation,” he said.

The behavioural changes related to the increased responsibility given to staff include…

…them developing strategy, setting budget, forming partnerships with other business units and developing talent.

“You cannot expect to achieve outstanding results without having the right team in place. I’m not referring to having the best collection of IT individuals, I’m referring to a high-performance organisation and guys who work extremely hard and can inspire others to deliver outstanding results and drive passion,” he added.

Mexico-born Martinez Galindo has been part of GM’s team for some years. Before taking the role of GM Europe CIO, he was GM’s IT boss for Latin America, Africa and the Middle East, and before that, CIO for GM Mexico as well as Mexican truck and bus manufacturers Paccar México and Méxicana de Autobuses.

These days, he reports to GM’s global CIO and the president of GM Europe. “In a global world where you’re trying to buy and sell cars all over the world, you need to be connected to the entire organisation. My connection to the global team is very tight,” he said.

Martinez Galindo also has a strong relationship with GM Europe’s CEO. “I always talk to [the CEO] about how we can better serve the consumer, how we can optimise our revenue, how we can take advantage of our competitive advantage, how we can bring specific business models,” Martinez Galindo said.

“I’m a strong believer that traditional IT has changed,” he added. “We don’t talk anymore about the IT and business alignment because that would imply a connotation of distance. In my view, we are the business. You can be the traditional CIO and be a way of operations or you can be on the front line with the business.”

According to Martinez Galindo, the ability to reinvent IT every couple of years, if not more quickly, is a critical skill for the CIO.

“It’s not just revisiting your strategy. You are dealing with a very dynamic environment in very difficult business conditions so if you’re not able to generate new ideas and suggest different business models, you will not succeed. You will not be a successful CIO in any industry if you’re not able to reinvent yourself. It’s not just innovation or using the flavour-of-the-month technology – you name it, cloud computing or mobile – it’s more fundamental in business values,” he said.