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Auto Industry problems impact to IT

By Cory M ·
whether the bailout happens or not the impact to the IT industry from the auto industry could be significant. while the focus in congressional testimony and in the news has been the on the companies themselves and the trickle down to parts suppliers and local communities, there is likely to be significant impact to the IT industry and some of the top end providers as well. some points to ponder:

the big 3 spend hundreds of millions annually on IT (probably more likely over $1billion) - this is both in house and spend with suppliers. it is logical to assume that all development and new hardware purchases will cease (at least at GM which seems to be in the the worst shape). at a minimum one would think there will have to be massive scale backs and a focus on essential operations only. from what we hear in congressional testimony, there is not enough cash available to fund the future car programs that are the foundation of success. it's a simple equation to assume that IT spend will be brought to as close to zero as possible, with the only systems remaining those that support essential manufacturing operations, supply chain, and retail. while the number and complexity of those systems is massive, a significant chunk of the IT spend is allocated to development, integration, deployment--functions that could be suspended indefinitely. In addition, production support could be scaled to bare bones, "light out" operations with no frills.

There are a lot of tier one suppliers that forecast significant revenue--EDS-HP, Cap Gemini, IBM just to name a few. Mass contract cancellation would certainly result in the loss of many thousands of jobs. Add to that in house personnel and you have the potential for a lot of senior level, highly paid IT professionals hitting the market place. Even more when you consider that a lot of smaller companies would join the ranks of the banks and financial institutions (and maybe some of the bigger ones).

In addition to potentially thousands of IT professionals hitting the market, the world will also likely lose the development and innovation driven by the big 3, at least for a while.

it will be interesting to watch over the next few weeks.

regardless of how you feel about the big 3 bailout, I welcome thoughts or comments on how you feel the situation will (or should) affect our industry.

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Totaly wrong attitude

by Tony Hopkinson In reply to Auto Industry problems im ...

They need IT. They need is it for efficiency, revenue enhancement, and cost management.

They might not buy the new shiny thing you were hoping to sell them, this just means they didn't need it anyway.

A bit more spend on your customers needs maybe, use the executive lunch budget.....

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