Reference no: EM132326363

Question

Software impacts every aspect of General Motors business, from how the company chooses manufacturing components to the ways that engineers and designers work together. Just as importantly, the automobiles themselves are becoming much more computerised. In fact, cars now have more software and computing power than computing power than the original Apollo mission in 1961.

Modern autos contain a growing number of apps that interact with the dashboard. In addition, self-driving cars are coming soon. GM's Cadillac line is planning a partially self-driving car by 2015. So, it is clear how important software is to the giant automaker.

When General Motors new chief information officer, Randy Mott, assumed his position in February 2012, GM was outsourcing 90 percent of its information technology work.

This arrangement was creating several problems for the company, including long lead times for new application development and a lack of in-depth knowledge of the auto industry. Motts response was to replace the existing system with an insourcing. strategy. This strategy includes hiring up to 10000 employees and opening four software innovation centres in the U.S. GM feels that a much larger in-house IT staff, one that understands the automobile industry, could provide advantages to the automaker, including:

Reducing the number of software applications. Mott estimates that GM has more than 4000 applications throughout the world. Many are redundant and can be eliminated.

Speeding up software application development to match the company's increased speed of new car and truck introductions.

Replacing IT contractors who do not really understand the auto industry with in-house IT staff members who are familiar with the industry. GM believes that these individuals will process the knowledge to develop superior, innovative software applications.

General Motors is consolidating the company 23 data centres into 2 much larger, more efficient centres. It is also building a global data warehouse that will enable executives to analyse detailed internal market and sales data and incorporate external information sources, including social media feedback, into their decision making process. Finally, the company plans to hire additional IT professionals to staff the data centres and manage the data warehouse.

1- What are potential disadvantages of Mott's insourcing strategy?

2- What are the reasons why GM, with its outsourcing strategy, ended up with some 4000 software applications?