IT strategy and application portfolio renewal for major auto manufacturer

For the past five years, a major automotive manufacturer had limited its IT investment to basic maintenance and select projects. This approach fostered geographic and functional silos, which were inhibiting IT-based business development and efficiency in a number of key areas, such as dealer relationships, customer experience – pre and post sales, and manufacturing and logistics.

Over the same timeframe, competitors had invested in IT to build-out leading capabilities in order management, dealer integration, and customer experience. As a result, this automotive leader was experiencing decreased profit margins and spending a large amount of its IT operating budget on low-value administrative activities.

Challenge
While some competitors had each invested over $500 million from 1999 to 2004 on key projects, the OEM had invested only in basic maintenance and select projects. In all, project investment for the OEM had declined by 50% over the past three years, and those made were in low value areas and/or they under-delivered.

To regain its competitive position, the company faced three main challenges in delivering fully effective and competitive IT capabilities:

• IT gaps in addressing business needs
• Aging and non-standard technical environment
• Ineffective IT investment allocation

Approach
A.T. Kearney worked closely with the company’s IT leaders across multiple global locations to develop a strategic IT / business direction, plus build out details and processes for implementation:

• Baselined as-is application portfolio and processes
• Identified key business drivers and strategic context through executive interviews
• Built an IT strategy and blueprint to enable future business-driven capabilities and increase competitive positioning
• Developed a project roadmap, investment plan, and business case to support the future blueprint
• Built portfolio management tool to prioritize investments and manage system lifecycles

Results
Most importantly, the portfolio renewal strategy re-focused IT on increasing the automotive manufacturer’s competitive position. IT has become a key contributor to strategic business productivity and growth across the enterprise.

Moreover, the new blueprint and roadmap are delivering significant benefits, which are expected to reach approximately $3 billion in cumulative benefits over the next five to seven years. Of these benefits, 75 percent will be derived from multi-year, cross-functional projects focused on transformational capabilities, which will improve the company’s competitive positioning and focus allocation of the IT budget on more high value activities. The remaining benefits will be derived from core process improvements and remediation projects.