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Prioritizing IT Capabilities : Volkswagen of America

ISM6338
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Christopher Huss

on 30 January 2013

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Transcript of Prioritizing IT Capabilities : Volkswagen of America

PHASE 2:
Are we doing the right projects?
Choosing a project to fund.
Why, how, what, where and when.
Defining the major goals, the function model and the information inventory.
Creations:
IT Steering committee (ITSC) that is a collection of business and IT representatives to guide and approve of projects and prioritize them.
PMO to deal with the difficulties and administer the IT proposal and processes.
Digital business Council (DBC) to categorize projects, business impact, alignment with the major goals, project assessments and trade-off decisions. Technology Application Types
Enterprise based IT that involve infrastructure services and tools.
Enterprise applications that involve company systems which provide broad function across the enterprise.
Customized point solutions that are useful in dealing with applications that are used across the enterprise. Classification:

Stay in business (SIB)
Return on investment (ROI)
Option-creating investment = new ideas. Proposal Process

Name.
Changes.
Financial model.
Enterprise functions that will improved or affect the current model.
Enterprise goals that the project will advance.
Investment presentation.
Technical applications that will be involved. Phase 1
Created the Business Process of Technology and Organization (BPTO) that have a staff of 23 people.
PMO (Program Management Office) that takes over all the management of IT projects.
PMO:
Project manager to each IT project.
Weekly status reports.
Monthly budget reviews.
IT planning. IT VWoA Budget

60 million dollars:
16 millions to spend on stay in business projects.
30 millions to spend on enterprise projects.
14 millions to spend on the highest priority projects. What to do next?

Drop the lowest ranked goal? (maybe)
Apply equal % to each essential project? (maybe)
Move funds to critical projects from different departments? (maybe)
Fund more to critical projects? (maybe)
Recommend that more funds are needed? (maybe)
Ask for a budget increase? (maybe) Frame work was established to manage IT investments.
Prioritization within IT budget was done by BPTO.
Budget was fixed and defined.
Cost management by monitoring and reporting.
3 investment types were defined :
SIB(stay in business)
OCI(option-creating investment)
ROI(return on investment) Goals

Were the priorities established?
- Yes, now VWoA has a prioritization project methodology.

is IT consider an obstacle?
- No, now IT is not seen as obstacle but as a important asset of the company. Funding projects are top ranked and then move to the next high ranked.
No funding to projects that are global. The final project list Phase III

Two days discussion Dr. Uwe Matulovic C.I.O. Ten business units that use IT in VWoA.
Next Round of Growth (NRG) program is required to define goals, functions and organizational changes to support the global diversification strategy.
Increase of car products from 9 to 22.
VW is the lower brand and Audi is the premium brand.
Outsourcing IT operations which led to the decrease of IT knowledge by eliminating IT staff.
GedasUSA is created and took the IT staff from all of VWOA to a specific department which led to even more IT knowledge lost.
Dr. Uwe Matulovic appointed CIO. History Volkswagen of America
VWOA Managing IT Priorities A Question to You! Matulovic was a leader of Process Development.
Prior he was a paint shop manager at VWAG.
To Matulovic the major issues were the processes not the technology.
Was not an information technologist by training or experience. Business Process of Technology and Organization Nikunj Bambharolia Rosa Kemper Questions? Unstructured debates among the executives (an orderly rational process is needed) When prioritizing IT projects, what is a critical step? Units sold by year (VW and Audi):
2005: 224,195
2006: 235,140
2007: 230,572
2008: 223,128
2009: 213,454
2010: 256,830
2011: 324,402
2012: 35.1% INCREASE IN 2012 U.S. SALES and 28 consecutive months of growth. No funding for certain business units.
Lack of morale for some business units.
Lack of flexibility .
Centralization.
No mid term reviews.
Proposal manipulation.
Are 3 months enough to develop a project proposal?
Compatibility with other projects?
What happens next year? DR.Uwe Matulovic CIO proposed -new prioritisation process for list of IT projects

IT strategy committee formed at board level(project selection and prioritization).

Establishment of internal and external IT structure to reflect business needs

Ensure roles and responsibility are properly exercised.

The ELT, ITSC, PMO, and the DBC selecting organizational activities and relating them in logical manner to the company’s strategy and ability to fulfill it.

PMO is required to focus on more planning prior to project execution phase and abide by management standards provide weekly status reports and monthly budget reviews for all funded projects Comparison with VOWA According to the Maturity model of Cobit the strategy implemented by CIO was well (3) defined.
Roles and responsibilities were defined.
IT organization is developed, documented, communicated and aligned with the IT strategy.
Relationships with the committees and management
IT organization is functionally completed. Maturity model Po5-manage IT investment Focusing on effective and efficient IT investment and portfolio decisions.
IT budgets should be line with IT strategy and investment decisions.
Achieved by investment criteria(ROI,NPV).
Measured by % of reduction of unit cost.
% budget deviation value with total budget. Comparison with VOWA Day one

- A High level schedule is created
- Proposals are delivered and ranked depending on priorities.
- Some projects might depend on other projects which requires a re-prioritize process.
- Project proposal are combined into enterprise proposals
- BU executive re prioritized proposals Day two

- Project proposals are reclassified
- The prioritization process became more complex
- Budget discussion
- Total budget available is 60 million. Decentralization.
Allocate a small percentage of the funds to be spent on the less ranked projects or the projects that depend on others so they can move along slowly until it is time.
Involve every business unit in the process to gain project developing experience for now, next and future. Po4-define IT process,organizations and relationship. by focusing on IT organisational structure and implementing processes with owners, roles and responsibilities.
Achieved by define IT process frame work
Establish organizational structure
Measured by number of business unit not supported by IT
Percent of roles with documented position Maturity Model Implications

- One critical project to the company was partially funded. According to the maturity model we can say it is (3)defined

IT budget is aligned with the strategic business and IT plan

Investment selection process is formalized ,documented and communicated

staff members have the expertise and skills necessary to develop the IT budget and recommend appropriate IT investments. Christopher Huss Husam Eldawi Julio Davila Prioritizing of IT Capabilities Make sure the most innovative projects are funded.
Align projects with the company’s strategic goals
Optimize the available funding so as many projects as possible get funded
Obtain the CIO’s agreement and support. Another question to You! One correct way a business unit manager could ensure that their project would be raked highly would be to : Associate the project with an enterprise goal?
Exaggerate the ROI?
Only pursue projects that would be appealing to management?
Buy their CIO a new car?
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