Why GM Created A Team Of 8,000 Programmers
By Jim Anderson
So IT manager, how many people are on your team? How hard is it to keep track of them and what they are currently working on? I’m willing to bet that it probably takes up most of your available time. Over at GM they just hired 8,000 new developers. How would you like to manage that team? What are they trying to accomplish?
The problem with trying to order a truck
Have you ever bought a car or a truck? If you are like most of us then the answer to this question is “yes”. How did you go about doing it? I’m willing to bet that you started the process by doing some research online in order to determine what you wanted and how much it was probably going to end up costing you. Next you packed things up and went on down to the local car dealer and sat down to do some haggling with them. All in all, this whole process probably took a lot of time and was not something that you were looking forward to doing.
At GM they realized that their customers were not enjoying the process of ordering their products. They decided that they wanted to create a way for their customers to order their products online. GM didn’t believe that their current outsourcing partner, HP, had the ability to create this type of application. GM decided to drop HP as an outsource provider and go out and hire the developers that they would need to create the application that they wanted. GM ended up increasing their development team from 1,400 programmers to 8,000 developers. It was their thinking that with this level of staffing they could finally start to develop the custom applications that they needed.
GM had decided to overhaul it’s IT infrastructure and they started this process by doing two important team related things. The first was that they created their own software development unit and the second was that they built internal programs that reflected what their customers preferences were when it came to both online shopping and online ordering. GM now believes that they need to be able to build custom software for both their products and for internal use. GM views this as being the best way to differentiate themselves from the competition and they believe that they can now respond more rapidly to customer preferences.
Why GM decided to do it themselves
GM had been paying HP US$3B per year as a part of a massive outsourcing deal, why change now? GM has stated that their desire to bring their IT work back in house, they now believe that they can “… take the lid off of what is possible”. Going forward, GM wants to focus on custom, internally-built software. This is going to pose a challenge to outsourcing companies like HP, Dell, and IBM. Additionally, makers of off-the-shelf software should be concerned also!
Growing such a large internal IT team means that it’s having a impact on GM’s bottom line. This has started to cause big impacts in both how the company operates and goes to market. One of their biggest new software programs is an online car ordering program. This application requires close coordination with local deals in order to get their inventory and work within state laws governing how cars can be sold.
GM reports that it took them over two years to create this new application from scratch. A small pilot was first created in order to test the idea and to get end user feedback. GM had to be careful how they implemented this new application because regulations require the local deal to be the one who stores things like customer information. Once an online deal has been created, the GM servers delete their information and everything else is sent to the local dealer for storage.
What all of this means for you
GM had to make a very painful decision: did they want to stay with the outsourced IT teams that they had or go to the effort of hiring enough new engineers to grow their internal development team to 8,000 engineers. In the end, they made the decision to create their own internal software development team so that they more quickly respond to their customer’s unique needs.
The results of GM’s decision have had their most immediate short-term impact on the new online vehicle ordering application that they have just rolled out. For the first time GM has been able to streamline the product ordering process and has found a way to work within the tangle of state regulations regarding how vehicles have to be sold. It’s the ability to do this kind of custom work that motivated GM to move their IT development activities in-house.
At your firm they may want to be taking a look at what GM is doing. Yes, GM is a very large company, but what they are trying to accomplish may be very similar to what your company wants to accomplish. In order to perform the type of custom development work that today’s customers are demanding, IT leaders need to have the teams that will be able to create what is needed when it is needed.
Jim Anderson has been a product manger at small start-ups as well as at some of the world’s largest IT shops. Dr. Anderson realizes that for a product to be successful, it takes an entire company working together. You can learn more about Dr. Anderson on his website, http://www.TheAccidentalPM.com. You can subscribe to his newsletter here.