Can General Motors Change How Companies Think About IT Outsourcing? - InformationWeek

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Can General Motors Change How Companies Think About IT Outsourcing?

A new CMMI model for acquisitions coming out this fall could make it easier for companies to mirror its standardized approach to dealing with IT outsourcing vendors.

General Motors CIO Ralph Szygenda pulls a book with an electric orange cover from his office shelf and plunks it on the table: CMMI For Outsourcing.

Not exactly The Bourne Ultimatum. But Szygenda has been using the strategy to manage $7 billion worth of IT services contracts his company handed out about a year ago (and another roughly $7 billion it'll start doling out next year). With two of Szygenda's top staffers among the co-authors, the book lays out how to standardize interactions with an IT services vendor, with the goal of lower costs, smoother cooperation, and better results.

Szygenda has $14 billion of persuasion

Szygenda has $14 billion of persuasion

Photo by John F. Martin courtesy of General Motors
There's more to come on this front. In two months, a process model for acquiring everything from IT services to jet-fighter engines, called the Capability Maturity Model Integration Model for Acquisitions, will be published.

Don't dismiss this stuff as ivory tower whimsy. CMMI-ACQ follows on the CMMI development model, which over the past five years has served as a road map for how many businesses do application development outsourcing. Indian outsourcing firms, in particular, adhered to CMMI processes to bolster their quality reputations. Like CMMI, CMMI-ACQ will be published by the Carnegie Mellon Software Engineering Institute.

GM is the business-world test case for applying CMMI processes to managing outsourcing relationships. Since GM has most of the biggest players on its payroll--including Capgemini, EDS, Hewlett-Packard, IBM, and Wipro--count on them to share what they learn with clients across industries. One year into the initiative, Szygenda says contracted IT employees worldwide follow standard processes 75% to 80% of the time, a mark he's satisfied with so far. "If there's an outage with software in Germany, at Opel, we've got globalized design engineers throughout the world, all who know what to do immediately," he says. "It's like playing a ballgame where everybody already knows what play we're calling."

GM and the Software Engineering Institute provided a first draft for the CMMI-ACQ standards, but the CMMI steering group, sponsored by the U.S. Department of Defense and its top suppliers, is honing those to the final model, set for publication Nov. 1. That makes two of the world's biggest buyers of IT services with a keen interest in this strategy.

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