Daimler Takes DIY To The Extreme To Extract Financial Systems From Chrysler - InformationWeek

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10/16/2008
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Daimler Takes DIY To The Extreme To Extract Financial Systems From Chrysler

When the big-name consultants said separating Daimler's and Chrysler's financial systems would take years and cost more than $100 million, CIO Jan Brecht launched a huge internal undertaking that cost half as much, saved loads of time, but required some heavy lifting from his staff.

For employees at Daimler Financial Services, April 12 wasn't just any overcast spring day in Sterling Heights, Mich. It was Day X, a date they had been working toward for months. The first disks holding 10 TB of data related to more than 500,000 auto and truck loans were loaded into the trunks of two black Mercedes-Benz S-Class sedans at Chrysler's data center. They drove off on their first trip to their new home--an EDS data center 15 miles away in Auburn Hills--flanked front and back by other Mercedes cars carrying armed guards. The caravan would make three such trips by nightfall.

For the nearly 400 people involved in separating Daimler's financial systems from Chrysler's after the two companies broke up their 9-year-old merger, this processional marked the end of eight months of dinners at their desks, late-night meetings, and sleeping on cots in conference rooms. More important, it proved that Daimler's financial systems could be extracted from Chrysler's far more quickly and inexpensively than the experts said it could.

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A little less than a year earlier, Daimler and Chrysler had revealed they were splitting up, setting into motion a series of decisions that would lead to Day X. DaimlerChrysler Financial Services Americas would be dissolved, and Daimler AG would create Daimler Financial Services Americas, which would run the $30 billion-a-year business of financing Mercedes-Benz cars, Daimler commercial trucks and buses, and, more recently, the hybrid Smart Car, in the United States, Canada, and Mexico.

In the breakup, Daimler Financial Services got a third of the DaimlerChrysler Financial IT staff, about 75 people. The group would work with about 300 employees on the business side to move 126 applications running in Chrysler's data center and transfer data that on paper would have filled 350 million pages to the new data center. The team also had to re-establish and test electronic connections with 118 third parties, primarily banks involved in vehicle financing.


Planning ahead for long days

Planning ahead for long days
Conventional wisdom would call for bringing in big consulting guns to handle such a project. CIO Jan Brecht met with several of them. They defined a multiphase, two- to three-year project, easily costing more than $100 million, Brecht says. They said it would be too risky to transfer all the systems and data at once, so some would have to continue to run at Chrysler's data center, requiring an ongoing service agreement until the transition was done.

But when Daimler Financial Services Americas CEO Klaus Entenmann asked for a faster, cheaper way, Brecht knew he'd have to get creative. He decided to forgo using consultants to lead the effort, and have Daimler do the transition itself, in one big bang on Day X.

Brecht's way would require incredible dedication from employees to run the project, using a few dozen outside consultants to support them. But it was done in less than a quarter of the time and at "significantly less than $50 million," Brecht says. And it let Daimler make a clean break with Chrysler, rather than drag out the breakup for years.

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