Volkswagen of America: Managing It

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Case 7 – Volkswagen of America: Managing IT
1. What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified?  Is it an improvement over the old process? The new system of prioritizing IT projects to determine funding is a very efficient way of ensuring those projects that are critical to business strategy meet their financial requirements. However, the method of dropping entire goal portfolios simply because they ranked lowest in the list could be deemed a flaw in the system, and one that could be detrimental to business unit integration slowly over time. This understandably frustrates those whose proposals are receiving no funding, and if this prioritization system has any hope of future success, the business units being consistently funded will need to work better at recognizing other priorities, or the system will need to be restructured to allow for smaller projects to be phased in at the very least to maintain integration.

2. Who controls the budgets from which IT projects are funded at Volkswagen of America?  The parent company of VWoA - VWAG - caps the IT budget at $60 million. However, the control of this budget includes the involvement of several cross-functional teams (AKA – “several organizational entities”, p. 5) that review project proposals before final approval – for instance, during Phase I the DBC (Digital Business Council) reduced the initial $210 million project proposals to $170 million (p. 6). Ultimately the PMO (Project Management Office) subsection of the BPTO (Business Process, Technology and Organization), which Matulovic established as a new internal IT department upon his arrival, approves projects prioritized by the IT steering committee (ITSC).

Who should control these budgets?  Should the IT department have its own budget?

3. How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system? Matulovic should tell the fellow executives the new priority management system was developed and implemented by ELT members and senior management group. The process is now complete and not reversible. It would be unfair for any ELT member to get a special treatment.

4. What should Matulovic do about the unfunded Supply Flow project? The unfunded project was critically important to the company. Lack funding would delay globalization initiatives. Since the project needed full funding to continue on track and the cost was a significant part of the IT budget, funding should come from alternative sources. Matulovic should argue that the project will have a large impact on the global integration and save costs for the company as whole, rather than just VWoA.

5. On page 8 we see that $16 million of the $60 budget is for SIB projects, under the spending direction of Matulovic; on page 1 we see that some people consider this unfair - is it? Should budget be "set aside" for IT projects? Why? The budget allocated for SIB projects, under the direction of Matulovic, is fair. Many individuals across the organization were involved in project proposals and creating the process for managing the priorities and selection. The head of each business unit was a member of Executive Leadership Team that helped develop and rank the proposals for the projects. Senior business and IT members in the IT steering committee guided and approved project selection and prioritization process. After the process is implemented and executed, it is too late to voice an objection. 6. In general, what characteristics should a process for deciding about funding of IT projects have? The process of how to fund IT projects has to include the means to categorizing the projects and relating them to company’s strategy. There has to be adequate guidance for developing proposals. Since buy-in and trust by unit leaders is critical, they have be involved in developing the process. The...
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