Volkswagen of America: Managing It Priorities

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INTRODUCTION

The main idea of this case evaluated the prioritization process as to whether it was the right process for VWoA. In this case, VWoA introduced a new prioritization process with three phases. But in the running the new process, VWoA have met many problem. All the problems can be regrouped in a major issue: How to find the right prioritization process.

Background of VWoA
1930——Ferdinand Porsche designed the first Volkswagen automobiles. 1940——since the launch of the Beetles, Volkswagen met the peaking point in its history. 1960——VWoA settled into a trying cycle of ups and downs that became known “Himalayas chart”. 1990——the company was suffering the “Valley of Despair”. 2002——VW Group chairman, initiated a strategy of diversifying the product ——VWoA’s CEO, Gerd Klauss instituted an organizational readiness program called “Next Round of Growth” based on the product-diversification strategy.

IT at VWoA
1992——VWoA , in order to reduce short-term costs, entered into a 10- years agreement with Perot Systems, an IT services provider. Thus also reduced its internal IT staff to fewer than 10 people, eliminated much of the knowledge of IT within the company. 1999—— VWAG company was created in the U.S.A, gedasUSA Inc. To speed the start-up of gedasUSA, all employees of VWoA internal IT department were transferred to gedasUSA. There is a arms-length relationship between gedasUSA and VWoA. VWoA made it appear that the knowledge was lost to VWoA. 1999——VWoA set up “eBusiness team” for the purpose of creating digital-marketing assets and interacting with customers. 1999-2002——gedasUSA, Perot System and the eBusiness team worked together to rebuild the IT environment to support the now rapidly growing VW and Audi brands. But IT function was not performing optimally within VWoA.

ISSUES/PROBLEMS

1. In order to adapt to the corporation globalization strategy, Klauss, VWoa’s CEO, instituted an organizational readiness program called “Next Round of Growth”. Some currently operating projects must stop, some new projects must start, others existing activities must be enhanced. So the primary question is how to classify the activities? 2. Across IT development at VWoA, the company put marketing and selling in a chiefly position and neglects the role of IT function. Review of building the IT department in three times, responsibility for managing IT was shared among multiple providers with no single organizational entity in control of the overall process.

3. In Matulovic’s mind, the major issues at VWoA were not related to technology but rather to the ambiguity that surrounded governance and development processes.

4. From executive’s ranking of enterprise goals for VWoA (in the exhibit 5), customer loyalty was put on the top position. In the final project list, keeping with the ranking of the NRG goals, the DBC will fund all projects in the top-ranked portfolio, the moving to portfolio with the next highest rank. In other words, all projects with the customer loyalty will be support. At the bottom position project, optimize the supply flow, may be get none aid financial.

5. The core question about whether the new process was right for VWoA. Does it need innovate or continue running application?

6. How about the unfounded supply flow project? Leaving alone the project or giving up others projects to saving the money for the global project?

SOLUTIONS (Taken by the company)

• To solve the problem about how to classify the activities, proposals categorized projects in terms of 1) the type investment they represented, and 2) the type of technological application that would. Investment types:

Stay in business (SIB) Return on investment (ROI) Option-creating investment (OCI) Technological application types
Base-enterprise IT platform Enterprise applications Customized point solutions

• In order to change the IT situation in the VWoA, Matulovic set about creating a...
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