Volkswagen of America: Managing It Priorities

The process of resource allocation for IT project funding is the primary issue that Dr. Matulovic faces. Inadequate funding from VWoA’s parent company ($60 Million compared to the $210 Million requested) forced a new prioritization system to determine which IT projects receive funding. The prioritization process is a centralized approach that aims to align the organizational activity with corporate goals and strategy. The new system is a significant improvement from the previous unstructured debates among executives because it clearly evaluates what and why projects are funded. However, many initiatives do not qualify for funding based on the theoretical nature of the prioritization system. Managers from certain business units are unhappy with the process because they feel they cannot do their job without the requested funding. The new prioritization also meant that the partially completed supply flow project was left underfunded—a project of high importance to VW’s global supply chain. Dr. Matulovic must assess the appropriateness of the new prioritization process and determine how to allocate future IT funding.
The following criteria is recommended to determine the most effective allocation of IT funding:
1. Organizational Benefit: Fund projects that contribute to VW’s corporate goals in North America and on a global scale while helping the organization establish a competitive advantage within the market.
2. Financial Benefit: Fund projects with the highest ROI that will provide revenue growth and/or long-term profitability through efficiency gains and cost savings.
3. Management Support: Allocation of funding is understood and accepted by all management, ensuring commitment to the corporate strategy across the organization.
4. Decision Making Input: Allocation process involves representatives from all groups affected by the funding decisions.
5. Long Term Sustainability: Fund projects that are required for VWoA’s sustainability within the industry