Case Volkswagen
CASE 1 - Volkswagen of America: Managing IT Priorities
Q#1: Given the case, provide your assessment of the new process for management of IT priorities. Are some of the criticisms warranted? Is it better than the last old process? Be specific.
The new process for managing IT priorities showcased the ambidexterity of the leadership of Volkswagen of America. Considering VWoA’s original outlook on IT as more of an expense than an asset, necessary changes were made in order to make it a priority within the company. This says a lot about leadership’s ability to recognize that while IT has played a role, it was never a priority and that had to change. Information technology was considered a source of overhead to be kept at subsistence levels so that all available funds could be used in the market (Austin, 2007). The problem with the original approach is that while prioritizing and allocating funds to marketing and selling, what is being missed is the significance that IT plays in those given functions. For instance, a detrimental decision was made upon the signing of the contract to outsource IT management to a third party [Perot Systems]. The internal IT department was significantly reduced and along with it was the IT knowledge of the company (Austin, 2007).
VWoA then changed this approach in the late 1990’s as the rapid growth and dramatic use of the Internet became a source of support for automotive sales and marketing activities. A new digital marketing process was implemented by way of eBusiness teams. The primary problem with this strategy was the autonomy given to each distribution business unit, thus leading to disorganization. IT is a business unit that because of its function, it is hard to calculate how it affects the bottom line in a positive way. However, those outside of IT see the expense and become concerned that the return on investment is negative. This concern becomes magnified when projects are not completed in a
Q#1: Given the case, provide your assessment of the new process for management of IT priorities. Are some of the criticisms warranted? Is it better than the last old process? Be specific.
The new process for managing IT priorities showcased the ambidexterity of the leadership of Volkswagen of America. Considering VWoA’s original outlook on IT as more of an expense than an asset, necessary changes were made in order to make it a priority within the company. This says a lot about leadership’s ability to recognize that while IT has played a role, it was never a priority and that had to change. Information technology was considered a source of overhead to be kept at subsistence levels so that all available funds could be used in the market (Austin, 2007). The problem with the original approach is that while prioritizing and allocating funds to marketing and selling, what is being missed is the significance that IT plays in those given functions. For instance, a detrimental decision was made upon the signing of the contract to outsource IT management to a third party [Perot Systems]. The internal IT department was significantly reduced and along with it was the IT knowledge of the company (Austin, 2007).
VWoA then changed this approach in the late 1990’s as the rapid growth and dramatic use of the Internet became a source of support for automotive sales and marketing activities. A new digital marketing process was implemented by way of eBusiness teams. The primary problem with this strategy was the autonomy given to each distribution business unit, thus leading to disorganization. IT is a business unit that because of its function, it is hard to calculate how it affects the bottom line in a positive way. However, those outside of IT see the expense and become concerned that the return on investment is negative. This concern becomes magnified when projects are not completed in a
References: Austin, R. D. (2007). “Volkswagen of America: Managing IT Priorities”. Harvard Business Review. Case 9-606-003.