Can GM’s New Data Start the End of Outsourcing?
General Motors (NYSE:GM) has announced plans to launch a new $130 data center of its own, following an earlier decision less than a year ago to stop outsourcing work to other companies, The Wall Street Journal reports.
After GM’s government-sponsored bailout, the company is still struggling to turn itself around. It believes that a modernized approach to IT could help expedite the process. The new IT advance, led by chief executive Tom Akersen and modeled off of developments by Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB), will help better the “mixture of conventional and experimental technologies that the company hopes will measurably improve its capacity to innovate.” This new approach is just the beginning of a cultural shift the company is undergoing, CIO Randy Mott explains.
The company’s new data center will be easy to maintain, inexpensive to cool and able to support a mixture of technologies, The Wall Street Journal explains. In order for the complex to be built and the new approach solidified, however, GM had to unravel its IT services contract with Hewlett-Packard (NYSE:HPQ), as well as retreat from an outsourcing model that has been in effect for almost 30 years. Until recently, HP, along with other companies, have handled almost 90 percent of GM’s IT work, adding up to a $3 billion a year payoff.
Mott views the company’s arrangement to outsource as one of its worst decision and hopes that as GM’s new technology unravels, IT will “boost its measurable value to the business by a factor of 10,” increasing the number of projects it can handle as well as its efficiency. About 70 percent of the staff will be focused on innovation, with the remainder providing support.
Don’t Miss: Why Can’t GM and Ford Compete in India?