GM Puts IT Outsourcing in the Rearview Mirror

I work in an enterprise environment larger than GM. Our leaders could learn a lot from this quote:<p><i>“Everybody can make a decent enough powertrain. But what differentiates you is what you can do with your software,” he says of car makers generally. “Companies have to be careful that they don’t outsource the crown jewels.”</i><p>Slowly but surely, I hope that we can learn that when used correctly, IT is more than a cost center, it is a competitive advantage, even if you don't think your product is IT related.

Boeing technical fellow LJ Hart-Smith wrote an spot on paper about outsourcing, his point was when the work is outsourced all of the profits associated with the work will be outsourced as well. GM seems to have gotten this.<p><a href="https://www.documentcloud.org/documents/69746-hart-smith-on-outsourcing.html" rel="nofollow">https://www.documentcloud.org/documents/69746-hart-smith-on-...</a>

It's not about who does the work, it's about how the work is done. You need continuous delivery and tight feedback loops with the end-user. Outsourcing typically fails because of long iteration cycles and feedback through contract negotiation. An insourced IT department can fail in the same way. The successful outsourcing i've seen did two week sprints with a strong local product owner who spoke directly with stakeholders. The worst outsourcing i've seen was contracting out whole projects that spent six months building "stuff" to do a big bang delivery at the end. That's the model that people doing outsourcing prefer, and it's the model almost guaranteed to fail.<p>I do agree about the risk of outsourcing the core business, but outsourcing makes sense if it's not core, as long as you use the right model. Ironically you have to really know how to build software well to recognize which outsourcing partners are any good. The companies best equiped to outsource are least likely to because they are already in control of their IT processes.

This is coming full circle for GM - they, not long ago, bought EDS and had all of their IT run internally. It got so uncomfortable, they had to separate EDS out to not much avail because of the stranglehold EDS had gotten on GM's operations.<p>Having in-sourced IT can work, but it takes a lot of work to make sure you don't end up with just a boat load of B &#38; C players that become complacent and work just hard enough to keep the status quo.<p>I suppose since GM has now experience both ways they can make it work this time. They are hiring many of the same old EDS (now HP) employees though [1] - hopefully they'll turn the old mindset around and be succesful in getting things done the way they intend to.<p>[1]<a href="http://online.wsj.com/article/BT-CO-20121018-712331.html" rel="nofollow">http://online.wsj.com/article/BT-CO-20121018-712331.html</a>

Long overdue. There are multiple layers of contractors and subcontractors living off the Big 3; 100M dollar corporations that do nothing but increase the rate on the billable hours. The amount of bureaucratic waste is astonishing.