Volkswagen was founded in the 1930s. Like its name in Germany, its brand positioning
was originally positioned as a car brand that ordinary people can afford. Volkswagen initially focused on designing and manufacturing cars. Obviously, there is no need to say anything about their competitiveness in manufacturing capabilities. It is worth mentioning that Volkswagen’s business strategy is commendable. If the success of ‘Volkswagen Type 1’ is an expression of their manufacturing capabilities, then the diversification of products from one to ‘Audi’,’Volkswagen’ two brand sets is undoubtedly the success of the business strategy. And the information system allows Volkswagen company to process large amounts of information and operate efficiently.
VW of America is a subsidiary of VWAG in the United States. In the 1990s, VW’s Volkswagen and Audi two brands faced challenges in the US market. VW of America executives was trying to reverse this trend. In order to put more funds available In the market, executives decided to reduce short-term IT costs. In 1992, VW of America signed a ten-year contract with an IT companies and drastically reduced its internal IT staff to fewer than ten people. Over the next seven years, VW of America clearly felt that the layoffs were excessive and that their IT knowledge was not even sufficient to manage the outsourcing contract. Therefore, the number of VWoA’s IT staff gradually increased back to 28.
In 1999, VWAG established a new group company, gedas AG. In the United States, a subsidiary of gedas AG was also established, gedas USA. Gedas USA was responsible for managing the VW of America outsourcing contract and taking over its IT operations after the outsourcing contract expired in 2002. To speed up the start of gedas USA, VWoA’s 28 IT staff were all transferred to gedas USA. So VW of America seems to have lost IT knowledge again.
VW of America consists of 10 business department and they are embarking on the challenging task of reforming prioritizing and selecting IT projects. These 10 business departments submitted more than 40 project plans and required a total of up to 210 million U.S. dollars. At the same time, VWAG, the parent company of VWoA, only gave a budget of 60 million U.S. dollars, which means that there are many programs that cannot obtain funding, and Inevitably create a sense of loss.
The shortage of funding budget seems to be the main problem facing VW of America. But the underlying reason may sound even more serious. The executives of VWAG is hesitant to adopt IT. In the 1980s and 1990s, information technology began to take off. At that time, Volkswagen underestimated the power of information technology and therefore did not make full use of it. I think this is part of the reason why the masses could not develop at that time. I can understand Volkswagen executives’ considerations, but I’m still surprised that they still have a vague attitude toward IT in 2004.
Due to the shortage of funding budget from VWAG, VW of America formed a new IT priority management process. The process is composed of 4 teams. (Team member may come from different departments) The 4 teams are the Executive Leadership Team (ELT), IT Steering Committee (ITSC), Project Management Office (PMO), and Digital Business Council (DBC). ELT is responsible for implementing the ‘Next Round of Growth’ program. IT governance also belongs to it; ITCS composed of high-level business and IT representatives is responsible for the direction and approval of the entire IT project selection and prioritization process; PMO arranges IT projects. Proposal and approval process; DBC is responsible for completing the necessary project classification for the final recommended project list, assessing business impact, determining whether it matches the target, and weighing the decision.