The Godfather of IT

This year saw Ralph Szygenda, GM’s influential Chief Information Officer, inducted into the CIO Hall of Fame. It’s been an exciting time for the veteran IT chief: in the last few years alone, he’s restructured the company’s IT outsourcing model, cleared away the technology clutter of 100 years of operation to enable a greater focus on innovation and, most crucially, put IT right at the heart of GM’s business.

Indeed, in a world where integrating technology into the C-suite is seen as an increasingly key part of organizational alignment, Szygenda has achieved what many thought impossible: he’s brought standardization and simplification to the automotive giant, and made IT work for those who run the business. It’s a critical development, and one he sees as being integral to the role of a modern CIO. “There’s not much room for being a pure technologist anymore,” he insists. “That’s where the CIO started off, but today I think there’s such relentless pressure to cut costs and add value that you have to have a very strong understanding of the business that you’re working in to survive and thrive.”

According to Szygenda, a mix of technology and business knowledge is now paramount if you’re going to be a successful IT leader. And while he acknowledges that there are still some technology-focused CIOs around who are happy to let others take responsibility for the business side of things, it’s a model that is fast disappearing. “I think if a CIO is integrated into the business as a business leader rather than just a technology leader – and they are successful – they will have greater longevity because they will be an established part of the business structure,” he explains. “I equate the position of today’s CIO to that of the CEO – as long as your company has great success and evolves as the market changes, then you’ll probably be there for the long haul; if it doesn’t, you won’t. At the end of the day, you live and die by the success of the business.”

It’s what you’d expect to hear from someone who has spent the best part of four decades successfully aligning IT with organizational goals. Szygenda started in the IT business at Texas Instruments 37 years ago, where he was involved in designing and building the world’s largest computing system. Roles in the defense and semiconductor businesses followed, as did a spell doing product development and manufacturing processes at TI. “That really taught me a lot about material requirements planning, process reengineering and other change disciplines that you need in the automotive business,” he recalls. “I already had a background in IT, manufacturing and telecommunications, but I also understood the business processes involved in each. I like to think my career to date has been more about the business of applying information technology.”

Cleaning house

It’s probably why GM came knocking in the first place. When he was hired as the company’s first CIO back in 1996, it was to effect the wholesale transformation of an extremely decentralized organization. “That was really costing us in terms of effectiveness,” he explains. “We needed to drive common business processes and information technology company-wide, and I think I was chosen because of my background in that area. I had an understanding of computer-aided design and the engineering of systems, and I understood the manufacturing side so I could talk to the business leaders of GM not as an information technologist, but as a business process expert.”

The first thing Szygenda did upon taking up his new position was to spend a significant amount of time with the business leadership. “I met with every person that had business accountability to understand the company better,” he says. He then famously took 1000 of the best automotive people from inside GM, hired 1000 of the best information technologists from other industries, and brought them together to form a matrix that mixed business with IT expertise. It’s a blend that allows him and his team to focus on making IT serve the needs of the business. “I report to all the business leaders of this company,” he continues. “Sure, my direct reporting relationship is to Rick [Wagoner, Chairman and CEO] but my job is to help transform and automate every line of business and I have tried to drive that into the mindset of everyone that reports to me. I sit down with each business leader and make them feel like I report to them, even if they’re more junior than I am. It helps that I can speak business with them and I think that’s been important.”

It was certainly a good starting point for a company that was groaning under the weight of a number of legacy systems issues. As Szygenda is quick to point out, few companies have ever had to deal with the volume of information and the myriad of systems that GM has acquired over its 100-year history; nevertheless, clearing out the clutter was an essential task for the IT team before they could begin on the next stage of Szygenda’s technology roadmap: business innovation.

“If you have information technology all over the place that is not adding value, you’ve got to clean it out,” he explains. “You’ve got to get rid of all the old information systems and environments that won’t let you innovate.” In GM’s case, this meant taking out a whopping 5000 technology systems that were surplus to requirements, and driving a common operating model across lines of business that were run more like independent fiefdoms than different parts of the same company. Says Szygenda: “Vauxhall was running its own business, doing its own engineering, its own manufacturing; Saab was running its own operations; and Cadillac was doing its own thing too. In today’s world there’s no way you could be successful with that model. It was a great model 35 years ago, but it’s not today.”

Unsurprisingly, he met with some resistance. So how did he overcome this common IT problem? “You’ve got to be very diplomatic and negotiate, but you’ve also got to be very forceful,” he asserts. “Taking out 5000 systems over 10 years is quite amazing, but the business benefits were amazing too. By doing that, we took out $12 billion of IT costs, to the extent that today we’re probably spending $1.5 billion less a year on IT than 12 years ago. Put in those terms – business terms – most people can see the upside.”

Getting creative

What that’s done – other than significantly reducing GM’s expenditure and cementing its CIO’s reputation as an IT visionary – is push the company to a position where it’s finally able to address innovation in a meaningful way. As Szygenda highlights, it’s all about getting the culture right. “Innovation from the perspective of a CIO now means business innovation,” he says. “Having a better IT product in a company is meaningless unless it enables better business transformation. You have to create a culture that drives innovation, and your expertise should be applying IT to the business area because those on the business side might know very little about the innovative potential of information technology.”

So how do you create that culture? First, you need to put the right staff in place – hire intelligent, questioning people, suggests Szygenda, and you will create an environment that debates problems and solutions. A CIO also has to leverage technology companies. “If you’re buying three-quarters of your IT solutions, you need to have links into the research areas of IT companies to understand where innovation is coming from,” he continues. “If you don’t have those links, you won’t see what the next big trends and innovations are likely to be and where they are coming from. If your CIO is looking for a traditional vendor relationship rather than a kind of shared responsibility with IT companies, you have a problem.”

The next thing is that you have to take risks. Szygenda believes the risk isn’t in using information technology, it’s in not changing your business processes – which means that the CIO has to be a trusted business leader. “If you’re not,” he says, “you’ll never be allowed to drive innovation into the business. You have to give freedom of experimentation to your people. In a lot of cases, people are only driven to solve the tactical problems and don’t necessarily see the bigger issues.” Finally, you have to know what the outside world is doing. “If you’re so inward-focused that you haven’t seen what other companies are doing – either inside or outside your industry – it’s hard to innovate because you don’t know what you’re innovating against. Once you know what everybody else is doing, it’s easier to see what’s going to be truly innovative.”

To address these and other innovation-related issues, Szygenda created a new strategic role within his team: that of the process information officer. He wanted people who were experts in a particular process area – such as manufacturing, product development, the supply chain, etc. – whose job was to drive commonality across business units and stimulate innovation. “CIOs typically keep the business running; there had to be people dedicated to innovation,” he explains. “It’s probably one of the best decisions I ever made.”

The process information officer has the responsibility to know what’s going on in a range of relevant industries. For instance, the head of supply chain at GM needs to know what Wal-Mart is doing, what Unilever is doing, what the best practices are in that area, as well as what their automotive competitors are doing, too. “We do an outside competitive assessment every year so we know exactly what all these companies do,” says Szygenda. “In most cases, you’re not going to get all this great process transformation knowledge from your own industry. Innovation usually comes from an industry that you just don’t think would be that applicable.”

Global solutions

With the right people in place and a simplified IT platform, Szygenda’s team was then able to begin improving the global information structure. “We wanted a globalized GM with no boundaries, where we could design vehicles, produce them, transport them anywhere, and weren’t encumbered by regional constraints,” he says. The first thing he needed was state-of-the-art telecommunications, which he got from an MPLS technology environment managed by AT&T that he calls “the most sophisticated telecommunication environment” in the world. He’s also put in the same desktop environment at all facilities worldwide so that GM’s entire product development environment – 30,000 engineers and support staff – use the exact same information systems. “They can team in five areas throughout the world, visualizing the same thing through IT,” he explains. When we started 11 years ago we had 23 different design and engineering environments in terms of IT in this company; today we only have one, and as a result we’ve reduced overall product development cycle times by over 50 percent.”

The figures are impressive, and don’t stop there. Szygenda, his supply-chain team and GM’s supply-chain leadership, also slashed vehicle delivery times by over 50 percent – not bad when you consider that GM distributes over nine million vehicles a year throughout the world. “We buy $100 billion in material and services and distribute it throughout the world, just-in-time, to 180 manufacturing facilities – all using the same system environment,” he boasts. “A decade ago every region did this differently; today, we can source materials anyplace, and we can move materials or finished products anyplace.”

But this new, globalized model brings with it new challenges, not least that of how to integrate IT initiatives across such a far-reaching organization. The process information officers play a key role here, facilitating systems integration across geographies and business units, but another key aspect is portfolio management. “Because we rank all of the things that are done with information technology in GM, we have a good picture of all the different pieces that have to integrate together, and we authorize the funding to do that integration from a global, GM-wide perspective,” explains Szygenda. “Between GM and outside suppliers, we have 400 architects that stitch the organization together from an information technology standpoint, and they all work together under what we call information integration management. That’s a very significant area of our systems engineering.”

Indeed, with the rise in importance of real-time access to information and the idea of 24/7 operation, facilitating better, faster collaboration between different departments, locations and partners has fast become a business essential. It’s a topic that’s close to Szygenda’s heart. “We use three things as major drivers from an IT standpoint at GM. One is standardization (standardizing processes, systems, etc.); the next is simplification (taking out the clutter); and the third is collaboration – no matter where you are in the world, when you’re talking to somebody else it should be as easy as though you’re in the same conference room.”

In terms of collaboration, GM started off with a capability in product development called Team Center Community that it built with Unigraphics Corp. many years ago, which allows engineers in different locations around the world to collaborate and look at the same designs on their PCs or in visualization rooms. “Today all of our people throughout the company can collaborate and can leverage information technology tools to do that.” Another major development on the collaboration front is the mobility issue. “It used to be that you might work from home every now and again; now the issue is you’re working every place you are,” continues Szygenda. “Whether you’re at Starbucks on Saturday morning or the ball game on a Sunday afternoon, the whole idea is that we have tools within the company to enable people to collaborate and work together, wherever they are and whenever. We do this every day of the week to keep the business going.”

Building the right team

Talking to Szygenda, it soon becomes apparent that he sees people as the glue that binds the business and technology sides together. Not only do CIOs now have the significant challenge of integrating the personal lives of employees with their business lives (“People are taking calls from Asia Pacific at 3am while they’re in their bedroom; there’s no real separation anymore.”), they also have to know exactly what they want from their employees – and where to find them.

“First and foremost I look for technology degrees – if you don’t have a technology degree, you don’t have the fundamentals,” he states. “These people are managing billions of dollars of information technology, and if they aren’t very knowledgeable in this area, then they can’t manage. Second, they also need to have business experience. I look for people that have both technology and business expertise, and unless they have both I will not hire them. Third, they have to have what I call a ‘teaming’ capability. They have to be able to respect other people, but they also have to be ferocious debaters – I run probably one of the best debating societies in the world amongst my staff. I want them to form a team, but I also want the differences on the table because that’s what drives innovation.”

The other important area is the ability to scale. GM’s a big company, and Szygenda requires people with the ability to juggle 100 balls where in a smaller company they might only juggle 10. It’s all about attitude. “People have to believe in themselves to be successful,” he says. “They have to believe they’re a winner. I look at whether they’ve been a winner before. Have they solved big problems? Have they been successful at that? If they don’t have a track record of success in driving business change, I probably won’t hire them.”

It’s clear he’s a demanding boss, but one driven by a belief that excellence begets excellence. “It’s very hard to find people with all those skills,” he concedes. So where does he find them? Technical MBA programs are one of Szygenda’s favorite hunting grounds, and in fact GM has created its own programs specifically tailored to its needs. “Take Carnegie Mellon University, for example. We worked with their business school and had them customize some of their master’s degree programs. We have over 100 graduates of that program in GM today, and we have another 100 in the program right now to develop the right type of leadership skills. If you look at some of my prior staff members, they include the CIO for British Petroleum, the CIO for DHL, the CIO for Disney, the CIO of Boeing, and many more. Those are the quality of people that come from this type of system; people want this type of capability and learning because it’s so relevant to the business. CEOs could talk to people who’ve come through our system and relate to what they do.”

Ultimately, it’s this kind of commitment to IT-business alignment that makes Szygenda such a respected figure within the industry. No doubt the next decade will see further seismic shifts in the way companies employ technology, but Szygenda’s guiding principles – that IT should serve the business, first and foremost – will resonate for many years to come.

Infographics:

5000
No. of technology information systems removed by Szygenda
50 percent
Reduction in overall product development cycle-times
$12 billion
Cost savings of GM’s IT simplification effort