VOLKSWAGEN OF AMERICA:

MANAGING IT PRIORITIES

Meeting

• Date: September 8, 2003

• Room: CIS 1012

• Hour: 7 to 8 pm

• Reason: Discussing some last minute issues and concerns about Volkswagen America prioritization process for IT projects

• Participants:

Participants

• Dr. Uwe Matulovic

– Volkswagen America’s CIO

Alias Jonathan Garriss

Participants

• Mr. Chris Broderick

– Digital Business Council (DBC)

Participants

• Mr. Brian Bullard

– IT steering committee (ITSC)

Participants

• Mr. Donald Byrd

– Program Management Office (PMO)

Participants

• Class

– Key personnel of Volkswagen America (VWoA) business units

MBA 2009

Participants

• Ms. Susanna Lopez-Legentil

– Executive Team Leader (LDT)

Agenda

1. Overview of actual prioritization process

2. Problems and critiques

3. Alternatives: Other cases

4. Brainstorming

5. Best alternative + Implementation issues

Project description Symbol Budget Range

Develop a fidelity program

Develop software for supply chain

Translate VWoA website to Spanish

Create a web user portal

Prioritization process

FIDELITY

USER

SUPPLY

SPANISH

$12

$10

$4

$15

VWoA

VWoA

VWoA

Global

Prioritization process

$22 million

Prioritization process

1. Calling for projects, communicating process, and identifying dependencies

FIDELITY

USER SUPPLY

SPANISH

Business blueprint

Prioritization process

2. Formal project requests from business units

Project description

Invest/Tech Types

Stay in business SIB

Return on Invest. ROI

Option-creating OCI

Base IT platform

Applications

Customized solutions

FIDELITY USER SUPPLY

VWoA Goal Ranking Project ranking

Customer Loyalty

Stable Business Infrastructure

New Vehicle Value

Pre-Owned Vehicle Business

Optimize the Supply Flow

Prioritization process

3. Transforming business unit requests into VWoA goal portfolios

FIDELITY USER

SUPPLY

1

2

31 2

3

Project description

Ranking Symbol Budget Range

Develop a fidelity program

Create a web user portal

Develop software for supply chain

Prioritization process

FIDELITY

USER

SUPPLY

IT projects prioritized:

1

2

3

$12

$10

$15

VWoA

Global

VWoA

Prioritization process

$22 million

FIDELITY

USER

SUPPLY

1

2

3

$12

$10

$15

VWoA

Global

VWoA

Develop software for supply chain

Develop a fidelity program

Create a web user portal

Problems and critiques

• Projects of global importance were not funded

• How to encourage employees to think about the greater good of the company instead of their own business units

• Management exaggerates ROI

• Difficult to validate project’s strategic relevance

Finding the right prioritization process

Other cases discussed

• Donald, Chris, Brian

Strategic Grid

High

Low

Low High

SUPPORT

FACTORY

TURNAROUND

STRATEGICStrategic Impact of Existing IS

Strategic Impact of Future IS

Goal!!!

Matulovic’s notes

1. Projects of global importance were not funded

2. Ranking: metrics

3. Management exaggerates ROI

4. Validating Proposal’s Strategic Claims

5. Setting and Applying Correct Filters

6. Sources of Funding

Alternatives

• Alternatives proposed in the VWoA case:– Take funding from other funded projects to give a

bit to critical unfunded projects

– Leave unfunded projects alone

– Help make an argument for funding the project from alternative resources

– Reopen prioritization process

VWoA Goal Ranking Importance

% weighted

Project ranking

Customer Loyalty 30%Stable Business Infrastructure

25%

New Vehicle Value 20%Pre-Owned Vehicle Business 15%

Optimize the Supply Flow 10%

Prioritization process

FIDELITY USER

SUPPLY

Key Questions 1

Volkswagen’s Next Round of Growth Initiative was established to accomplish what goal?

A. To build more profitable product lines.

B. To establish a line of communications between its North American and European divisions.

C. To support and enable the new global product diversification strategy.

D. Rank projects by their ROI.

Key Questions 2

One correct way a business unit manager could ensure that their project would be raked highly would be to :

A. Associate the project with an enterprise goal?

B. Exaggerate the ROI?

C. Only pursue projects that would be appealing to management?

D. Buy their CIO a new car?

Key Questions 3

When prioritizing IT projects, a critical step to perform is:

A. Make sure the most innovative projects are funded.

B. Align projects with the company’s strategic goals

C. Optimize the available funding so as many projects as possible get funded

D. Obtain the CIO’s agreement and support.

Extra Credit

Project leaders often exaggerate the ROI on IT proposals before submitting them. How can management limit this phenomenon?

Project evaluation should be directly related to the initial proposal’s ROI calculation and any other metrics included within the proposal.