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.