Ford bucks the outsourcing trend

When Ford Motor Co. chairman and CEO William Clay Ford Jr. announced a massive restructuring plan for the ailing auto maker earlier this year, much of the talk was about layoffs and discontinuing low-margin vehicles.

Although it wasn’t detailed in the plan outlined to shareholders and employees,

the CIO of Ford Canada said IT will also play a significant role in the company’s revitalization program.

While rebuilding revenue streams is a priority at Ford, for Eini Di Bon, job one right now is lowering costs across the enterprise.

“”IT is a critical partner to help manage costs effectively and we must take a hard look at whether we are leveraging our assets properly, are we getting the right efficiency out of our IT staff, infrastructure, all those things. I’d say the focus right now is on the cost side of the equation,”” said Di Bon, who spoke to InfoSystems Executive recently as part of a discussion with Compass Management Consulting about IT delivering benefits for the entire business (see July ISE for the full report).

“”IT is so systemic in an organization. We are a key player and it is a substantial part of running a business,”” he said.

As director of IT and e-business infrastructure at Ford Canada in Oakville, Di Bon’s responsibilities include a budget in excess of $30 million and a staff of 130. As well, IT crosses almost every division including marketing, sales, service and finance, head office, regional office, parts distribution centres and dealers.

One of Di Bon’s major projects has been to show the value IT brings to an organization by proving his department can deliver just as well as the competition.

“”We’ve literally bid against outside people. We’ve insourced stuff more cost-effectively so it’s a definite trend away from outsourcing,”” he said. Di Bon explained that if an IT project delivered to an internal department comes in under budget, that department gets to keep the cash remainder. “”I’ve been very upfront with our (departments) that when we quote on projects there’s an implied profit margin. My goal is then to get even more efficient and fundamentally increase that profit margin,”” he said.

Di Bon said in the months ahead he will also be looking at the portfolio of applications in the Ford IT shop to ensure they’re being put to the best use. Like old car models, some of those underperforming applications may be discontinued.

As well, a carefully constructed governance model has assisted the company in looking at IT projects with business value in mind before anything gets the go-ahead.

“”Every request, regardless of size, has to go through a formal governance process,”” he said.

“”This was a cultural change to get the business partners to accept — that we were asking them to define the business value before it goes any further. It forces them to go through the mental exercise and I think that’s where IT provides the value to help those disciplines, which are corporate disciplines, not just IT disciplines. What’s your ROI? What’s the business value? Is it going to increase sales, reduce costs, is it going right to the bottom line?””

The idea is not new, said Neil Barton, service development manager with Compass Ltd. in the U.K., but is something companies have ignored in recent years.

“”It’s something that the industry lost sight of in the last three or four years as we hit two phases,”” said Barton. “”The big ERP system implementations — many probably driven with a year 2000 agenda, and the e-commerce wave of systems where a lot of the time a governance process was seen as being a bit of a speed bump.””

The problem now, said Barton is to bring people back from that freewheeling mentality so they don’t see a well-defined governance process as a speed bump.

As for e-commerce initiatives, while they remain important, e-commerce applications are not a focal point for Ford. Consumers aren’t ready to complete a vehicle purchase on the Internet, but they still want the information.

“”I wouldn’t say it’s a retreat but a reality check. It’s alive and well at Ford Motor Co., we continue to invest in our Web presence and our dealers are our major touch point with our customers, so we’re working with the dealers on our presence on the Internet,”” Di Bon said.

“”A key attribute is for IT to have some courage and finesse to stick to a vision and you need some management support because there is some push-back. We went through that with the Web. I was getting tired of hearing people say ‘Net speed.’ The fundamentals are still the fundamentals.””

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