Friday, September 07, 2007

GM Drives Effort to Develop Outsourcing Standards

Can General Motors create a set of best practices for outsourcing, a business sector that has to date appeared largely impervious to standardization?

It’s been about six months since we last wrote about the automaker’s ambitious $7 billion multi-sourcing intiative, which requires all suppliers to adopt standardized processes.

GM CIO Ralph Szygenda takes a downright altruistic tone when describing the project in a recent InformationWeek article.

What this shows is the IT industry and other companies want to work with each other if they believe it will solve business problems.

Maybe. The need for standardized processes has certainly never been stronger, thanks to the global nature of the supply chain. But it doesn’t hurt to have GM, a company that buys services on a multi-million-dollar scale, as its champion.

GM apparently is enjoying significant cost savings for its trouble, though Szygenda doesn’t get specific in the article. He says the effort has allowed GM to boost funding for new systems development by 30 percent.

GM spearheaded the development of standards modeled on the Capability Maturity Model Integration (CMMI) widely used by software developers. The new CMMI Model for Acquisitions will be published Nov. 1 by a CMMI steering group sponsored by the Department of Defense and a group of its top suppliers.

Observers aren’t sure how much the new framework will affect the larger outsourcing universe, since few organizations buy services on a scale akin to GM. But an IBM executive quoted in the article says both IBM colleagues and clients are following the initiative with much interest.