Outsourcing Information Systems
IBM Business Consulting Services
Automotive business transformation outsourcing
Accelerating change to gain competitive ground
An executive brief
ibm.com/bcs
Contents 1 2 3 4
Introduction
The IBM Global CEO Study 20041 found that CEOs are facing a turning point in the business environment, generating a new set of challenges for them and the organizations they lead. The key challenges dominating their agendas are: • Driving revenue growth through product differentiation or by attacking new markets, while simultaneously continuing to cut costs and manage exposure to risk • Making their organizations more agile and able to respond with realtime capability to competitive pressures, changing customer demands and an array of market threats • Tackling deficiencies in the organization’s skills, talent and leadership pool, which are regarded as the key internal barriers to change. In addition to these cross-industry challenges, automotive CEOs continue to have an intense focus on cost cutting and profit improvement. A new form of outsourcing has emerged to enable automotive companies to reduce its exposure to those risks – business transformation outsourcing (BTO). Outsourcing is not a new concept in the automotive industry. Initially, OEMs and suppliers began outsourcing by hiring third-party providers for IT services. However, automotive companies still own and operate costly back-office processes that are not core to the business – outsourcing these functions is an extension of the e-business revolution that started in the late 1990s. As more companies adopt technology across all aspects of the enterprise, the "digital deconstruction" of the enterprise continues, where components of an enterprise, such as the accounting function can be decoupled from the organization and provided by a third party. This technology foundation also creates the opportunity for a virtual workforce (made up of a team of onsite, offsite and global resources) to deliver a
Automotive business transformation outsourcing
Accelerating change to gain competitive ground
An executive brief
ibm.com/bcs
Contents 1 2 3 4
Introduction
The IBM Global CEO Study 20041 found that CEOs are facing a turning point in the business environment, generating a new set of challenges for them and the organizations they lead. The key challenges dominating their agendas are: • Driving revenue growth through product differentiation or by attacking new markets, while simultaneously continuing to cut costs and manage exposure to risk • Making their organizations more agile and able to respond with realtime capability to competitive pressures, changing customer demands and an array of market threats • Tackling deficiencies in the organization’s skills, talent and leadership pool, which are regarded as the key internal barriers to change. In addition to these cross-industry challenges, automotive CEOs continue to have an intense focus on cost cutting and profit improvement. A new form of outsourcing has emerged to enable automotive companies to reduce its exposure to those risks – business transformation outsourcing (BTO). Outsourcing is not a new concept in the automotive industry. Initially, OEMs and suppliers began outsourcing by hiring third-party providers for IT services. However, automotive companies still own and operate costly back-office processes that are not core to the business – outsourcing these functions is an extension of the e-business revolution that started in the late 1990s. As more companies adopt technology across all aspects of the enterprise, the "digital deconstruction" of the enterprise continues, where components of an enterprise, such as the accounting function can be decoupled from the organization and provided by a third party. This technology foundation also creates the opportunity for a virtual workforce (made up of a team of onsite, offsite and global resources) to deliver a
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