Volkswagen of America: Managing IT Priorities Essay

July 12, 2018 Information Technology

In today’s universe. IS alignment is important for the operation and growing of concerns. Information systems allow concerns to cover with huge sums of complex information and run more expeditiously. Founded in 1930s. Volkswagen is the taking automotive vehicle maker in Germany. However. its USA subdivision was confronting jobs with unequal IT human resources due to inordinate outsourcing and a decrease of internal IT staff. Additionally. an unequal budget to cover the considerable cost of multiple IT undertakings was worsening the issue. A prioritisation of IT and concern activities and a strategic allotment of the budget are indispensable in deciding Volkswagen’s jobs. This paper will analyze Volkswagen’s concern and IT strategies ( based the instance survey ) . and place assorted issues encountered by Volkswagen direction. I will show how the company can work out these issues by apportioning its limited financess to back up its IT substructure development.

As its name suggests. Volkswagen’s aim is to plan and fabricate quality fuel efficient and low-cost autos. Through changeless development. Volkswagen has non merely dominated the automotive market in footings of lower-priced autos. but has besides gained industry acknowledgment for their midsized and rising vehicles. This has been achieved through their comprehensive competences in concern scheme and fabrication capableness. every bit good as their extension of merchandise portfolio. i. e. the debut of several new trade names ( e. g. AUDI. Bentley ) and a broad scope of theoretical accounts. Volkswagen still maintains its competiveness over most other car trade names ( Interbrand 2014 ) .

However. this was non ever the instance. After the 1960s gross revenues dramatically decreased. fluctuated. and so remained at a reasonably low degree ( Austin 2007 ) . Although Volkswagen invested big sums of money in an effort to better concern. their gross did non increase as expected. However. through assorted other betterments. one being the aid of information engineering. their fiscal jobs could be resolved. During the 1980s and 1990s. advanced information engineerings started to din. At the clip. Volkswagen underestimated the power of information engineering and hence did non to the full take the advantage of it. This became portion of the ground that Volkswagen was unable to thrive. for information systems would go an built-in plus to Volkswagen.

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Business IS alliance is the correspondence between the concern aims and the Information Technology demands of an endeavor ( Rouse 2006 ) . Achieving IS alignment requires a systematic apprehension of the concern aims of the endeavor and the comprehension that alliance is an iterative procedure which uninterrupted measuring and enhancing is needed ( Chan 2002 ) .

The deficit of sufficient financess was the major issue that Volkswagen America was confronting. However. a more in-depth analysis it was a deficiency of consciousness of how IT could profit the concern. In other words. the execution of IT non merely costs money. but besides is a functional and indispensable concern constituent that helps a concern earn more money. The direction of Volkswagen was hesitating to follow IT. believing that it may go debatable and expensive to implement. Resulting from this deficiency of support. a prioritisation of disbursals became important. Some undertakings either received partial support 2

Case Study 2 Volkswagen of America: Pull offing IT Priorities or relied on taking financess from other undertakings. while some undertakings receive no support. It was highly hard for CIO Matulovic to put these precedences ( Austin 2007 ) . The best attack would hold been to turn out that IS alliance would be good to concern. particularly in footings of return on investing. doing more discoveries to be allocated to IT. As discussed above. the ultimate desired result of following information engineering is an addition in Volkswagen’s gross. This can helped be achieved in a assortment of ways:

1. With the growing of concern and more trade names added to the merchandise line. the direction of pricing. distribution. and after-sale service has become more complex. With the execution of information systems. gross revenues figures and ongoing jobs could easy be reported to central offices. which assists in better decision-making.

2. Departments and distributers can pass on more efficaciously through communicating package. such as Lotus Note that was implemented by PwC ( Kling 2007 ) . This will ensue in less phone calls and face-to-face meetings. enabling staff to pass more clip concentrating on gross revenues.

3. A Customer Relationship Management system could assist Volkswagen understand consumer behavior by prosecuting with current clients. enabling the company to supply more individualized service.

4. The predominating Big Data engineering can roll up consumer informations and assist place possible clients so that the selling activities can be more targeted.

5. Integrated Inventory-Transportation System could do the bringing and stock list direction of motor vehicles more logical and efficient. merely like UPS theoretical account does by cut downing unneeded paths ( Volling. Grunewald. & A ; Spengler 2013 ) .

There are many other benefits of IS alliance. which can assist Volkswagen accomplish their concern ends and back up the company’s concern schemes. Given the high quality of the autos they produce. with better service provided. more targeted selling. and efficient stock rotary motion. Volkswagen could remain in front of the competition. Gross saless could be increased and more gross could be generated. A great illustration to exemplify the success of IS alliance is the vesture company Zara. for after upgrading their outdated information system to a new one which allowed intercommunication between locations and better client service. gross revenues increased by 18 % in 2012. up to ˆ10. 541 million ( Grupo INDITEX Annual Report 2012 ) .

Volkswagen presently has a prioritisation process and procedure for every proposed undertaking due to budget restrictions. With limited fiscal resources. huge nidations of IT appear non be impracticable while other undertakings take fiscal precedence. Because this is a pecuniary issue. the concern should concentrate more on receiving greater Returns on Investments ( ROI ) . and implement undertakings that would see a quicker return on investing by salvaging costs or bring forthing more income. If the rollout is successful. more financess can be allocated to IT undertakings. For other investings. if financess allows. little tests could be funded. and one time proved effectual. more financess could be considered. Undertakings that are dearly-won and take a long clip to see a return should be postponed until more financess are available.

Regardless of other investings in IT undertakings. internal IT forces are indispensable for the concern as they retain the valuable cognition and experience. which can non be purchased elsewhere. Therefore. keeping at least 20 staff in the IT section is necessary. even if IT has been outsourced ( although this state of affairs is less than ideal ) . In add-on to the great quality merchandise. with the right prioritisation of investing. and equal human resource and cognition base. Volkswagen will retain its prima place in automotive industry and see a growing in the extroverted hereafter. By puting in the execution of IT. Volkswagen would see a speedy and significant ROI. The efficiency of their concern. every bit good as their ability to supply high quality client satisfaction would be greatly improved. Volkswagen should non fear the execution of engineering. but embrace the possibilities for concern enlargement that come with it.

Austin. Robert D. . 2007. Volkswagen of America: Pull offing IT priorities. Harvard Business School. Vol. 9. Issue 606. pp. 1-19. June 14.
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Grupo INDITEX Annual Report 2012. June 2013. Comunication and Institutional Relations Corporate Division. A Corun?a. Spain.
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