ASP is new vehicle for GM's future
Published: 09 Jan 2001 13:54 GMT
Ralph Szygenda, GM's chief information officer, outlined Monday a sweeping business strategy that enables the car manufacturer -- one of the largest employers in North America -- to sell many of its internal applications for e-commerce exchanges, customer financing and even human resources to outside companies.
"We looked at what we had and said, 'Wow. There's really a business opportunity here'," Szygenda said during an interview with CNET News.com at the North American International Auto Show. "This is a tremendous opportunity to redesign GM and put the company into an area of higher growth and higher margins."
Szygenda estimated that the information technology portion of GM would be the equivalent of a $50bn company. GM's New Economy applications include software that facilitates online financing for homes and automobiles, virtual exchanges for after-market automobile parts and services, a popular on-board cellular concierge service called OnStar, and the technology supporting DirecTV. (DirecTV's parent company is Hughes Electronics, in which GM has a 60 percent stake.)
GM also has one of the world's largest internal human resource portals for more than 200,000 North American workers, a project it conducted with America Online codenamed "Emerald". The car manufacturer also powers one of the auto industry's largest aftermarket parts exchanges, a project in conjunction with Bell & Howell codenamed "Marmaduke".
To be sure, GM has no plans to stop manufacturing cars and instead concentrate on outsourcing software and processes. It has not begun pitching projects modeled after Emerald or Marmaduke to prospective corporate clients.
But becoming an ASP could represent an important new revenue trend for GM, whose automobile market share has dwindled since the 60s as Americans flocked to Japanese and European vehicles.
Although GM reaped record profits in the mid-90s -- based largely on Americans' infatuation with GM's pickup trucks and faddish sport-utility vehicles -- it is facing lean times as Japanese rivals encroach on the domestic car manufacturer's former stranglehold on trucks and SUVs. Executives gathered in Detroit this week for one of the industry's largest trade shows are also palpably worried that Americans will purchase fewer vehicles in 2001 as the economy cools -- a slowdown that has the manufacturers scrambling for new sources of income.
The move toward becoming an ASP also speaks to a broader e-commerce conquest among industrial manufacturers.
Starting in the mid-90s, corporations forked over billions of dollars to relatively obscure companies in technology hubs such as the Silicon Valley and Boston. The start-ups got fat by building the giants' internal Intranets, corporate portals and online marketplaces.
Now many of the behemoths are learning how to power their own information technology projects -- and, in GM's case, maybe even snag extra revenue by tackling similar projects for other companies.
"We got a little tired that the dot-coms were taking on our business," Szygenda said. "We are a dot-corporation... and can do better than a dot-com."
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