ASP is new vehicle for GM's future Pt II
Published: 09 Jan 2001 14:05 GMT
There's no question the ASP market is hot: market research group AMR Research predicts the ASP market will reach $4.7bn by 2004, with a compound annual growth rate of 153 percent. GartnerGroup predicts the worldwide ASP market will surpass $25.3bn by 2004.
The industry has caught the attention of leading technology giants such as IBM and Dell Computer, software giant Oracle has inked partnerships with several ASPs, including Center 7 and Agilera. Wall Street embraced the ASP buzzword in the spring of 2000, when technology icon Marc Andreessen embarked on a major marketing blitz for his newly formed ASP, LoudCloud.
It's unclear whether GM hopes to compete directly against LoudCloud, Oracle or any other ASP. Despite the automaker's lofty ambitions, experts question whether GM can successfully enter the swift-moving ASP sector.
"GM has a habit of looking at things in a very grandiose manner," said Dennis Virag, president of the Ann Arbor, Michigan-based Automotive Consulting Group. "The idea that GM is an Old Economy company with...Internet-based process management is definitely something GM needs in the investor community. It's obvious they really want to recreate the company in a New Economy vein. But can they make it work? It would be an incredibly tough challenge."
Besides, GM has a history of embarrassing stumbles when trying to execute sweeping technological campaigns.
Roger Smith, chief executive of GM from 1981 to 1990, earmarked $40 billion for automation in new plants -- to disastrous results. Smith spent billions on robots to paint cars and install windshields, hoping to reduce GM’s unionised work force and slash costs. The robots accidentally painted themselves and dropped windshields onto the front seats, and many of the robots still stand unused. Instead of reducing its work force, Smith's project resulted in the need for even more workers to babysit 'bots and fix them when they broke.
But Szygenda is undaunted.
Formerly chief information officer for Bell Atlantic, Szygenda came to GM in 1996 to "transform GM into a digital company". Since his debut in Detroit, he has hired more than 200 senior managers in the largest executive recruitment effort in the company's history. He has also approved roughly $1.6bn in Internet-based applications, shaving costs by $1bn.
Many of the efficiencies came from a dramatic reduction in the number of discreet information systems used at GM. An information system is a set of protocols used by a department or division to accomplish a certain task, such as quality control in manufacturing or payroll processing in accounting.
When Szygenda started, the company had more than 7,000 different systems, it's now down to 4,000. Szygenda (pronounced zhe-gen-da) has won accolades from Wall Street and the media, in what was meant as a compliment, e-commerce magazine eCompany Now dubbed him a "loud outsider with no patience for bureaucracy". "We've really cleaned house," Szygenda said of his five years at GM.
It remains to be seen whether GM can help clean other corporate houses as well.
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