Volkswagen of America: Managing IT Priorities- Case Study- Essay Writing Assignment

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Case:

Dr. Uwe Matulovic, chief information officer (CIO) of Volkswagen of America (VWoA), placed the telephone in its cradle and leaned back in his chair, replaying the just-completed conversation with one of his peers from the Executive Leadership Team (ELT). The call, Matulovic mused, had been similar to three others he had participated in that week, each with a different ELT member. The results of a new prioritization process—a list of IT projects that would be funded in 2004—had been unveiled only a few days earlier. But already a storm was gathering.

The phone calls from other executives had common themes. All the callers had expressed concern that high priorities for their areas of the company had not been funded. Some had repeated views expressed during the prioritization process by people who worked for them about supposed categorization mistakes that penalized their business units. And each of the calls had concluded with an informal request to insert an unfunded project (or two) into the IT department’s work plans.  “We don’t have to reopen the process,” the most recent caller had said, “but perhaps spare capacity might be applied to make some progress on this project in 2004—we’ve done this before, and it would mean a lot to our area and to the company’s growth plans.”

The 10 business units that made up VWoA had proposed more than 40 projects, with funding requirements totaling $210 million (US). A budget of only $60 million (an amount capped by VWAG, the parent company of VWoA) made some degree of disappointment inevitable. But the intensity of pushback against the new process was surprising. The ELT had endorsed the idea of improving upon the old way these decisions were made, via unstructured debate among executive sponsors. The new process, it was agreed, would make trade-offs explicit and link projects and the core business processes they impacted with VWoA corporate goals. An orderly, rational process would replace what in the past had sometimes been haphazard.

But now questions were being raised about whether the new process was right for VWoA.  Some business units had seen none of their projects funded. Whispers throughout the company suggested that the process was “too theoretical” and noted that IT infrastructure projects had been treated separately, not forced through the same process, which many considered unfair.

As Matulovic peered through the window into an overcast sky, he wondered whether he should order exceptions to the process. If a project was small and just below the line of funded projects, maybe IT should figure out a way to get it done. Or maybe he should stand his ground and defend the new process. Matulovic did not work for the other members of the ELT, but he did have to work with them. Whatever he decided could certainly affect working relationships, so he would need to consider his options carefully.

Background—Volkswagen of America

Ferdinand Porsche designed the first Volkswagen automobiles during the 1930s in Germany. The original vehicles, targeted at the mass market (“Volkswagen” means, literally, “people’s car”), were intended to transport a family of five at highway speeds, use modest amounts of fuel, and remain within financial reach for most people. The company’s signature platform by the late 1940s was the Beetle,  which, with its rounded styling and reliable air-cooled engine, became internationally popular. For about 20 years, sales of the Beetle hurtled skyward, propelling the company’s total worldwide vehicle sales past a million in 1955 and to a high point in 1969. Although the popularity of the Beetle declined throughout the 1970s and its importation was discontinued in the U.S. late in that decade, production of Beetles in Latin America continued into the 1990s. It remains the best-selling car of all time.1

After peaking in the late 1960s, the pattern of sales for the North American subsidiary of Volkswagen settled into a trying cycle of ups and downs that became known, due to its jagged contours, as the “Himalayas Chart” (see Exhibit 1). Sales fell precipitously until the introduction of the Rabbit in 1977, then recovered briefly before dropping sharply again. This time the introduction of the Jetta prompted another short-lived recovery, followed by a several-year descent to a new low point in the early 1990s known informally within the company as the “Valley of Despair.”
Questions

1. What is your assessment of the Volkswagen of America’s new system for selecting projects for funding?

2. Dr. Matulovic is fielding many requests from his peers for “special exceptions” — requests for IT to work on projects not formally funded — Should he agree to these requests? (And how should he handle it?)

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Posted on : April 04th, 2018
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