Steven L. Johnson

The cloud is a method for people to access and store their information on the internet or web without the burden of software programs or the hardware necessary to house their data. If updates are necessary to various platforms and apps this is done without effecting your data or access to your data. Businesses may choose to implement software-as-service (SAAS) in which they only access and pay for apps that are needed to drive their business. This is paid as a utility would be paid with a monthly subscription fee. Platform as-a-service (PAAS) allows a business to custom design their own set of apps for use internally by its employees and staff, and finally Infrastructure as-a-service (IAAS) which creates a skeleton that is designed by a company and rented out to help an organization provide custom services to their clients. Although this all sounds ideal for those that want to be unencumbered with constant software updates and storage backups, God forbid there is an access problem to the web. This could potentially stifle business opportunities and be fatal depending on the importance of the stored information to the company’s operations.

I would explain “the cloud” to a co-worker by logging on to Google Drive to show them how I access all my personal productivity applications and documents on the web using a browser. I demonstrate creating a spreadsheet and sharing it with them with the assumption they have a Gmail account. I would show them that we both make individually or collaboratively are saved in “the cloud” and never on our local machine. And finally, I would then log into Google Drive from my smartphone to bring up the spreadsheet to demonstrate that applications and documents stored in “the cloud” can be accessed on any device.

I think that cloud computing is an important innovation and will have a lasting impact on businesses. For instance, according to a Forbes article (http://www.forbes.com/sites/louiscolumbus/2014/05/06/gartners-crm-market-share-update-shows-41-of-crm-systems-are-saas-based-with-salesforce-dominating-market-growth/) 41% of CRM Systems are now SaaS-based with Salesforce.com dominating with a 16.1% market share. My company currently is in the middle of a major project to identify where we can leverage cloud based services and solutions in order to reduce our software licensing and maintenance charges. All of our C level executives are behind this initiative and have even directed their respective business lines to change long-standing business processes and practices where possible. It is both an exciting and unnerving time for all employees.

Duke in medicine we are so far behind when it comes to taking advantage of the benefits of cloud computing. I can envision outsourcing all our software needs such as payroll, phone services, accounting, and many HR functions where we require constant software updates to maintain up to date connectivity. When negotiating contracts among the board we use the old fashion method of having to individually sign all documents and then pass them along to the next partner. With google Drive we can go to the cloud and access in progress documents until a final executed document is complete. When it comes to contracts with book a company the process now is that one author signs the contract and then sends it back to the publisher to be passed onto the next author. This can be made much more efficient and quicker with the cloud. All finance and accounting spreadsheets like you mentioned can be shared among all 21 offices and updated real time prior to board meetings. The cloud will revolutionize the way we do business in all industries. To continue its meteoric expansion security and reliability concerns will have to be addressed along with international laws to protect IP, prevent theft, piracy and of course hacking.

Agree with Alex and Duke. And indeed, medicine is populated with many “digital immigrants” rather than “digital natives”, and I have actually had to explain the concept of cloud computing to my older colleagues on several occasions. I’ve used Dropbox as an example, similar to Duke’s example of Google Drive. Being able to use my personal files online or offline on my laptop, then pick them up from another device like my phone or PC has become invaluable to me, and has value that I think most people in the workplace can appreciate. Furthermore, files can be easily shared instead of using physical jump drives or performing workarounds for massive files that cannot be emailed. In this sense, I think cloud computing is a tremendous innovation and definitely not marketing hype. As Alex points out, network security and stability will become increasingly important as more consumers become beholden to an outside company keeping their data and applications.

I would explain “the cloud” metaphor by using an example of our personal computer (pc) at home and in the work place. Historically, there was a need for storage and memory capacity that drove up the cost when we needed more of each due to storage of pictures and videos or business applications. We would get frustrated by slow response times and sometimes having to choose what to move onto other forms of storage. With “the cloud”, you don’t need large storage or memory capacity since this is not stored on your pc, it’s stored on the internet where you can get instant access when you want it from a variety of devices (mobile, pc, ipad, laptop, etc).
I would then use Facebook as an example of cloud services describing how we can post pictures and videos and share them instantaneously with friends and family without having to worry about storage capacity or costs to purchase a larger hard drive. I think this would then lead nicely into how it can be used effectively in business with applications like salesforce.com (we have used this in two different companies I have worked for).
I do not think “the cloud” is a fad in that the ability to get instant access to information on demand and pay based on actual usage has lasting value for consumers and companies.
However, technology moves fast and I would not be surprised if someone is working on something like “the star” that sits above the cloud and builds upon it’s capabilities and applications.

Cloud is shared computing resources. Before cloud, every business relied on having their dedicated computer power in their own data centers (servers, etc.). The “cloud” is a data center that many people and/or businesses share – leveraging fast connectivity via the Internet for access. Rather than owning and operating its own data center, a company can pay to utilize the servers and computing resources the cloud service provider’s data center as necessary. Cloud service providers rely on thousands of customers using their data centers to generate revenue to operate the business, continually refresh the equipment, expand data centers, and build new ‘clouds’.

Cloud has already revolutionized the world by enabling rapid app development for mobile devices. Small and medium business are also adopting cloud, switching their entire businesses to the cloud to save money and increase focus on their core businesses. Entire sets of business productivity tools and enablement products for small-businesses are cloud-based (no on-prem computers or local installs needed). The savings from switching to cloud enables businesses to invest in their operations, fund new product and service development, and expand capabilities. And now enterprise are being to make use of the cloud for several needs (disaster recovery, non mission critical apps).

There are still concerns about security and reliability for cloud, especially from enterprise, but overall the performance is as good (if not better for some companies) compared to owning and operating their own physical data center resources. The use of cloud will only grow in my opinion and further enable breakthroughs for businesses and consumers.

I would explain “the cloud” as a new form of storage space like what we have in our computers or flash drive that we can use to store the programs or documents we are working on. The difference between “the cloud” and our computer or flash drives when it comes to personal use, is that we don’t have to carry it around to have access to our documents. We can simply log into our cloud account from any device that has access to the internet and we would be able to have access to our documents. When it comes to business application or programs we use to run the business, “the cloud” offers a maintenance free system where we don’t have to worry about when to download the latest updates, they are automatically updated. Business also can choose and customize which application they would like to buy or in most cases pay a monthly fee for the programs which may be less costly than buying a full version of the program or additional storage capacity.
I think “the cloud” is an important innovation that will have a lasting impact on the way business operate and how people access their stored information. Cloud computing has also made it easier to collaborate with others on projects without delays and in most cases has lowered the cost of doing business.

Some examples of cloud computing are Facebook, whereby you can store videos and pictures without having to worry about losing them, if perhaps they were only stored on your laptop or desktop. If either of these were to be damaged or stolen, the pictures can be accessed from any computer using the log in identification and password you created. Apple’s iCloud is used for storing music, pictures, calendars etc., across all of your Apple devices.
For small business’ it allows them to access resources using an internet connection and web browsing. As the business expands they can change the amount of services they need. An example of this would be installing an accounting package on all of the individual computers in an office which can be costly versus having the accounting software stored outside the organizations’ firewall on shared systems.
I think it will have a lasting impact, as it is a viable option for small business to compete globally as well as keeping their costs down. For individual users it’s the peace of mind that knowing your important information such as pictures and videos is stored remotely and can be accessed from anywhere. Recently friends lost everything in a house fire, including their laptops and a desktop. Knowing that they had stored 3 generations of photographs on iCloud gave them some relief to get precious memories back that would otherwise be lost.

Sorry this was cut- off from previous post :
“The cloud” allows you to keep and store information on a remote server (the cloud) instead in one physical place such as a laptop, desktop or cellphone. Data can be accessed wherever there is an internet connection.

Some examples of cloud computing are Facebook, whereby you can store videos and pictures without having to worry about losing them, if perhaps they were only stored on your laptop or desktop. If either of these were to be damaged or stolen, the pictures can be accessed from any computer using the log in identification and password you created. Apple’s iCloud is used for storing music, pictures, calendars etc., across all of your Apple devices.
For small business’ it allows them to access resources using an internet connection and web browsing. As the business expands they can change the amount of services they need. An example of this would be installing an accounting package on all of the individual computers in an office which can be costly versus having the accounting software stored outside the organizations’ firewall on shared systems.
I think it will have a lasting impact, as it is a viable option for small business to compete globally as well as keeping their costs down. For individual users it’s the peace of mind that knowing your important information such as pictures and videos is stored remotely and can be accessed from anywhere. Recently friends lost everything in a house fire, including their laptops and a desktop. Knowing that they had stored 3 generations of photographs on iCloud gave them some relief to get precious memories back that would otherwise be lost.

What a wonderfully timely topic for me as I have had salesforce aggressively selling their grant software, foundation connect, to me at work. Part of the problem I have with it is the cloud. I would describe the cloud as a way for people to share resources and have access to their data remotely. While these things appeal to my personal computing needs, I do not like the idea of losing control of the Foundations data. The contract I was given specifies that they can use the Foundation’s data to complete surveys. I can only imagine how many more grant request we would begin to receive and how many mailing lists we would be put on! The company wants me to pay approximately $10,000 for the pleasure of using their software and storing the Foundation information on the cloud, but are quick to say that they are not responsible for time and work lost if there is a problem with the system.

Everyone seems to agree that the cloud is the way of the future. I am surprised that people have given up their rights and ownership of their information so easily.

With the cloud, one is able to store documents and other files through storage accessed via the internet as opposed to an in-house server. Cloud-based software is also available where one can access programs from any place at any time as long as that person is connected to the internet. It’s easier to share files and often times work on the same files as someone else with cloud-based applications since the programs, files, etc. are accessed using the internet.

I think the cloud will have a lasting impact. People are turning toward technology more and more as they try to find ways to work and live efficiently. The cloud offers the ability to work as efficiently as possible as long as there is an internet connection. I understand the concerns included in the article. I’ve definitely been in a situation where I desperately needed to access a file that was saved on Google Drive while our WiFi was down, but was able to open the file through Google Drive on my phone. The intellectual property issues are a big concern of mine, but I feel confident that, in time, IEEE and organizations like it will be able to “establish standards for use”, as the What Is Cloud Computing? article states. Because of its usefulness and the fact that there is a demand for it, I certainly wouldn’t call the cloud “marketing hype”.

The cloud is a means of accessing data, programs, pictures, music or any other stored information over the Internet instead of from a computer’s hard drive. The cloud service gives much more storage capacity than a personal computer. I believe the cloud will continue to have a lasting impact. As hackers continue to infiltrate many large corporations infrastructures, I think it becomes evident that the need for a fast, reliable method to store and retrieve data that is both secure and cost efficient remains a great option for many companies.

I would explain the cloud by opening up the programs on someone’s computer that reside on the hard drive and then sharing that “in the cloud” those programs are linked to via the Internet. It allows many to access the program but also slows that access from anywhere you can log in and have Internet access. Most people are already using the cloud via social media applications like Facebook, Snapchat, etc. The benefit I would share is not only access from anywhere but also that the programs are always being updated to latest version and they need no assistance from internal IT staff to make sure that happens. This SAaS or PAas world is not a fad. It is an efficient means by which companies can focus in their core business and not be in the software management business. It allows IT staff to focus on process and security with greater attention.

The cloud is also a core component of the Internet of Things. Companies will be able to leverage the computing and storage available in the cloud to rapidly develop and launch IoT solutions for both B2B and consumers.

One application is the connected car – Delphi, a long time producer of products for the automotive industry has developed an LTE enabled plug in module that fits the standard diagnostic port on the computer in passenger cars. Data is streamed from the car’s computer to a Delphi application hosted in Microsoft’s cloud. Consumers access the data through a smartphone app or web browser. The key advantage, as noted in this Wired article, is that ‘Delphi can scale up without investing in its own computing infrastructure, or having to develop the know-how’. Delphi can focus on their core competency, deliver innovation for its customers, and leave the ‘back end muck’ to the cloud provider. Using the cloud (as opposed to building their own data center for this product) also ensures they have enough computing to scale up as consumers increase demand for their connected car service (elastic computing).

http://www.wired.com/2015/03/cloud-computing-can-make-old-beater-connected-car/

The cloud is not a new idea. Instead it is a new incarnation of an old idea. In many ways “the cloud” is analogous to the Internet itself. At a high level, the Internet was created to allow information to be dispersed efficiently across several locations to lower the risk of losing the information. “The cloud” in the generic sense of the term is doing the same thing. Some key changes in “the cloud” today is that at its core, “the cloud” is all about optimization for both the consumer and the provider. Providers optimize by taking advantage of economies of scale to deliver services for consumers. Consumers optimize by simplifying and offloading the complexity of scale/availability to a provider. It is a classic win/win design that shifts the IT power dynamic in favor of the consumer.

If you have any interest in what “the cloud” means to service providers, read consumption economics (http://www.getabstract.com/en/summary/industries/consumption-economics/17230/). It describes the basis of many cloud based services that you see today and explains how the power is shifting to the consumer.

In simple terms, the “Cloud” is a space on the internet where applications and files can be executed, saved/stored and accessed from anywhere in the world(as long as you have internet). It can store numerous amounts of data. It will have a lasting impact as every major company is headed towards cloud, with one of the last major company’s being Microsoft which it is now offering Office 365 as a cloud.

I would explain “the cloud” to a co-worker as being a virtual space where data and applications are centralized, managed and stored. I think it is definitely an important innovation with a lasting impact. Cloud computing is advantageous in that it can be cost-effective, lower maintenance, reliable, secure and flexible.

Here’s a story on Google’s ‘race to zero’ – to marginalize the providing of cloud storage, forcing providers to find profit margins on other services (of which Google probably had something lined up). Many of us currently expect the cloud to be free but if providers cannot find services to sell to the masses, their cloud storage and services will not be able to be provided (as it does cost these companies significant dollars to operate the data centers).

http://www.businessinsider.com/google-were-revolutionizing-storage-2015-3?utm_content=buffer8c8ca&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

The one thing that I think will always keep cloud computing from taking over completely is the lack of security of always having access to a physical copy of your data. I don’t think anything can really beat that. The article mentions outages knocking out Netflix, Pintrest, and the like. Imagine if you really wanted to watch a movie or a show or something, Netflix is all you have, and then it goes out. You’d probably be mildly to severely crushed, right? Well picture that same scenario, only you’re trying to access your business data, apps, and programs instead of Netflix. That’s devastating. And with physical memory becoming relatively cheap, I imagine there will always be some kind of back up that’s always held on to in order to mitigate the damage of a cloud outage.

If privacy rights and security issues are consumer friendly, and online access remains relatively easy and inexpensive, then it seems to me that the cloud is definitely an important innovation that will have lasting impact. The ability to store and access data, pictures, programs, etc., from anywhere via any device at any time, while also relieving the individual or business from constantly having to use up capacity and other resources, from always needing to upgrade, etc., is a valuable service innovation that will only grow in usefulness.
To explain the cloud to a co-worker I would just tell them that they should think of all the programs, data, pictures, files, etc. that they have installed or downloaded onto their computer…. and think of what everyone else in the company has on their computers. All of that can be shifted from individual computers onto/into the cloud, and still be accessed by you as easily as if it was on your own computer. Also, instead of needing to send rounds of emails back and forth to update others and get their input on a project that you are working on, with the cloud you can allow all the other project team members to view all the work and input their two cents with relative ease.

In my own words I would say the cloud is a place where you can store and access data through the internet as opposed to on your local hard drive. “The cloud” is just a term used to describe the internet. It is something that can be accessed from any computer or mobile device at any time or anywhere. Everyone can login to this one database from different places at the same time.

I think the cloud is a very important innovation that will have a lasting impact. Right now 80% of the large companies in the US are either using cloud services or looking into using these services. It is much more inexpensive and as you near eliminate much of your hardware and software by being able to run your business infrastructure through the internet. Prior to starting my MBA, I couldn’t even tell you what “the cloud” was (I have heard the term a lot) but now I am actively using things like Google docs and recently Google Drive. The fact that we had a dozen different people accessing a document online instead of emailing it back and forth countless times saved us a lot of time when trying to complete our various projects. In one of its simplest forms through this cloud-computing document sharing I am able to see the lasting impact. Like any new technology, I think there are things with it that need tweaking, like who owns the data when it is on the cloud. But that takes time, implementation, failure, and testing to figure out how to make it work most effectively and securely.

I would describe the cloud as a set of internet based capabilities. From storage to computing, much of what your laptop or PC can do can also be done via the web. It is like outsourcing much of the hardware and software in your computer. Additionally, it allows all access to programs, data, etc., from any computer/tablet/smartphone that has an internet connection. Additionally, unlike a PC or laptop, where only one person has access to the information on it, the cloud allow many people to collaborate on the same project at the same time.
I think the cloud is an important development whose future cannot yet be foretold. It certainly has the “bones” or the structure to have a lasting impact, but whether that materializes or not depends upon how the providers of cloud services adapt to new problems, threats, and needs. As discussed in the articles, the benefits of the cloud are undeniable. Access anytime, anywhere, from any machine by multiple parties is an invaluable tool and has put the cloud on the fast-track to widespread, global use. However, it could still be derailed in providers are not nimble in meeting future challenges. As on of the articles stated, if you are using the cloud, you are dependent not only on your cloud provider, but you are also dependent on your ISP. Additionally, the cloud is currently seen as being safe. But it is only a matter of time before hackers figure out how to exploit various cloud services. Thus, the staying power of the cloud will be dependent on the course of its evolution.

My grandfather once asked me to explain “the cloud,” and even though he’s not a co-worker, I’m fairly certain I would have used the same explanation (he’s pretty up on technology and has more gadgets than I do). I explained the cloud as a place where data is stored so it is accessible from any computer with an internet connection as long as the correct login credentials are provided. I told him that while files in the cloud are, in reality, stored on computers somewhere, the access to those files is configured in a way so users do not need a computer or device that is physically connected to that hardware. The files or program can be accessed by inputting a username/password on a website or by logging into a specific application on a computer, tablet, smartphone, or other device. The cloud provides small businesses and individuals with access to services they otherwise would not have the resources to develop, including off-site backup, which is one service I’ve been taking advantage of for several years. I used Gmail as an example of “the cloud,” as he uses it on a regular basis.
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I think cloud computing is here to stay, especially as more people gain access to 24/7 internet and as more businesses have offices and employees in multiple locations. I’m currently working on a project for a small business that includes the implementation of a cloud-based ERP system. The company wants to make its processes and systems scalable so it can grow, but implementing a server-based solution was out of the question – it would have required the purchase, configuration, and maintenance of a server (which in turn would have required increased security and the hiring an IT expert), the costs of the server-based ERP solutions tended to be higher than cloud-bases solutions, and using a server would have required either dummy workstations for non-local employees to access via remote desktop or the implementation of VPN access on the server, and that would have slowed down the program and created a poor user experience. Additionally, the cloud-based ERP solution is much more customizable than the solutions that required in-house servers. Also, since multiple companies are using the same solution and all make various functionality requests, the company implements those solutions on a customer-by-customer basis until the next platform update, and then everyone subscribing to the service benefits from functionality improvements.

I would explain that “the cloud” is basically the internet. It is a virtual place where your interactions, documents, programs, and other activities take place online. Your computer is no longer the machine that stores the information and programs you need, but rather it is now your gateway to “the cloud.” A more simple understanding might be to explain that if you can do your work when you are not connected to the internet, you are not working in the cloud at that moment.

I believe working in the cloud is here to stay, but I do think it will change dramatically. Working in the cloud is rather easy. And “easy” will usually trump all. People have increasingly ubiquitous access to the internet. Whether it be from laptops, smartphones, tablets — across Wi-Fi or cellular networks — chances are good that you can get online anywhere, anytime. That is not going away; therefore, cloud computing is not going away. It is becoming the norm that a person can start working on a file on a work computer, continue working on it on the train ride home from their smartphone, and then finish on their home computer. Cloud computing makes this possible and seamless.

However, cloud computing will change dramatically for two reasons: net neutrality and privacy. Although net neutrality won out recently, I believe the fight will continue. I also unfortunately believe that the internet service providers will win some concessions around charging tiered pricing for different connection speeds and bandwidth ranges. It may not happen in a year or two, but I believe it will happen. When it does, cloud computing will lose some of its attractiveness, especially for companies that need to move/store large amounts of data. Furthermore, the privacy questions raised in the readings will have significant impact on cloud computing. Right now I would bet most assume that the data stored on cloud systems are the creator’s property. However, more and more we’re likely to see cloud providers claim some ownership of the data. We have seen this with Facebook. This is a game-changing issue, in my opinion, and one that will have dramatic implications going forward.

If I were explaining the cloud to a co-worker, I’d tell them that much of the IT infrastructure is similar to current terrestrial based solutions, but based on large server farms that are accessed through the internet. Our company is going through a migration to the cloud right now. Essentially, we’re trying to replicate our current systems, which are housed at a database server offsite near our office, on Amazon Cloud Services. The reasons for moving to the cloud are obvious – we achieve much greater scale at a fraction of the price by using Amazon (and other tricks like MapReduce and Hadoop), instead of paying for expensive, high-end servers. The obvious downside, though, is that we are at whim of Amazon’s IT, rather our own. If Amazon Cloud Services were inaccessible for whatever reason, we’d be unable to serve our clients. We can mitigate this risk somewhat by having two versions of our system running in multiple locations, but if ACS goes down across the country, we’d have a serious business interruption on our hands.
I think “the cloud” will have a lasting impact. The achievable scale is just too great to ignore, especially in an age of “big data,” which is only getting bigger. The data science techniques for tackling “big data” issues are only getting more complex and require more capabilities than a small or medium sized company can incur for their own hardware. Right now, the biggest threat is the lack of competition. Amazon is the clear best-in-class (e.g. here) and no one is particularly close. If Amazon started charging monopoly rents for their service, costs could skyrocket. Also, if, for whatever reason, Amazon decided to shut down ACS, the market would be left without a first rate provider.

If I were explaining the cloud to a coworker it would probably go like this:

Hey wouldn’t it be cool if we could share our calendars, our documents, our programs and data by just logging on to the internet? The cloud is like a virtual warehouse where you can store data, programs and more. The best part about it is that we can do this on any device we wanted and anywhere we wanted. We no longer have to log into the work desktop to access our information nor do we have to use a VPN to access our network information through a work laptop. Another cool perk is that we can have access to the same information but customize it to meet our individual needs.

I think the cloud will have a lasting impact if done correctly. We currently use the cloud in our personal lives when using Apple photo stream, iCloud, Google Drive, etc. These products provide us with an ease of use that could transfer quite nicely to the workplace. The key to success would be to have the appropriate internet bandwidth to support multiple users, invest in a system that is secure and has a reliable infrastructure to ensure there are no system issues.

I am luck enough that most of my coworkers are pretty tech savvy so I don’t have to explain this to them. I could imagine trying to explain it to one of my employees, though. Where do I start as I prepare for a lost gaze at the end? The cloud is where you can store your information, whether it be songs, movies, powerpoints, papers, or anything you can do on a computer and retrieve it from any device that you use. It’s like you have a magical shoe box. That shoe box can be all places at the same time. It is omnipresent. (Big word, I know, but most of my employees are religious, so I could break it down further by saying its like the Holy Spirit, everywhere at the same time). You may think you stuffed that shoe box under the bed, but when you get to work, its there, and then when you go to Mom’s house for dinner, it’s there. When you go back home, it’s also there where you left it. That is the Cloud. You can put things in that shoe box, say some family pictures, and when you go to Mom’s for dinner, it is magically there. You can pull out the pictures to show your mom, then put them back in, go home, and the shoe box is right there where you left it all along.

I do think it is a lasting, important innovation and will continue to be explored in the future. I don’t think we have fully explored the whole capability of the cloud yet. It will be interesting to see the cloud in 5 years. We will think what we are doing today using it as outdated. It is not going away anytime soon as we become more dependent on it in our everyday life. A lot of times it is working in our lives and we don’t even know it. We don’t really see it, but its there, helping us to better IT.

Ryann — a placed I used to work encouraged us to use Dropbox for the same purpose as you describe. Then one day we were told to remove Dropbox and switch to Box.net. I don’t recall the exact argument for the switch, but I think it was related to security or privacy (we were given a really hard time if caught using Dropbox on work-provided computers). This was a few years ago so it’s very possible Dropbox has improved their security, but I was wondering if this is something that’s come up at all at your organization.

I would explain it as a type of storage device but via the internet. The “cloud” gives us access to all of our information on the go without the need to carry items such as portable hard drives or USB flash drives. Like everything else, the cloud can be accessed by intruders so it important to know what you are uploading. Imagine heading into work and you realize you forgot the presentation on a portable flash drive and the meeting starts in 5 minutes! Well, had you uploaded your document to the “cloud”, you would be able to access it via any computer terminal or your cellphone and print/show it. The “cloud” is becoming a vital part of every business, student, and healthcare professional. We all want to carry our information, music, pictures and all other files with us constantly, but hate carrying actual devices. Well the “cloud” aids us in accessing this information. Additionally the “cloud” has enabled us to create backups of crucial information in the event of a catastrophe or if our devices are stolen. Apple “iCloud” has played a crucial role in securing and backing up information. I can see the “cloud” eventually becoming the major source of backing up your data.

It was relatively easy to explain “the cloud” to a co-worker since we had to rebuild our appraisal database from scratch after our main computer died last fall. Using Carbonite’s system, we lost about a half day worth of work but really didn’t miss a beat because we were able to access any files we needed from our personal computers until we got the main system back on track. And, while we were only retrieving data backed up to the cloud versus working directly, having that capability is such a relief as compared to what we had to deal with before the service was available.
Our last assignment with analytics last week was my first venture into Google Drive and I was amazed at the ease of use, the speed and how much was available all in one place. I had helped my daughter set up her Google Docs for school but never took the time to look in to the other apps and services. It made me realize I had some catching up to do after having been tied into our appraisal systems for such a long time. I’m wasting time not transferring my systems to something more mobile than I already have. With that in mind, “the cloud” is just in its early stages (earlier than most stage for me) and should continue as an important tool that companies use for data access, sharing and storing for years to come. Much like any other technology, somebody’s going to build a better mousetrap than what exists now but it seems like an innovation that represents much more than marketing hype. It will be interesting to see how issues such as crashes or intellectual property affect the number of players in the market.

While Cloud is a relatively fancy term, it’s concepts and ideas are fairly simple. Since most people took the approach of explaining simply what cloud is I want to take a slightly different approach and talk about multi-tenancy cloud. We are all aware that the cloud is a term for something that resides not locally on your computer, but both the hardware and the software are virtual to you as an end user.
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For Multi-tenancy think of your software application as an apartment complex. There is a building that someone else owns and is responsible for, and all of the apartments share the same roof, foundation, bricks, and mortar. However, in your apartment based on rules of the complex you can modify things inside such as paint the room the way you want it, change out the light fixtures, but doubtful that you would be able to modify something foundational such as moving a wall or renovating the bathroom. Think of the modifications you can make internally to those personal settings that you can setup within the software (Configuration). If you were to use Gmail as an example you can personalize the settings to look differently. Now let’s talk about access to the information contained inside. Each tenant has access to the main building to use shared resources such as a laundry facility, but only they have the key to their own apartment or access to their own personal data. While your data remains safe you gain the benefit of being on a shared system, if support is needed the service provider only needs to support one version of the software because everyone is in the same apartment building. This allows for the service provider to also scale as needed. You might not have enough space in your apartment, but by flicking a switch they can build another unit, or they can knock down a wall and create a larger apartment.
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Being that I work on cloud based ERP software I have no belief that it is just marketing hype and it will have a long lasting impact. It tends to be substantially safer and cheaper to have data and infrasture where you don’t need to support it. Also, by means of data privacy and security I believe the cloud providers will do a better job of protecting your information than you could ever do internally. Companies no longer have to maintain a large IT, have large server rooms and have to worry about things that don’t differentiate them. They can focus on the important things and less about IT with a cloud focus.

The concept of cloud computing is actually kind of a sore spot for me right now because I’ve been trying to convince my brother’s company to use Google Drive as an alternative to simply local file storage. After years of being in business, I finally got the company switched to Google Business Apps for shared calendar access, but the idea of remote file storage is still a tough sell for them, mostly for security concerns. Recently I was at the office and our office manager needed “the thumb drive.” I asked what the thumb drive was for, and I kid you not, they use it to transfer files back and forth, instead of through a network or cloud storage. I tried to explain that a cloud system would be more secure and easier to use than a thumb drive, and hopefully I made some progress in convincing them to migrate to cloud storage.

My way of explaining the cloud, is that it is a way to store data on remote services while still maintaining access from any device via the internet. Cloud storage makes it possible to collaborate and access data from anywhere in the world, and protects data from physical loss or destruction. Cloud storage is secure because of encryption systems, and can be far less expensive than trying to install a local network or server system.

I would describe the cloud to a co-worker using same “Giant Office Building” example from the salesforce.com article and video. I thought that the explanation hit the nail on the head. The cloud is the internet version of an office building. Everyone in the building shares the infrastructure – the building itself, security, utilities – but offices themselves can be customized to any purpose. A similar comparison could be a gym. People sign up and pay a membership fee for certain services, including access to equipment, utilities (showers, restrooms), security features (key fobs, lockers), and maintenance. In the office building or gym example, everyone uses the same facilities but tailors the experience to what they need.

I do believe that the cloud is an important and long-lasting innovation. Companies are looking to streamline, go green, and work as efficiently as possible. Shared resources that can be tailored to a need save the company on investing in equipment and manpower, electricity, and other resources that can then be devoted elsewhere. They also benefit from the service provider’s feedback loop from many customers resulting in important upgrades that may not be generated by internal feedback and IT support.

The cloud is essentially “somewhere else” that data and online materials are stored yet readily accessible to the user via an internet connection. I would argue that it’s not really the internet, since the material that exists “in the cloud” is in reality being stored in a large building filled with servers somewhere here or overseas. Having the material stored “not on your own hard drive or server” is what really defines items as being in “the cloud” and cloud computing.

I think that the cloud is an incredibly powerful innovation because it frees the user from “holding” all of their data on their own devices and servers…it essentially gives all of us almost endless storage space. I believe it is here to stay, but I worry greatly about its security from hackers and cyber terror, as well as the concerns about ownership and access to the data, as cited in the PC Mag article. It seems that for the near future the concept of ever increasing storage capacity (described by Moore’s Law) will allow increasing amounts of data to be held locally (on hard drives), but there is so much data being stored today that it is likely that local storage, despite its higher security and guaranteed access (what happens when the internet is “down?”) will not suffice for most organizations with data-rich products and services

Hi Ryann – can you explain the part about “versus having IT move us to the correct size and upgrades when necessary?” I’ve always thought that one of the main benefits of moving to the cloud was only using the resources you need. In other words, you don’t have to buy hardware that is more powerful than you need now because you anticipate needing the power a year or two from now. You get a much more flat cost path than the jagged increases each time you need to upgrade. Or maybe I’m not understanding what you mean by implementing security features on an individual basis?

Some of the Directors in our firm are well established healthcare professionals and they really haven’t dabbled with technology too much. I can’t blame them as their primary concern has been patient care. They also like to deal with concrete concepts so the idea of a cloud is somewhat confusing to them. I tried to talk to a Director about the benefits of the cloud while on an engagement and the following unfolded:
I told her that instead of saving files to your computer you save it on the internet. Immediately mind blown. I trudged along and asked the Director if she ever had a computer crash and lost files. Sure enough she did. I told her the cloud solves that problem because your files are stored on the internet so you can access the files with any device. I of course had to address the entire internet aspect and assured her that it was secure through the use of login in credentials. I tried to keep it high-level and it was apparent the wheels were put in motion. After I gave her more examples of how it would help on some of the projects she was a little intrigued. I took it as a small victory and will revisit it later.
The conversation kind of made me think about the e-mail commercial that aired during the Super Bowl. The hosts of I believe the Today Show were completely confused about this e-mail thing. It’s the same thing here. Some people just aren’t accustomed to something new so it will take time for more people to get on board.

The cloud is place on the internet that serves as virtual data storage for things like software and hardware that allows users to access the data remotely via an internet connection rather than on your computer. This same computer is now the vehicle to access the data rather than where the data is stored.

If I were to explain the cloud to a coworker, I would state that the Cloud is a virtual server that offers storage services in an unknown location, and provides easy access of data from any device over a network (internet). It is like the network that delivers electricity from suppliers to consumers, without understanding the infrastructure required to provide that service. The Cloud allows companies applications to run faster, with easier manageability and fewer maintenance, permits IT to quickly adjust its resources to meet fluctuating and unpredictable business demands. I believe that the Cloud is an important innovation that will have a lasting impact because many businesses are driven to use the cloud as a means to reorganize its IT infrastructure and its cost efficient.

JiHae, I can’t really say how secure Dropbox is now. The closest thing I could find to a quick answer to your question comes from a May 2014 post on the Motley Fool site. If you google “how secure is dropbox,” or even “how secure is cloud-computing” you get all sorts of dire warnings about security issues along with each company’s FAQ boasting about how secure your information is when using their service. Like Ryann said below — where there’s a will, there’s a way. I have a hard time believing any digital file is 100% secure (even if it’s not connected to the internet, a rogue thumb drive can do harm), but I also believe that some services/programs do a much better job than others in terms of protecting that data.

The cloud allows for the internet of things to communicate seamlessly and effortlessly via backend channels supported on external servers. In short – it allows for us to use others hardware to handle the bulk of our activities required in the back round for our common uses.

The cloud is perhaps the leading innovation of era. Sadly, I think it has been stymied by the controversies surrounding data breaches. The cloud allows us to interact with complex systems and to perform seriously heavy computational activities without investing the infrastructure. Additionally, it takes us away from the idea of a home or desktop computer. Now, we can access the apps we need, when we need them, from wherever we ar.e

In healthcare especially, I think the cloud is particularly of interest. Sadly, most EMRs (though not all, see Aetna’s new EMR) are not cloud based. We need to establish the public perception of security in these systems in order for them to take serious ground in healthcare.

This is a great question, and I’m pretty sure I had to describe “the cloud” to my parents while I was home for Christmas. These two articles do a pretty great job of explaining it. To explain the concept I would draw an analogy. Think of local computing storage as your basement or attic; everything you own, all your packages and photos and things, are kept up there. You know all of your stuff is nice and secure. The problem is you can’t access anything when you’re not home. Cloud computing is like having a public storage unit, except you can access it anywhere. Visiting aunt Franny in Canada? No problem, you can still get to that box of photos you forgot to pack!
Cloud computing is similar; everything you store on your computer, or every program you use, can be accessed or run remotely on the cloud. For instance you can access your email from any computer and from anywhere.

Cloud computing is definitely here to stay. Increasingly personal users and businesses are turning to the cloud for their computing needs. For a descriptive example, lets consider the evolution of the music industry over the last 20 years. In the late 90s when I was in high school for instance, music was sold mostly on CDs. Like that new song you heard on the radio? Gotta buy the whole CD and play it on your personal stereo system or Discman. Some of my more techie friends were early adopters of digital audio coding and began ripping CDs back then. The utility of MP3 files slowly caught on, and the iPod was released along with other players; users could carry hundreds or thousands of songs in a pocket-sized device instead of carrying around a massive book of CDs! Concurrently iTunes came out and brought MP3 music to the mainstream. Now music fans could pick and choose songs and only purchase what they want. Now users could explore songs by a massive variety of artists from the comfort of their own living rooms. (Here is an interesting article about how artists will no longer make money on music sales: http://www.digitalmusicnews.com/permalink/2014/09/08/fans-arent-going-pay-music-anymore-thats-ok)

Computing in general has – and is – taking a similar evolution. Increasingly businesses and personal users are recognizing the increased utility and freedom of embracing cloud technology. Commonly used programs like the MS Office series are moving online so that users can work on their documents from home, work or school without lugging around a laptop, and easily collaborate with their peers. From a business perspective, cloud computing is akin to outsourcing your IT department; not only does it decrease employee and infrastructure requirements, but there are tremendous cost savings involved with the scale economies of multi-tenancy. As these articles explain, cloud apps can also drastically reduce the start-up time of a new business of service. For all these points and more, there’s almost no reason not to use cloud computing.

If I were to explain the cloud to a co-worker I would say that the cloud is an offsite, online storage system that allows the user to access their data from anywhere across many platforms. The cloud is a new approach to an age old data storage system. In the past, people and small organizations had either an onsite data server or portable hard drive or CD’s to back up their data, if they even backed it up at all. But now that backup is online in an offsite server location. With the emergence of different kinds of tech like cellphones, Wi-Fi capable cameras, tablets, ect… the cloud makes it a lot easier to access data between platforms which is why I think it is such an important innovation that will continue into the future. Like we discussed last week, Google Drive is a personal version of the cloud that allows users up to 15GB of free online storage. With companies like Google introducing low level free cloud storage I think it will continue to catch on until it is a commodity to everyone with a digital device. There has been some push-back on cloud storage over the past few years though. The main reason for this push-back is because of the hacking scandals that have come out of it. One of the most well-known ones happened last year where many celebrities and businessmen had their iCloud accounts hacked and all of their pictures and data were released to the public. This type of security breach has been hyped over and over by the media which has led to many misconceptions about the cloud. Even with these potential security risks I still think the cloud will have a lasting impact because it allows may people to back up their data who otherwise wouldn’t because they either don’t know how or it is too big of an inconvenience.

Ryann, I agree that you have to be careful of what you put on the cloud. Like in that movie “Sex Tape” and with all the Apple iCloud hacking scandals that have been happening recently it shows that nothing store online is truly secure. I don’t think this should deter anyone from backing up online though. But the same goes with online storage like dropbox and megaupload, you just have to be careful what you put up and I even suggest having an onsite backup of all your important documents as well. When I was in my undergrad I used MegaUpload to store my school work and one day the FBI raided the severs and site founder for copyright infringement and the site was seized. The FBI locked the site and allowed the server leases to run out so all my data along with hundreds of thousands of other peoples data got erased. I learned a valuable lesson about online storage that day, I learned that online storage is a great too but people should still keep the old fashioned onsite backup of important data. Like you said, it will be interesting how the could evolves with consumers and businesses in the future.

The cloud is a concept in IT which is about leveraging shared resources for the basic tasks in IT like compute and storage. The “Cloud” provides a set of shared services in various flavors of computing and storage are provided for consumers of IT services to leverage. The cloud is all about provided shared computing resources on demand similar to how one would rent a car when they need additional cars. You pay for what you use in that example. The cloud provides economies of scale because your sharing a resource with many others who are not all using the capacity at the same time. The cloud is many ways is a throw back to the days of mainframe computing where companies would pay for rented time on computers since computers too expensive to own. The cloud is a full lifecycle evolution of that model, I think the cloud will have a lasting impact and it is not marketing hype. However I do think the cloud will evolve further and change again. The value proposition of shared computing resources continues to grow with companies looking for more and more capacity. Companies like Salesforce, Oracle, Microsoft, Apple and IBM are investing billions of dollar in building out large data centers to support their cloud strategies so I doubt its a hype as these organizations have solid viable business models for building new products/services delivered via the cloud. With the appetite of the consumer for more data driven applications, music, content(video, movies) and internet access the cloud is a trend which is here to stay and will continue to grow over the next decade.

Simply put, cloud computing means de-localized IT. Whether one is running a particular piece of software, storing and accessing data, or even building new software, doing these things “in the cloud” means doing them via the Internet on hardware that belongs to, and is operated and maintained by someone else. The implications for both individuals and businesses are huge, starting with the fact that when you’re operating via cloud computing, you have access to whatever you’re working on or working with from just about anywhere via the web. In addition, the time, money, and personnel traditionally associated with hosting, operating, and maintaining all of one’s IT storage and functions locally can be drastically reduced by treating them as services to be purchased, rather than capabilities to be maintained in-house. The cloud computing movement appears to be much more than a “phase” of current business practice – it’s making a huge impact in terms of the number of firms that are currently using it, and the market for such services is heading toward generating $100 billion a year.

The idea of “the cloud” is that of a bank of servers in warehouse is either run by Amazon, Google, or some of the other large internet companies that allow for storage and web only usage. Rather than you having the program on your computer and doing work and saving it to your computer the program and the storage location for data are in a bank of servers. This allows you to use any device weather it be an iPhone, iPad, android device, or computer to do you work and activities as long as you have an Internet connection. I do believe that this will have a lasting impact because it obviates the need for significant hardware which allows cheaper access to programs and storage. The length of cloud computing will be determined by whether the telecom companies limit internet access or start to make claims of ownership to data stored on their servers. If these things occur cloud computing for the most part will be dead.

“You can think of the cloud as a virtual storage locker that you rent from a storage company. Because the storage locker is virtual you can accesses it from anywhere as long as you have internet access. The storage company is providing all the hardware and software to provide this service and as a customer we are just paying for the space to store our information and instant access.”
This type of service can be very beneficial for small start ups that don’t have capital to invest in expense hardware and it’s flexible enough to grow as the company grows without a large price tag. It can also provide huge benefits for international businesses and companies with virtual teams to help facilitate real time communication. Ultimately the benefits to multiple companies make this tool something that will only grow stronger as the world becomes more globalized.

My concept of cloud computing is that the data being accessed lives on the internet and access is achieved via an internet connection. The software that accesses the data also lives on the internet and is accessed via an internet connection. Provided there are no major hacks, I think cloud computing will likely continue to grow in popularity and is likely not a fad. My hospital is located in two rehabbed side by side row homes that were built in the 1850s. When I first computerized, I had to pay to have rj45 jacks (computer hook ups) installed in any area of my hospital where I wanted to install a work station, and all the wires leading from those individual jacks joined at one location (in my case the basement) and were then connected to a bridge that was connected to my internet modem and my server. My server was the “brain” of the operation that allowed all of the work stations to access the same database. If I needed an additional work station, I needed to first install a new jack. With a reliable wireless signal, and wireless enabled computers, the jacks are no longer necessary, so that means I don’t have to pay an electrician to run additional cable when I need an additional work station. It also means I can now use mobile tablets. If I moved to cloud computing, I could get rid of my server and all the ugly computer cable that connects to it. My server was an expensive computer to purchase, and a large portion of the installation costs associated with the purchase of the server along with the software was paying an IT professional to configure my server. On a monthly basis I pay the IT company I use a hardware maintenance contract and I pay for a software assurance plan. It is quite likely, that I could completely eliminate my IT hardware expense if I moved everything to the cloud. If I was cash strapped and starting out, cloud computing would look very attractive.

In real simple terms, the cloud is a network that allows you to access information and data through the Internet as opposed to accessing it directly from a piece of hardware such as a hard drive. The information is obtained from a network of servers that are connected online. It is extremely important because it makes data accessible from remote locations, thus reducing costs and dependence on hardware and location.

The cloud. How would I explain the cloud……hmmm. This would be the same conversation as back when physical file folders and documents left the file cabinet and went on the computer hard drive. Little Invisible Space (IS) people do it. Yes, that’s right. They now live in the clouds instead of on hard drives. I type a document press save and they come take my document away to their happy cloud world and hold it there. I think they play games with it. But, whenever I want that document back on my screen, no matter where I am, the little IS people bring it instantly back. Its magical. For the less imaginative people; the cloud is simply offsite server storage reached through the internet. Yawn.

The “cloud” is a server that is based on the internet. You can access your files from anywhere and on any device. How we work now is that we have to connect to VPN prior to being able to access our files on network drives, the “cloud” eliminates all of this. Instead of saving our documents on a server we are saving them on folders on the internet. Although our system may go down from time to time and all of the IT employees are running around trying to fix it so we can access our files, if we adopted the “cloud” system, this would about never happen. Our documents are even more secure due to the fact that millions are invested in security rather than the small amount we can spend on security.
The “cloud” is not just the latest fad but it is going to last. With companies cutting as much overhead costs as possible and trying to spend money on strategic decisions, they will continue to use “cloud” based solutions in order to continue moving forward.

The cloud is a virtual storage space for electronic information that is accessible remotely. This data is stored on multiple tangible servers that allow access through the use of the internet. It is akin to a large storage drive that is not physically attached to your computer, but rather is attached to a bunch of large computers elsewhere that you can access anywhere in the world.

In the words of the great Isaac Asimov: “The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.” This was true in his time, and is especially true now that technology has accelerated the rate of discovery beyond what was imaginable even decades ago. Cloud technology is not immune to this phenomenon. It is intangible, complicated, and hard to understand. In fact, I still can’t wrap my head around how a bunch of numbers, symbols, and letters equal stuff that happens on the computer, let alone how I can watch my friend’s wedding in Singapore from my phone in Philly in real time. Therefore, just because it is hard to understand, I don’t think cloud technology is a fad. It makes so many business operations so easy and efficient, that I think it has rapidly become an invaluable tool. Moreover, the rapid evolution of technology creates the risk of storage technology and formats becoming obsolete rapidly. For instance, remember VCRs? If you have VHS tapes with precious family memories in your attic now, you’re going to be hard pressed to find a VCR to try to reformat them into whatever new format is popular now (e.g. Blue ray). The same thing will happen with stored files, where there will no longer be programs to read the format of the files, especially for those files that hinge on the application to store or open them. Storing information on the cloud at least in some part prevents the formats from become obsolete. At least, in that it usually does not require one specific application or format to use the file.

In simplest terms, the “cloud” is an accessible server that allows individuals to access, retrieve, and store an infinite amount data on the internet, WiFi, or even cellular devices rather than a standard hard drive. This innovative technology has numerous benefits as it no longer calls for companies and individuals to be stuck with a physical device such as desktop PC when needing to share or obtain various information ranging from business reports to music and photos. Also, if a company wants to share information, the cloud allows multiple employees to have access to the same data at the same time. I currently use an s-drive on a desktop PC at work which has barriers. For example, only one individual can access a data report at a time on the s-drive. Another benefit is related to broken devices. When a hard drive or desktop PC crashes, you ultimately lose your stored data. With cloud, there is the ability to keep the data and restore it once the device is replaced. I can personally relate to this. I broke my iPhone a few weeks ago. I had my iCloud drive on and the back up feature immediately kicked in. Once I purchased my new iPhone all of my photos, music, and information was restored to the new device. With all this in mind, I do not think the “cloud” is a marketing hype. It should be seen as an essential innovation in today’s world.

Cloud has become so popular in modern technology, every person probably has her or his own interpretation. For me, it simply means store and access your data remotely somewhere on the web, a place where the physical existence is not clear for end users, but the end users can access it 24/7. The cloud facilitate all our computing in a way that have not been foreseen before. For example, if we want to sequence one person’s genome, it would take about two weeks to complete in the past, but only take an hour or so to sequence the whole genome using cloud technique. On the other hand, there are issues with it, such as ownership, safety, information sharing, ethics issue, HIPAA law, etc. There has not been rules to govern its use, but it has become a part of life for everybody in the world.

The cloud is a collection of servers run by companies like Amazon, iCloud, Facebook, YouTube, etc that allows users to sync files, videos, pictures, etc wirelessly to be able to access them from any location with an internet connection.

I think the cloud is an important innovation because we are able to access our files and information from anywhere there’s an internet connection. This allows us to be more productive without carrying large hard drives, memory cards, and multiple devices with us. I use it daily for all my files and have used something like it since 2008-2009. However, there are concerns with uploading everything to the cloud and not having a physical copy of something. Vint Cerf, Google’s vice-president warned that all of our information stored in digital files could be lost because of upgrades to technology (http://www.theguardian.com/technology/2015/feb/16/digital-black-hole-delete-memories-information-lost-google-vint-cerf). I would also include as part of the tech upgrades technology going out of date and companies going out of business. I have lost a couple thousand pictures over the past decade to relying on now older technologies like CD-Rs, external hard drives, thumb drives, etc that are more easily lost or have crashed.

Cloud computing is here to stay as more and more start up businesses are using these types of services to start their own businesses which really allows for them to cut down on operating costs.

Here’s how I would describe the cloud to a co-worker:

The cloud is a virtual hard drive.it allows you to store files, or back them up without using your own computer/hardware. This helps mitigate risk associated with loss, theft, or damage to your work/personal device. However, unlike a safety deposit box at a bank, the legal ownership of “your” intellectual property in the cloud, could be claimed by the company your are renting storage from. I don’t think this is a fad, especially given the sheer volume of data individuals are ‘creating’ — I.e. Digital memories.

The Cloud is simply a term used to describe software and services that we use over the internet, as opposed to being housed on the hard drive of our computers or in a data center that our firm owns or manages. This can be demonstrated by considering tools that we use every day in our personal lives such as iCloud, Netflix, online banking, Facebook and a multitude of other internet based services. The Cloud can also include SaaS or software as a service offerings such as Salesforce.com, Workday and numerous other enterprise services, where data is housed on servers owned by the service provider and available to you on demand and over the internet. This is exactly the opposite of traditional on premise software deployments where software is housed on company owned servers and managed by internal IT staff. The Cloud is also not hype or a short term trend. Being in the technology world, I see first-hand, how many firms have completely shifted their IT strategy to the Cloud. Fewer firms are buying software to be deployed on-premise and are now demanding world-class Cloud products that meet every increasing standards for up-time, security and latency. A Cloud strategy generally enables a firm to streamline their IT departments, reduce internal hardware purchases and upkeep, and limit the time spent on upgrades and software implementations. In many cases, there is a very strong business case for the Cloud that can be justified in both strategic value and cost savings. However, the Cloud is not a catch-all and there are certainly some types of software that are more appropriately deployed on premise. However, the trend is to the Cloud and enterprise providers who fall behind, will have a very difficult time recovering in their respective industries.

The way I would explain “the cloud” to a co-worker would be to have them first refer to it as online storage rather than the marketing term “cloud” that it has been given. Then I would find out if they use Google Docs or have a Gmail account or a Facebook account. More than likely they use one or both. Then I would tell them that they already familiar with what “the cloud” (or our new easy to understand term: online storage) is, but they don’t realize it. And then I would explain that all of their emails and documents on Google and their photos on Facebook are all stored in online storage rather than on their computer hard drive. I think “the cloud” is an important innovation and will have a lasting impact because of the convenience it provides its users (it’s available to anyone) and the fact that it can be used fora more than just a storage solution. When dealing with the common user with all their data in “the cloud”, they can wipe an old computer and dispose of it and then buy a new computer and simply download all their data on their new hard drive from “the cloud”. Even more comforting to a user, if their computer were damaged or destroyed in a fire all of their information would be safely backed-up in “the cloud”. I think some cloud start-ups are just marketing hype and will fail, but the cloud business model as a whole is here to stay.

Think of the “the Cloud” or internet as a large cloud that has the capacity to hold all your data virtually in the sky so you do not have to store it on your hardware. This service allows others to have access to your data files and they do not have to ask you to send them via email. You will be able to share your files wirelessly with other coworkers and cross functionally. “The Cloud” will have a lasting impact since it’s a service that increases the speed, efficiency, and convenience of storing and retrieving information. It is a solution based service that provides a cost reduction and eliminates the need for additional long term software or hardware.

I would define “the cloud” as the web-based warehouse utilized in hosting, processing and managing data without the presence of any hardware or software infrastructure. Cloud technology relieves businesses of the responsibility of running inevitable computer components, leaving the tasks to the hosting vendors.
I strongly believe that cloud computing is a technological breakthrough that is here for good. It has been tested and proven as worthy invention. It not only benefits small businesses that may not afford sophisticated IT infrastructure, it also benefits large organizations. It enables businesses to focus their time and resources on other innovative ideas without distractions.

I definitely prefer Steve Brown’s explanation of the cloud than the actual description! I would explain cloud as an on-demand – public or privately managed – service that is provided by a vendor who makes available huge datacenters – at predetermined transactional rates – which are capable of processing, storing, and backing up information and applications for a large number of clients. It can deliver significant cost savings/reductions – at least initially; time will tell if it’s sustained – for a business, regardless of size. Make no mistake about it – the cloud is here to stay and it will either carry on in its current state or a hybrid capacity until an even better solution comes along to unseat it.
http://www.wired.com/2012/03/cloud-here-to-stay/
I found an interesting article that asks if legacy (yes, they’re already being called legacy) providers like Amazon, Microsoft, IBM, and Google are here to stay or if they’ll be brushed aside by a startup. It is interesting to consider the possibility for second mover advantage with regards to cloud superiority. It would be fascinating to see if an emerging player can capitalize on the foundation laid by these providers and innovate a new service (either a hybrid cloud service or a completely new innovation) that seizes control of the market from the current tech giants. Take Google for example: 70% of its time is dedicated to its core search services. It innovates on the edges. This sounds a little bit (I said a little; not exactly) like Microsoft’s complacency with personal computers. I can see the potential for stagnation and possible loss of influence. This is why Amazon is now in firm control of the cloud market because it saw an opportunity and seized it – even if investors could not connect the dots between retailer and tech company. The digital world moves too fast to rest on your laurels. Companies must be able to identify emerging trends in technology early and exploit them for their benefit.
http://it.toolbox.com/blogs/byod-cloud/are-legacy-cloud-providers-here-to-stay-or-will-they-be-gone-with-the-wind-65130
Finally, the Army has gone all in on virtualization, at least at the Pentagon and we’ll see if can be applied across the force. If it can, there are wide-ranging implications and opens up a multitude of possibilities for government systems. As I mentioned in the Amazon thread, AWS now provides services to the Department of Defense (DoD). I wonder if this is a temporary solution until they can build their own equivalent datacenter. In the last few years, the Army has installed five Regional Hub Nodes (RHN) worldwide which serve as long-haul reach-back centers to secure and non-secure networks. If the DoD can virtualize all systems – no matter where they are in the world – and becomes strictly reliant on cloud computing/storage, I cannot see unclassified data going to AWS and classified data going to a government repository.
http://www.federaltimes.com/story/government/interview/one-one/2015/01/16/gregory-garcia-desktop-virtualization/21859141/
http://www.army.mil/article/77034/Army_completes_last_Regional_Hub_Node/

The cloud references a network of servers which allows businesses and consumers to access large amounts of storage space for minimal costs. The cloud takes the place of having to store data onsite at either your place of business or residence and minimizes the costs required to purchase hard drives or servers. For companies, this is typically an efficient way maximizes the available space while minimizes costs. Also, having data stored in the cloud minimizes the exposure to mechanical failure or damage.

The “cloud” is an off-site server, owned by a third party, hosting several individual’s or companies’ can store their data and use software. The cloud eliminates the need for those individuals to have the hardware and everything that goes with it at their personal sites.
I think it will have a lasting impact as long as the internet providers are stable because it makes the IT process easier for the end user. I see internet access as the biggest deficit with cloud computing because the system is completely dependent on your access and also the access of the providers.

This post should have a “thumbs up” like option. Thanks Professor!

Before I answer the question, I think it is important to consider how “disruption” is defined. I consider it to be a temporary or permanent decrease in sustainable profitability that may end in current business models becoming obsolete. With this in mind, the industries I think will be least likely to be disrupted are social media and technology. The reason I don’t think social media is going to be affected by technology is twofold: 1) Social media is typically not on the receiving end of disruptions, rather, they are the disruptors. 2) Social media’s emergence as an industry was based on new technological capabilities. Technological changes are nothing a Facebook or Google are unfamiliar with. As changes arise, these social media and technology giants wouldn’t have an issue responding to it in a sustainable and profitable way. The same reasoning applies to the broader tech businesses. This sector seems to know what is ahead before most of the rest of the economy catches on, so it puts them in a less vulnerable position to be disrupted by technological changes.

Ultimately, I don’t believe any business type will avoid being disrupted by technology. We are in the information age, and increasingly in the age of big data. Therefore, even if the product or service is not directly affected by technology, it will become increasingly reliant on the trends of the people or else fade into obscurity. There is always a more efficient way to do something, whether it is in oil drilling, food service, or agriculture, and usually the effects of technology are what increase efficiency. Trying to avoid the disruptions of technology is just delaying the inevitable downfall if the owner does not pay attention. Everyone wants things cheaper, quicker, and safer, and technology is the best way to achieve that.

There are definitely some similarities with the old and new IT priority systems at Volkswagen – not all being positive. But, it appears, as a whole, that the new process installed for managing priorities, the Business Process, Technology and Organization group by Dr. Matulovic, is an overall better system than the old process used by the company prior to 2002.

One common theme with both the old and new systems is the underfunding and lack of prioritization for information technology. The 2004 budget of $60 million (capped by the VW parent company) for funding requirements over $200 million represents a strong disconnect between department needs and corporate interest in IT investment. While I don’t think there needs to be 100% funding for proposed projects, it seems that the gap between proposed funding and the budget should be more closely aligned. This seems consistent with the pre-2002 view that IT is simply an overhead cost that should be kept at a minimum. IT, in general, seems to have been consistently viewed as a cost that VW wanted to keep low and struggled to control or truly understand the value associated with proper implementation.

However, Mr. Matulovic’s new department gave VW something that had been lacking with the old system – an in-house group devoted exclusively to IT process development. By establishing this, the company was able to develop better processes that not only focused on finding the projects best suited for the company needs but also create forums where business units could work together with their proposed initiatives when they were similar or dependent upon each other. With an established group in place, it may be easier to push for initiatives to focus around IT versus an outsourced group assigned to complete tasks without ties to company plans. It seems to be the start of a larger voice for IT in the VW organization.

Rich:
I think you make a really good point about the budget and requested funding being so far apart. I know it’s scary to think about going into something without a budget, but would it make sense if VW had a flexible budget that allowed the company to evaluate different ideas and approve something based on the return of investment instead of strictly looking at how it will directly impact the budget?

It seems like the new model places limits on innovation and creativity because if an idea/plan is not cost effective to the current budget and not aligning with immediate goals it will be shot down. This could set VW up to miss out on something big.

Thanks,
Will

As a whole I like the new process because it brings the ideas of different departments together and it helps to create a shared vision. I mentioned a concern regarding budget in a previous post, and I have another concern associated with the budget. Let’s say you keep coming up with great ideas, but they fall just outside the ranks of being approved. Are you going to grow frustrated?
It seems like VW needs to expand it’s budget and find a way to incorporate more ideas without immediately thinking about the budget.

The new BPTO centralized IT department is a better more optimized system than what previously existed at VWoA.

VWoA’s previous attempts to manage IT were plagued with operational deficiencies. From 1992 to 1999, VWoA engaged in the complete outsourcing of its IT needs to the Perot group. In 1999, VWoA regrouped the few IT personnel it still directly employed into GedasUSA – a subsidiary charged with assuming the responsibility ofr managing the outsourcing contract with Perot. By creating GedasUSA, VWoA further drained their internal IT abilities, by placing talent in a subsidiary that remained one step removed from central organizations. In addition to GedasUSA, the late 90s bared witness to the birth of eBusiness Teams, which created digital marketing assets and developed new channels of communication with customers. The eBusiness Teams were situated in each of the various organizational entities. Thus, by 2002, VWoA had a third party contractor (Perot), a subsidiary (GedasUSA), and internal teams (eBusiness Teams) all independently making IT decisions. Perhaps unsurprisingly, this system was inefficient, costly, and burdened by numerous cost overruns and project delays.

The new system-wide initiative being led by Dr. Matulovic corrected for many of the aforementioned inefficiencies by centralizing all of the IT decisions into one department, the BPTO. This new system standardized the system for assessing IT projects and created a system of checks and balances that would executives to quantitatively assess IT projects. While the system is large and all encompassing, and is certainly better than the prior system, it is still not ideal. The flaws of the this new system are made apparent by the fact that Supply Flow Project, which was critical to the company’s global sypply chain management objectives, remained unfunded despite going through this rigorous and regimented system. The fact that an initiative so central to VWoA’s business operations could fail to receive full funding demonstrates that the new system requires tweaks.

The new process for managing priorities at Volkswagen of America is better than the old process, which the case describes as haphazard and unstructured debate. Under the new system, projects are prioritized through a transparent system that links common goals and reduces redundancies between business units. In addition, the new system monetizes every project, enabling the team to draw a distinct cutoff in yearly budgeting of projects, eliminating the lowest-priority requests that fall outside of the IT budget. The budget also left some money in reserve for use at the CIO’s discretion on “stay in business” initiatives, a prudent decision, since allotment of the full budget would have certainly led either to over-spending or under-resourcing.

The architecture that the CIO put in place is a huge step forward for the company, if nothing else for the sheer fact that there is now structure. Some of the criticisms are justified, however, as would be expected in any new initiative. The notion that the system didn’t recognize the priority of a global-impact project since it was focused domestically is one example. This deficiency is a result of basing strategic decisions strictly on quantitative analysis. There must be room in strategic development for elements that cannot be captured on an excel sheet. That said, the movement from chaotic back office arguments to a transparent, shared strategic development protocol is a benefit, and any shortcomings can be worked through in future years.

The new process for managing priorities at VWoA is much better than the old process. Change is never easy but the new process was an orderly and rational one that was replacing an old one that had been characterized as haphazard which is not surprising when you read about the history of the IT department and how it was decimated, outsourced and lacked any sort of identity within the company. When Matulovic was moved from VWAG to VWoA, he was quick to change this by establishing the new BPTO, which acted quickly to douse the flames and give power to the PMO. I was surprised to read that simple project management procedures didn’t exist at VW. Once Matulvic was satisfied with the execution phase of existing projects, he tackled the process of making sure the right projects were being funded. The process had structure whereby the business architecture included a blueprint that helped strategists understand the relationships amongst all the different elements. Above all, it provided a means of categorizing organizational activity. A few examples of its success that stood out to me is that it identified that several different business units had similar initiatives which were able to be grouped into common enterprise projects and it also identified dependencies among projects which meant several on the 2004 list would not be able to get started until other projects were completed. While this new process was a step in the right direction, it wasn’t without criticism, which is to be expected in an organization as large as VW. There is no magic solution that will make all of the employees happy but considering how they operated without any sort of defined process or procedure prior to this, I don’t feel that the criticism is justified. I am more amazed that a company such as VWoA was able to get by for as long as they did without a defined process.

The new process for managing priorities at VWoA is an improvement upon the old system but not without flaws. Under the old the system frequent inconsistency was present in regards to the management of information technology. This was made apparent by the constant changes to the internal IT department. In 1992 IT services for VWoA were outsourced to Perot Systems via a 10-year contract agreement. During this time VWoA would reduce their IT personnel to fewer than 10 people, only to realize that their cuts created insufficient IT knowledge within the company. VWoA would later attempt to rectify this issue by rebuilding their IT staff to 28 people. Furthermore, in 1999 VWoA created eBusiness teams, GedasUSA was charged with facilitating the contract with Perot Systems, and in 2002, at the conclusion of the Perot Systems contract, GedasUSA took over the IT operations for VWoA. Between 1999 and 2002, VWoA experienced a classic case of having to many chefs in the kitchen. The new system that was implemented in 2002 allowed cohesion of IT initiatives. The formation of BPTO created a centralized point for all IT issues. This new system was also an improvement of the old system because it provided a structured environment to prioritize initiatives and allocate funding. Under the new system business unit representatives were able to realize that they were planning to invest in similar initiatives, thus reducing redundancy. In addition, dependencies were identified allowing projects that could not be completed in 2004 to be pushed back to later years, freeing up capital for other initiatives. While there were many benefits to the new system there were flaws as well. One frequent complaint about the new system was categorization mistakes that would cause certain business units to go unfunded. With funding so closely tied to categorization, any misrepresentation in that aspect significantly affects that unit. The most glaring deficiency of the new system appears to be the lack of funding for the global supply chain system. Due to the fact that this initiative would benefit the company as whole more than the VWoA, it received inadequate funding. This is an obvious issue that needs to be addressed. A change is warranted to create a system that has a more holistic view of the organization and its initiatives. With that said, this new system is a significant improvement over the previous one, but alterations are needed to optimize the system.

The general assessment of the new process is that it did a good job of aligning the available IT resources with the overall business goal and strategic priorities of VWoA. This was better than the old process mainly because one) it was more structured, two) it prioritize projects and three) it allowed all departments to provide significant input into funding prioritization. While some of the ELT members appeared to be politically motivated, the criticisms of the new process were justified because the new process was weak in a couple of areas. There was a big disconnect between VWoA and VWAG. One such area was; there were global but necessary projects which were excluded from the process, for example, the unfunded Supply Flow Project. To make the process more accepted and adaptable, global VM business objectives needed to be considered with the VMoA goals during prioritization. Another area of weakness was budgetary constraints. The PMO team was unsure of what amount was allocated to them which resulted in a lot of speculations and frustration due t underfunded or unfunded projects. Matulovic should have taken the initiative to explain to the other business leaders that funds were in short supply and that only a portion of projects would be funded.

The new priority management process at VWoA corrected many issues that were problematic in the previous process, including lack of alignment between projects and strategic goals, lack of coordination among business units with similar needs, no clear process to select and prioritize projects, and lack of formalized project management. The new process resulted in more involvement from project stakeholders along with a planned-out process to prioritize and implement projects based on their impact on VWoA’s strategic initiatives. However, the new process did not take into account the importance of global initiatives and their associated project requirements, like the supply chain initiative, nor did it seem to truly gain the stakeholders’ buy-in on the new process, given the amount of pushback after funding decisions were made. Additionally, the many years of considering IT as a relatively-unimportant (strategic-wise) service area rather than as a strategic partner meant that the entire process was still based off of IT providing a service, even if the decision-making process was better organized and prioritized. The new process is still better than the old one, but changes need to be made to ensure global initiatives aren’t ignored and to help change the way VWoA thinks about IT – more of a partner and less of a service provider.

The new process for managing priorities at VWoA was clearly superior to the old one. In any project management setting, there must be some sort of scoring system so that projects can be compared to one another. The top 5 infrastructure projects may all be more valuable to the growth of VWoA than the best marketing project. Although some business units may feel slighted because none of their capital expenditure projects were accepted, the overall benefit to the business will increase due to the ranking of products against company goals.

An alternative method, and perhaps more objective way to prioritize these projects, would be to use NPV and discounted cash flow analysis. By providing a cash flow justification, the PMO can accurately determine the immediate and long term benefit to VWoA. Using a discounted cash flow analysis is the way most companies now select their projects and is the most mathematically defensible way of selecting projects (e.g. here)

I don’t believe the criticisms of the new ranking criteria are justified. However, this is another area where change management is critical. The CIO needs to use all of the Kotter’s techniques (or, alternatively, the GAO strategy from the Conrad reading. The CIO needs to start by instilling a sense of urgency in changing the way projects are selected and ensuring that other key members of the ELT are on his side, while creating and communicating the vision for how the PMO will make their decisions. Without these standard change management techniques, the CIO will face scrutiny and backlash against his decisions.

My assessment is that the new, consolidated and ranked priority management system at Volkswagen of America was imperfect, but it was ultimately better than the decentralized and disorganized system it replaced. Forming the BPTO was a brilliant move to consolidate IT resources and “direct traffic,” as it were, with regard to deciding on which projects to fund. I think it was key that a centralized process or medium was established to consolidate resources. Additionally, ranking projects by priority was a smart way to decide on the allocation of limited resources. In this case the criticisms were not necessarily justified because there was simply a limited budget; this was very much out of Matulovic’s hands. That being said, IT professionals at the company bore some responsibility in identifying ways to cut IT costs and cover more ground with the limited resources they had.

The new system surpassed the old by a huge margin. I agree with the majority here that the old system was imperfect, but the new system, even though it organized the process better, had its flaws. The new system ranked projects in order to receive funding but it left out projects that could have great impacts. The creation of the “blueprint” was a good step to figure out what projects benefited the company and how they should be funded. The Blueprint helped VWofA prioritize and fund projects according to the company’s strategy. What I liked about the new process is Phase II and the steps the business units need to show that their project proposal needs funding. This gave all the business units a fair chance to promote their project and ask for assistance. I don’t think the criticisms are justified. The new system proved that a centralized system proved far more efficient than the latter. It will be up to management to prioritize projects that will help the company grow.

When assessing the new prioritization process to the former process while far from perfect the new has repaired some of the previous challenges. For starters It’s in-depth and transparent, it’s no longer about minimalizing groups and it’s a much more inclusive approach that includes multiple groups that now were responsible for deciding on which projects would ultimately be funded. This approach also forces groups to look at themselves and prioritize only their most critical and important projects so that they gained a sense of involvement in the decision process as well. When you look at the prior process one of the biggest gaps is that there was a lack of focus on how the initiatives tied back to profitability or savings.

Personally I get involved in many IT projects that need to be evaluated from a project standpoint, and with this new model it’s often the technology projects that support the business don’t necessarily save the organization money, nor does it increase profitability. I think there is a neglect for these types of projects in this new methodology where projects that might enhance something like mobile accessibility where without it you may not be able to recruit the new breed of talent and millennials might actually hinder your ability to be a viable competitor in the long run. They need to be able to evaluate on multiple facets, and with the review process I think it’ll happen after a few cycles.

What is your assessment of the new process for managing priorities at Volkswagen of America? Is it better or worse than the old process? Are the criticisms justified?

The new process for managing priorities at VWoFA in my opinion is better than the old “haphazard” system in many ways. The old system had the problem of managers banking on the next round of new vehicle models to save them from current economic difficulties. This allowed VWoA to stay afloat as the Rabbit and Jetta were released but this did not fix the problem. They also had an issue with task consolidation. They had too many projects that relied on other projects and they had many redundancies within the company. But in the early 2000’s a wave of department consolidation started which set in place the need for the new priorities management process. Although the new system met stark criticism I found that they could improve in many ways as an organization if they implemented the new process. The new process proposal was rolled out in stages to allow a smooth transition in the attempt to slow criticism. Phase one of the process prioritized and defined projects with set date which I think is key for any organization if they want even some semblance of accountability. This step alone saved them $40 million from their proposed list of initiatives. Phase two was just as important because this phase laid out formal business units which allowed managers to priorities or reject projects without effecting other parts of the operating environment. Phase three then allowed WVoA to create high level project schedules which then combined into focused enterprise project proposals. I think this three phase proposal, although expensive to implement, it still better than the old system and the criticism over cost and underfunded projects aren’t something that should stop this transition. Therefore the criticisms are not justified because the long run cost savings along with the greater economic stability with the new proposed system put them in a better position than they were before this proposal. I think this new process has worked because over the recent years VWoA has produced more affordable cars while also gaining interest from the younger generation, all while consolidating the amount of cars they offer to the consumer. Just a few years ago the new Passat went from a 30k+ car to a mid 20k car while not skimping on luxury features.

Ryann:
I like the idea of revisiting plans that may not have been approved. This could increase morale and lead to businesses revisiting rejected ideas in an attempt to improve them for the monthly review.
My only concern would be if leadership does not provide feedback to the business in order to help them make the necessary changes. The last thing you want to see are resources spinning their wheels.
Thanks for the reply,
Will

Kris – great points. Change is never easy but VWoA took a longe term phased approach that has delievered results which in turn has led to a much more stable company. Also, thanks for sharing the tidbit on the Passat as I hadn’t realized its price had come down that much.

The new process for managing (in this case information technology) priorities at VWoA has many strengths. Greatest among them is the opportunity to identify synergies within the IT needs of different teams, and allowing for the establishment of a timeline which can allow the “project proposers” to understand the most logical point in time for implementation of their project, relative to the company’s overall strategic plan due to “dependencies” of project A upon project B, which should be completed first. This new process also strengthens the connection between the company’s IT projects and its “next round of growth goals,” which unsettled some of the ELT members (Case study, page 7).

There are two potential problems which I saw in this proposal. First, it is not clear from the reading how many of the DBC members actually have expertise in IT? Although only a few on each team are needed, it sounds like the “eBusiness teams” from which they were comprised may have been predominantly employees from sales and marketing. The other problem is that there is a complete disconnect between the needs and priorities of the PMO / DBC and the funding available. In a year in which there may be a need for substantial IT investment based upon the priorities of VWoA, there does not seem to be a mechanism which allows the appropriation of a larger budget for IT initiatives.

The new process that was put into place was neither great or horrible in my opinion. I think that any process that would be put in would have its dissenters as everybody has their projects that they want funded. Employees get very narrow focused when they see only there department or job, They don;t see the big picture of the company as a whole. That is why putting some type of process in place is essential. I think the one done in this case did a good job at trying to focus on those projects that would impact the company the most as a whole and this has to be clearly demonstrated to employees. A better business as a whole leads to a better department or job. While some items fell through the cracks and got underfunded, such as the supply chain project, the use of a structured system to decide where resources would go is a big step forward for Volkswagen. Now, it is a matter of refining the system.

In reading this article I was struck by the number of IT services changes VW had gone through. Starting in 1992 and for the following decade they outsourced all IT issues to Perot Systems, then in 1999 gedasUSA was created as a wholly-owned subsidiary of VWAG to provide IT services, and finally the internal BPTO business unit was created. I was surprised that they created gedasUSA as a solution to the problems they had with Perot Systems; ideally the IT services should be handled internally and relying on outside companies, even those associated, will inevitably result in knowledge loss. Hence the new business unit is definitely an improvement in theory, simply by way of organizational structure.
One problem we see with the new process, that is perhaps inherent in all processes, is the method of expenditure prioritization. The infrastructure associated with the BPTO is intensive, made up of the ITSC, the PMO, and the DBC, all overseen by the NRG. This degree of segmentation perhaps makes it difficult to evaluate project necessity and requirements. This is similar to the problem at Google where so many different groups were working on different projects making it difficult to prioritize things. As a result we read that the supply flow project went ultimately unfunded, although this was critical to the global supply chain. This ultimately is an IT purchase decision that affects the entire organization. In my opinion these systemic changes should be pushed from the top level and at least partially funded by corporate as opposed to relying on the individual business units to finance and implement them.
Thus aside from some inherent disorganization and internal controversy, the new system is definitely an improvement. The BPTO effectively groups together similar projects, which is crucial, and through a process of meetings and organizations slowly filters the smattering of project ideas and boils it down to a collection of essential actions.

The new process is much more transparent and deliberate than the older ad-hoc way. It was inclusive of all the departments and solicited input from the parties involved. The fact that it was so in-depth shows Volkswagen’s commitment to it’s IT systems and infrastructure. The older system left the IT department vulnerable to criticism of favoritism, which this new system has avoided. However, the new system has not eliminated the problems completely. Through the new system the prioritization was criticized by people who weren’t present so there is an area where even more transparency is needed. The expectations of other executives was not managed during the process which could have also helped decrease complaints. Ultimately the new process is a step in the right direction but it’s not perfect.

What is your assessment of the new process for managing priorities at Volkswagen of America? Is it better or worse than the old process? Are the criticisms justified?

The executive leadership team at VW did not give proper attention and priority on its IT department and as such, it had to be built from an infancy state…twice. The act of vendoring out an IT department, particularly for a global company, has many repercussions. The biggest disadvantages to allowing vendors to perform in an IT capacity is the loss of institutional knowledge and control. These deficiencies provided Matulovic with a very challenging job.

I believe the new process VW implemented is a step in the right direction. It isn’t perfect, but it is a huge improvement. The old process prioritization was quite simple: each business unit’s top three initiatives were approved without consideration to other departments’ projects. Implementing proper IT governance processes, creating a digital business council and an IT steering committee, and building capabilities to identify enterprise projects and link to corporate strategy and goals is exactly what VW’s IT department needed to be successful. Unfortunately, the revised prioritization process failed to assign proper weight to global projects. I also believe at the core of the issue is that VW did not allocate proper funding to the IT department.

I think the new process is a vast improvement. There needs to be priorities and business cases related to enterprise goals related to $210 million in spending. It is also critical to identify dependencies to properly access the business case. Unfortunately not all stakeholders will be satisfied under this system and there will be resistance by departments whose projects don’t rank higher on the priority list. The wasteful spending of the past necessitated these changes. I was in a similar situation as the supply chain project a few years ago. We had a website redesign underway that was budgeted for a specific amount. The project ran across budget years and wound up put on hold the second year to free up budget and internal resources for something that was of a higher priority to the organization. As someone involved with the project, it was frustrating. However, it did make the most business sense at the time and thus we had to respect the decision.

With Volkswagen’s history of projects with schedule and cost overruns along with their previous failed attempts to overhaul their IT project process the shift to a PMO is a smart move. Schedule and cost overruns indicate lack of a project process and process control. A PMO, if staffed correctly, serves to manage project schedules and costs. The three-phase approach adopted provides expectations from a project before the project arrives at the request stage gate. Due diligence therefore forces improvement. The project ROI ranking will always eliminate projects with the lowest value and some project submitters will be critical if not outright discouraged. However, this serves to challenge submitters to improve the project justification, scope, and process control.

When compared to the prior process, the new process is more transparent, robust, cost efficient and vastly improved. Within the ‘blueprint,’ the new processes for managing priorities at VWoA entailed three phases spanning three months, July through September. Several organizational entities were in charge of creating and managing a new process for managing priorities. The organizations were ELT, IT steering committee, Program Management Office subsection of BPTO, Program Management Office, and Digital Business Council. The new process had three distinct phases, a time limit, and various areas had a distinct role in completing and choosing the right project feasibly. Furthermore, the robust phases provided management more information than ever before and enabled them to make the right decision for the company within the appropriate budgeting and funding requirements. Lastly, the new process resulted in a different view of prioritization from each business units’ top three initiative. This created a sense a responsibility and ownership to unit managers when presenting their ideas for funding.

The criticism from other executives and management is unjust. These managers should understand that the process was implemented due to prior deficiencies in the system, to improve the company as a whole, and to ensure that the right projects receive funding.

I believe Volkswagen’s new project prioritization process improved upon their disorganized debate-based selection method but has flaws of its own. Their new process considers project trade-offs and links each project to firm goals, where the old system failed. This process categorizes projects and assesses their business impact, two items that were not formalized in their former project approval method.

Under VW’s new project selection process, decisions are made methodically. First, business units have to understand the need for a particular project, what business function it relates to and what major VW initiative it supports. After this initial investigation, decision makers compare projects against each other to select sequential order for the projects that depend on timing and/or completion of other projects. Projects are then formalized in specific project proposals and placed in an order of prioritization. Finally, business unit requests were either combined or pitched individually as enterprise project proposals.

The former process lacked this structure. Projects were approved out of necessity and as reactions to difficult situations. This new process transformed a reactionary process into a forward thinking selection of improvements.

As aforementioned, VW’s new selection process has shortcomings. Loopholes in the new prioritization of projects include temptations to arbitrarily link projects with high-profile company initiatives and to demonstrate key proposal connections to various projects so they would be considered enterprise-wide projects and be given high priority and approval. The system fails when critical ventures do not receive the necessary amount of “enterprise value” for approval. I think these weaknesses justify some of the program’s criticism and can be resolved by creating a set of “critical projects” exceptions that require funding – whether or not they contribute to institutional goals or fit a particular framework.

The new priority process for selecting projects is an interesting solution to the organizational problems at VWoA. The stronger aspect of the system is the fact that there is a framework for selecting projects and several levels of selection. This process eliminates favoritism or battles within the leadership as to which project to prioritize. All of the leaders are aware of the selection criteria and the alignment of the individual projects with the enterprise goals. I think this also helps communicate the enterprise goals more effectively and urges the leadership to work to facilitate those goals. Also, when VWoA was forced to table projects until the following year in order to resolve conflicts and facilitate their execution, I think it was useful in allowing projects to have the fair attention they may deserve, rather than being overlooked in the milieu of the current projects.

However, perhaps due to its novelty, I think the process is somewhat cumbersome. For instance, when the leadership was struggling during phase III regarding final portfolio decisions and budget distribution, it seemed that the lack of experience with this system resulted in a lot of the resulting criticism. Also, in the multiple rounds of the process, certain projects were shuffled and lost, not necessarily because they were not worthy, but because they didn’t make the cut through the system. With more experience and more leaders on board with this prioritization system, I think the process will continue to be smoother.

The new process was an improvement for managing processes at VWoA. It attempted to allow the CIO to focus on communicating the strategic value of developing a comprehensive and effective information management system at VWoA. In particular, I liked the way members of the PTO and the corporate strategy groups at VWoA in partnership with members of gedasUSA, created a high level business architecture. The process was the beginning of allowing the ET to establish executive support for IT projects and activities. Business management and IT management need to be in sync, in fact a firm’s ability to be effective is tied to how well it can manage information. I think Matlovic’s management experience, rather than IT experience, allowed him to view process improvements in the context of architecture. It is better than the old system where IT was outsourced and run as a separate entity. Previously, the executive team lacked the involvement of the CIO, which is something that does not allow IM to be involved in meeting strategic goals and allowing IM to be integrated into helping to establish the firm’s competitive advantage.

The new process is an improvement of the old process. Volkswagen made the right move to create one IT department to work collaboratively rather than many different disjointed IT departments. By creating one department rather than several, and actually having people submit their requests formally, and then telling people which project was chosen creates transparency. Although not everyone is going to be happy with the process or which project was chosen, each person does actually have an opportunity to present their project to IT. No one is being overlooked and everyone does have a voice (other than the global supply chain – SAP implementation plan). The system sets up three layers of choosing which project to move forward with, and although the system may not be perfect, it is a well thought out process that goes through the ins and outs and the cost and benefits for each project.

I think the new prioritization process for handling priorities at Volkswagen is a step in the right direction and a substantial improvement from the old system. Prior to this initiative, accountability for managing IT was shared among numerous providers with no sole organizational unit in control of the overall process. The new process is more streamlined as it is in alignment with the concepts of categorizing organizational activities and connecting them in a consistent way to the company’s execution of business strategies. The three phases appear to be in depth, elaborate segments that are well thought out. For example, it is essential for business units to have a voice as phase I allows business unit representatives to informally present their proposed, future initiatives and how the project would ultimately better the business. This also allows for the company to determine if any projects are dependent on one another which is another pertinent factor when prioritizing. Phase II also contributes to the vast improvement as it allows Volkswagen to formally categorize projects based on investment and technological application types. These two categorizations are also crucial when making decisions. I think Phase III brings some controversy as it is related greatly to differences in opinion among several individuals at VW. During this phase, individuals from the PMO teams and DBC have to determine which business unit requests are truly the most critical to the NRG goals. I think this is where discussions can get heated and disagreements can arise. I think it is important to remember that this type of process will never be foul proof and that criticism will always be given. As far as criticism for this current process, I think a little criticism can be justified related to the phase III portion. I don’t necessarily think two days’ worth of discussion and final decision making is necessarily enough. Although there is extensive pre work that goes into this two day off site process, they may want to look into extending it if possible. Although it may seem cumbersome, the results of this final decision are critical for the overall business success of the company so extensive efforts should be made.

The new process provided a structure where one was not present. As Matulovic stated, it can be easy to forget the process was transparent and involved group dynamics. As in all new processes, especially at this scale, the criticisms are always rampant, but many of them are justified. Unfortunately, not all processes can be perfected and there will always be unhappy business division leaders within each group who do not get the things funded they had all wished for. Nevertheless, the new process seemed well thought out and missed very few large projects, with the exception of the one globalization and integration initiative that displeased VWAG. It will provide a framework for further refinement in the future, but helped create a prioritization process rather than a favoritism/nepotistic process.

VWOA’s new project for managing priorities was a major improvement from their previous unsystematic process of SBUs presenting their top three project initiatives without presenting a case on how each project links to achieving the overall strategic objectives. The new process was also more collaborative and inclusive with all functions or departments within the organization having the ability to determine what projects to prioritize in order to receive funding. The process of VWOA creating a blueprint to identify and evaluate new projects to determine if they were linked to the corporations overall strategic objectives, was an effective way to establish a review process. This process required them to present the facts and not be subjective. It also was an effective way to for each business unit to explain why and how their projects will benefit the organization. This process would effectively drive Volkswagen’s bottom line by helping to eliminate a misuse in funding for projects that will not effectively change the business in any way or help foster strategic growth.

Within Phase I- Calling for Projects, Communicating Process, and Identifying Dependencies was an effective way to identify if SBUs were initiating similar projects and if any projects were codependent of each other. This eliminates duplication and wasted costs of resources. Phase II Formal Project Requests from Business Units was also an operative way to have all business units go through the same process to present a required project proposal using a formatted template. SBUs could not skip the necessary steps to advance their project and this allows for all project proposals to be submitted in the review process. The most important step here was classifying what type of investments and technological applications that are needed if they moved forward with their project. Phase III- Transforming Business Unit Requests into Enterprise Goal Portfolios, was a great way for senior leaders to meet at a neutral site to determine what SBU project portfolios needed to classified into the enterprise portfolio. Meaning what projects were focused on driving strategic enterprise objectives. The criticisms are not justified because an organization does not have the financial or personnel resources to possibly implement all projects that are being presented. A company’s main goal is to increase profitability and generate more revenue. Systems and projects that help an organization maximize their initial investment and drive their growth strategy should be prioritized. There has to be a cut off and trade offs have to be made to ensure the best projects that help accomplish the overall strategic objectives of an organization are the ones that should advance through the process and be approved.

VWoA’s new project prioritization process is far better than the previous version as it provides a formal methodology and arranges projects in logical way that is aligned with organizational strategy, vision, and goals. The old process was considered “haphazard” and it was evident that it lacked the necessary structure to be truly effective. It was dependent on making trade-offs via office politics and posturing that affected the entire organization. When Matulovic created the Business Process, Technology and Organization (BPTO) department, a formal PMO was established that had oversight of the project proposal and approval processes – in my opinion, the most important decision that he made. All ten business units of VWoA were represented on the Digital Business Council (DBC) which was appointed as the responsible party that would prioritize and decide the final project listing. The Executive Leadership Team (ELT) ensured that projects were consistent with NRG goals.

By creating all of these groups that including senior leadership and representatives from all business units – not just BPTO – the process set to hold the business accountable in the distribution of its budget. In adopting a three phase identification (call for projects), formal request, and project selection (enterprise goal portfolios) process that covered a period of three months, it provided all business units a sufficient (and equal) amount of time to prepare their project requests. It also provided them the opportunity to properly align projects with organizational goals do that the most important projects had the best chance to secure funding.

In this case, the criticisms are not justified as ELT members haven’t even given the new process a chance to succeed or fail. As with all change, there is an adjustment period that many employees may not embrace. However, over time, the processes will slowly become a part of the organizational culture and norms in each business unit. Pretty soon, those ELT members will be the same ones who forgot about the decisions to withhold IT investments in the 1990s. For instance, recent sequestration and budget cuts have gouged the Department of Defense (DoD). DoD employees had been living like fat cats for more than a decade and were used to being able to requisition almost anything they needed. Eventually, we remembered how to do more with less and now rely on ingenuity and innovation to solve expensive problems instead of just throwing money at it.

Although the new system is more ‘orderly’ and transparent, I don’t think it achieved better, or fairer outcomes than the old ‘haphazard’ system. Both systems encourage leaders of business units (i.e. the ELT) to circumvent the rules and neither allocates funding equitably, therefore I think the criticisms are justified. Under the new system, almost 30% of the budget is excluded from the evaluation/approval process and its distribution is left to Matulovic’s sole discretion. Regardless of how Matulovic decides to allocate the funding, the selection/approval process of these infrastructure projects will appear biased. Additionally, 50% of the budget is reserved for ‘enterprise projects’ and less than 25% of the budget is available for the ‘highest priority business unit projects. Based on these percentages, it appears beneficial to bundle projects together and to purposely misclassify them to “improve chances of funding.” Ultimately, due to the scarcity of budget funds, the more expensive a project is, the less likely it is to get approved, regardless of its actual importance/priority. Despite Matulovic’s efforts to restructure the project evaluation system, low priority projects will get approved simply because they are more affordable than higher priority projects. This logic is counterintuitive. At least under the old system, business unit leaders were guaranteed to get approval for their highest priority projects.

For a while, Volkswagen America (VWoA) concentrated most if its efforts on marketing and sales at the expense of Information Technology (IT), leaving the company with a weakened IT department. It was therefore important to implement a well-structured prioritization process to successfully manage the company’s many business units, yet in alignment with the organizational goals. Accordingly, the complex prioritization process instituted by CIO Matulovic was critical to allocating the company’s limited resources to the various ongoing projects.

The frustration of those units whose proposals are declined is logical because prolonged lagging of these projects would be detrimental to the entire organization in the long run. However, the criticisms are not all justified because many key players throughout the organization were involved in the project proposal and prioritization processes. Each business unit was represented at the Executive Leadership Team (ELT) that facilitated the ranking procedure. Instead of abandoning the important but low-ranked projects, per the CIO’s discretion, substitute funding may be sought out.

I think the new processes are a major step in right direction for the company as it finally got business units to design their projects to be more efficient (push to come in under budget and on time). It really allowed the company to also see which projects fit into the overall strategy for the company. As with any new company initiative, there are shortcomings that can be addressed in future years. The idea of tying a project to a company initiative knowing that it would be more likely to be funded as well as staying away from other areas knowing that it would most likely to kill a proposal. But the business units should be able to adjust their strategy and design their proposal to compensate.

Gutting IT twice and removing the institutional knowledge moving IT staff around would cause employees to think twice about whether or not investments/projects in IT are in it for the long haul. In my previous position, management decided to replace our legacy system but it was flawed from the beginning trying to select a contractor to build it. It ended up wasting a lot of money and ended up getting scrapped.

VWoA is attempting to fix a decade old IT issue, with some structural process improvement. While certainly a start in the right direction, this will not be enough. The old process, while haphazard and unstructured; likely engaged department heads in a debate about resources, overall investment impact and competing priorities. While this process is certainly not desirable or sustainable in a growth company long-term, it seemed to provide a forum for unstructured dialogue. The new process, while highly structured, may simply be too rigid in spurring recovery from poorly managed IT resources over the previous 10 years. Further, the prevailing IT strategy at VWoA should focus on investment in IT that corrects previous lack of proper spend and creates a solid foundation for future projects. Matulovic and the DBC are being boxed in to selecting projects based upon somewhat arbitrary categories and without sufficient evidence in support or denial. Additionally, the criteria SIB, ROI and OCI are almost entirely fixated on capital investment; which is precisely what the article this week cautioned against. There is no mention of looking at IT as a driver of strategic value or IT as an enabling technology. Selection criteria appears to be more based on cost and return; than on business performance improvements. It would seem that the criticisms levied are justified, as strategic projects (whether at the enterprise level or customized point solutions), are being stack ranked and selected on the lacking criteria. As stated, this process is more concerned about fitting into a fixed IT budget than anything else. This process will cancel or delay important projects and further slide VWoA into the potential “death spiral” between business management and IT management. It would also seem that this strategy takes a silo approach to decision making and does not take into account the interconnection between projects. Employing holistic decision making as was outlined in the Systems Thinking article from this week, would likely reduce some of these challenges. In sum, this process change is a vast improvement to the former method; but falls short if VWoA is seeking to drive value with its IT investments across the portfolio.

What is your assessment of the new process for managing priorities at Volkswagen of America? Is it better or worse than the old process? Are the criticisms justified?
My assessment is that the new process provides needed structure and alignment with the company’s business strategy over the old process of an unstructured debate amongst executive sponsors plagued with excessive costs. Prioritizing IT projects in order to determine funding is an efficient way to match critical projects with VW’s business strategy within the constraints of financial requirements. It is new process is better, because the old process was arbitrary and unstructured. The new process creates an orderly and logical structure for the prioritization process regardless whether everyone is happy with the results in the end. It is worse than the old process because although it focused on strategic initiatives it created a gap between Volkswagen of America and Volkswagen AG that threaten their global initiatives. A mechanism needs to be in place to have the global headquarters provide alternative funding for any global initiative. Some of the criticism seems unjustified because it comes across as an attempt to politically influence the process outcome. Other criticism about the unfunded project affecting the company’s global supply chain system objectives can be seen as a lack of possible flexibility in the new prioritization process. The process did not allow for an override of results that were not predictable or acceptable.

Volkswagen’s IT management struggles are becoming problem of today’s corporate management for many companies. As the companies grow, the leaders encounter battle of managing resources to deliver the business model. With conflicting priorities, leaders are often pressured to deprioritize projects which usually are the IT projects for a non-IT company. The IT management and projects were also being pushed lower on prioritization matrix by the Volkswagen leadership team. The team was failing to understand the deeper/long-term value of these projects. On the other hand, I believe the IT managers/project managers also did not do appropriate job to demonstrate the impact of various IT projects to push through the NRG program. As presented in the business model generation plan, the first step to deliver an effective business model is to ensure everyone understands and are on common ground. Although the vision behind independent IT business unit was to ensure that Volkswagen is able to drive a consistent business model with one single business unit managing information systems. However, the failure came from the centralized budget and project prioritization governance. At Johnson & Johnson, we also have a central IT business unit which is independent from each of the revenue generating sectors (medical device, pharmaceutical or consumer products). Unlike Volkswagen, what our company has done is to create a subunit within each sector (and further within each company) to manage the prioritization of the IT projects and solutions. These sub-units are tasked to evaluate each project for the company/sector from risk, reward, and resource point of view. Combination of such information yields a prioritization matrix that is further divided into short and long term projects. These two projects are evaluated and maintained in two different streams to ensure both type deserves appropriate attention. Each company is given a budget for the project that impacts the company, any projects that are enterprise wide changes are escalated to central management system (such as upgrade of operating system from XP to 7). Volkswagen is on right path to build its IT management system; however with minor tweaks, they can drive changes that can benefit the entire organization.

Matulovic wanted to involve everyone in setting the IT priorities. But what he found was most managers are concerned with their own area and do not see the global impact of the IT projects. In the early 1990’s VWoA learned the importance of not cutting the IT department too deeply. In order to cut costs they outsourced the IT duties and drastically reduced their internal IT staff. This created a lack of IT knowledge within VWoA. They began to rebuild their IT department and in 2002 Matulovic was transferred from VWAG headquarters in Germany to the Unites States. He established a more formal process for IT projects. I believe the new process was better because it made the project managers more accountable and gradually projects were back on-schedule and on-budget. The process also made the managers state the changes it would cause in the current environment, financial model, how the projected affected the enterprise and what enterprise goal the project would advance. This gave more structure to the projects and also if a project was dependent on another. This would help the team with refining the project list and planning for the future. One criticism that I feel is justified with the new system of prioritizing projects was not all options were selected based on their importance to achieving enterprise goals. By selecting projects based on their importance, some executives may be concerned that their business units would not have approval for any IT projects that year. They also did not choose to fund the supply flow project because much of its value was at the global level.

The new processes are more cohesive, robust, and efficient compared to the former. By creating one department they are encouraging collaboration, streamlining approval processes, and creating transparency. By creating distinct groups within the department (i.e., ELT, IT Steering Committee, Program Management Office, etc.) it allowed information to flow through the correct channels to determine project and funding approvals. Even though there has been criticism it’s important to remember that these new processes were introduced to improve prior deficiencies. The original IT department was outsources and piecemealed. Matulovic was tasked with not only reorganizing the entire department from an org chart perspective but changes the way current business was being handled – and with that there will always be growing pains.

I do believe that the revised process is an improvement over the prior process. The prior process was extremely decentralized and lacked a policy to manage the spend and ensure that all projects were approved or declined based on a common rating scale. At the time that the new process was introduced expenses were increasing without the required structure to manage the project and ensure proper and consistent project management. The new process not only introduced common procedures to evaluate project but also introduce a governance structure. I have seen many projects succeed and fail over the course of my career and can attest to the importance of standardized governance and structure.

I don’t feel that the criticism is appropriate but not surprising considering the fact that the executives were accustomed to not having to adhere to strict governance or getting approval.

It is mind boggling to read how one of the largest automotive conglomerate which owns multiple international brands managed to undermine its IS support at the point of having less than 10 employees while outsourcing the work. This careless action resulted in the realization that they couldn’t even administer the outsourcing contract. While surviving the outsourcing drama on two separate occasions, I can attest to the negative impact it had at multiple levels. ultimately, a hybrid model seems to work best, where the management is still part of the company while the regular and repetitive tasks have been outsourced. This allows to be in control and mange those who produce the work. Maintaining a long range vision is key to improving the process and positive outcome as part of the overall corporate strategy to success.

The new system is definitely better. An organization is doomed to failure if its individual business units are investing heavily in projects without regard to how those investments tie into enterprise strategy. One major discovery in this new process was the redundancy between business units’ top-ranked projects. By the old mechanism of funding every unit’s top 3, this would have led to a lot of redundancy and waste in an already tight budget.

Perhaps Matulovic realizes in the end that the limitation of the process is in accurately defining the NRG goals. Exclusion of “global integration” as a goal meant that an important enterprise priority went unfunded. The risk this presents should be analyzed, and if this presents a critical level of risk compared to a modest ROI on a project that did get funded, perhaps a one-time redistribution of funding is appropriate for the organization. However, short of this funding shortfall being a catastrophic risk to VWoA, it is probably best handled by reopening the discussion of top NRG priorities for the next funding cycle. While budgets are determined on a yearly basis, corporate strategy should be more long-term. Perhaps an open discussion and ranking of IT funding priorities over a longer period would be useful. Project A could be heavily funded early on, with a plan to redirect funding to Project B in the next year.

Most of all, I’m shocked like many of you at how flagrantly VW underinvested in IT during the critical 1990s and 2000s. Talk about bad timing to be downsizing your IT operations. Surprised it wasn’t a fatal mistake.

My assessment of the new process for managing priorities at VW is positive and I think it’s much better than the old unstructured process. I have led the Corporate Strategy group at TD Bank in the US for the last two years and the changes made at VW are very similar to what we implemented. One of the major changes we made over the past year to our IT Plan prioritization process was adding in alignment to strategic priorities much the way VW did but we use it only as a weighting attribute to determine project importance.

I think much of the criticism is justified mainly due to confusion around enterprise funding and because items are changing on the fly in a fire-drill type atmosphere without clear direction or transparency about how the decisions are being made.

I’d like to share a few areas where TD differs that may have helped VW avoid some of the issues they are facing.

We have a formal ranking mechanism other than the judgmental top 3 ranking provided by the business units. This would provide them with a way to measure the importance of a project across the lines of business based on pre-defined weightings of project attributes to determine the relevant importance to the overall organization.

Another area for improvement is at the very beginning they should segregate the process for enterprise wide vs. local projects. We have a separate Enterprise Program Management Office (EPMO) from our PMO and prioritize EPMO projects first in our Planning process. I think this would help VW avoid much of the confusion in their new prioritization process.

Last and most importantly, our CIO and IT Council do not make the prioritization decisions, our Management Committee (equivalent to the VW ELT) approves the final list. The ELT at VW should be inserted into the process. Each business unit head and CIO Matulovic is an ELT member and they should jointly make the decision on the final list of projects to be funded in 2004. It’s an executive leadership team decision that they should all ultimately communicate and support. Hopefully their compensation is tied to overall company performance so they are incentivized to think outside of their silos. It has worked well at TD. Even though many executives don’t get their projects funded, they understand and support the decisions. If this were the case at VW, Matulovic would not be getting phone calls from fellow ELT members since they all would have been part of the final approval process.

Matulovic and VWoA are on the right track. He went about it in a logical fashion by putting out fires first to get the current projects in order. Then he went about determining which projects actually needed funding by carefully identifying those that were strategically aligned with the enterprise goals. In this process, similar or redundant projects were identified and subsequently grouped into common enterprise projects. Systems thinking helped them to realize that certain projects relied on other projects’ completion first. This moved many projects off of the slate for 2004. But their systems thinking did not extend to the global market and their parent company’s goals of globalization, which is what led to the unfunded supply flow project.

In many ways, the new process was an improvement upon the previous way of doing things. As Matulovic commented, “You try to involve everyone in the process and make it transparent, so that everyone owns the outcomes.” I agree that this was the strength of this process, and it is laudable that they tried to align the projects with the overall enterprise goals. I don’t think the criticisms by the ELT members are entirely justified. Although each one of them understands their business units’ needs better than anyone, getting projects funded outside of the process because they “did it that way before” is not a good enough argument. I’ll discuss this further in my post on Advice for Matulovic.

I think the new process is better than the old process and that Matulovic is headed in the right direction. The new process might not be completely 100% fail proof (unfunded global supply chain management), but that just means the process can be improved upon. The criticisms are somewhat justified, but this was the first time the new process was used, so it could therefore be considered a sort of “test”. It should be expected that newly developed and implemented processes might have some issues that need to be worked through. Once they’ve strengthened the process, they can use this as a learning experience in which they can develop methods to mitigate similar issues going forward. Some say making mistakes is the best way to learn, and from what I read in the case, the new process is better than the old one in that it attempts to streamline and prioritize projects based on a number of important factors.

I feel Dr. Matulovic’s strategy of creating several organizational entities proved productive. The ELT, ITSC, PMO, and DBC each had designated roles and responsibilities and each group played a major role in narrowing down an expansive list of projects into a smaller list of top ranked projects. As a person who works often in proposals of a different kind and also someone who works in a firm specializing in project/program management for many large clients in several markets, I can particularly appreciate the PMO team’s role of handling IT project-proposals and approvals. By preparing formal proposals for their projects using an established template, each business unit was able to propose their projects in an efficient, simple manner. Since the information requested was the same for each business unit, the PMO team was able to evaluate each proposal and determine which projects were to move forward in the process by using certain criteria (1 – type of investment the proposed projects represented; 2 – type of technological application required).

I do feel Matulovic’s timeline and overall schedule may have been a little too aggressive. Three months hardly seems like enough time to have a project of this size successfully implemented and completed. Also, the 2-day meeting to convert the business-unit-focused projects into the enterprise-focused project portfolio seems a little rushed. Perhaps, if the DBC had more time to spend on this task, the supply flow project would not have gone unfunded. Phase II (preparation/evaluation/approval of proposals) could have been extended to allow the business units additional time to prepare proposals. The supply flow business unit could have prepared a proposal explaining how, although there seemed to be just a small U.S. benefit, the project was still valuable as far as global integration was concerned, which might also lead to a revision of the evaluation criteria used for approving proposals. Although a major project did manage to fall through the cracks, I believe Matulovic’s was on the right track with this new process.

The new process for managing priorities at Volkswagen of America has improved. By allowing representatives from different business units and having each group come up with a proposal, and putting them on a “functional wall” was a great idea. Every so often businesses spend a lot of money on waste. Volkswagen tried to get ideas from all the different groups and see if there was a common theme. They placed these common ideas as an enterprise group and left the other ideas as a business unit idea. This form of brainstorming allows tremendous amount of flexibility with the organization to efficiently spend their resources on needed projects and allows leaders of their various business units to see the vision of the company. I believe the process has definitely improved because of the focus that it brings to each project and allows leaders to prioritize the importance of projects. In addition, having a 3 phase set up for new projects allows each project to get more scrutinized as the proposal can be seen multiple times throughout the phases.

My assessment of the new process for managing priorities at VWoA is positive as the new system provides a much needed improvement over the prior decision making processes that included unstructured debate among executive sponsors. I think the new process for managing priorities under the “Next Round of Growth” (“NRG”) initiative was implemented at the right time for VWoA following a decade of outsourced IT activity. At this point, VWoA had lost nearly all of its internal IT knowledge and needed to implement a new strategy to grow its IT operations within the company. To do this, CEO Klaus instituted the NRG initiative using an internal IT group (“BPTO”) and corporate strategy groups, along with strategy consultants from gedasUSA. They devised strategic plans with the goal of aligning the IT priorities with the company’s overall strategy objectives. I think this strategy made a lot of sense in view of the organization’s need for change and improvement in the 2000s. Certainly, not everyone is going to be satisfied with the new process and some criticisms are justified as some projects may get pushed back as they work their way into the new system, but I think it’s a step in the right direction for getting project priorities, costs, and unnecessary spending under control.

Being someone that comes from a military background I am always a fan of structure. The change in the process to become more structured is much better. Although I do not agree with laying the majority of the decision making in the DBC’s hands. The decisions for what should be funded or what is in alignment with the corporate strategy should not be left with the DBC but rather the ELT. They are who is ultimately responsible for the outcome of the NRG so they should be involved in deciding where funding should go. The ELT has the 10,000 foot view of the company unlike the DBC which is focused on trying to bring their individual silos together. I believe the DBC could have still narrowed down, categorized, and ranked projects. After this they should have presented the whole list to the ELT and allowed them to give the yah, nah, or any other opinions. This addition to the process would have allowed ELT to ask questions that may have not been asked previously. Allowing the ELT to make final decisions would also lead to the appearance that corporate was setting the strategy with input on options for the IT department apposed to the IT department setting the strategy.

I believe the new process implemented by Volkswagen of America is better than the old process. The first positive aspect as mentioned in the case is that the new process had a buy-in by the executive leadership team who endorsed the idea of improving on their unstructured debate amongst themselves as a way of making decisions. Having a standardized detailed process gave the leaders more information to decide which projects needed to be approved and which projects they could afford to hold off. Second, reason that makes the new process better is that it made trade-offs explicit and also linked projects to core business processes and Volkswagen of America’s corporate goals. This created a sense of order and a clear picture of why a particular project would be approved. I also believe this new system gave the various executive leaders a template to follow when proposing their projects. Having a standard of measure allowed most of the leaders to realize that they were proposing similar projects, this gave them a chance to group together the similar projects into an enterprise portfolio and help cut down on duplication costs.
I also believe that criticisms might be justified if the people being critical do not have a clear understanding of why their projects did not make the cut even though from their perspective their projects aligned with the organization’s goals. In this case, the leaders can use the criticism to address the misunderstood key issues and improve their communication of the required standards. Criticism may also be justified if not all projects are given the same evaluations or required to go through the same process for approval for example, in this case whispers suggested that IT infrastructure projects did not go through the same process for funding approval.

Like the rest of you so far, I do believe that VW’s new process is better than what it had before. I may be a little less optimistic about how much better, though. The primary way in which I believe it is better is that it is in fact a structured process where before it was much more haphazard. My problem with it, however, is that it is way too complicated. Some of you mentioned the need to reread the case several times to figure out the alphabet soup styled process for project funding. While this did put ideas through the ringer in order to prioritize them, you end up with all kinds of permutations by the time they make it through. If projects are going to be funded based on corporate strategy, all of those different groups are going to dilute or cloud the overall strategy. When the strategy gets hazy, it becomes harder for groups to accept the decisions because they focus more on their wants and (supposed) needs. I’d like to see a much more centralized, and frankly less democratic system. Because there is so much remnant policy from the ’90s that’s mucking up the process, I would have the ELT or some other group with a clear view of strategy enact something company wide to centralize everyone around the new process and get them focusing on the strategy. This would hopefully spur a culture change that gets all of the various groups on the same page in prioritizing their own projects before sending them down the pipeline and trying to make them fit so that they get what /they/ want. (Note: I think to responsibly enact such policy, the ELT would be well-served to communicate thoroughly with the various business leaders in order to get a feel for what they want and need and to not be completely despotic.)
I get worried about the vast committee field because I see how poorly it works at my office. Over the last year plus, my firm has reorganized numerous times with Executive Committees, Department Heads, Managing Partners, Boards, and so on and so forth. While it looked like they had finally settled on one, it was too complex and as a result, people have ignored the new channels and procedures that were created and instead follow some kind of hybrid of old and new. The outcome (I think) is that no one really knows what’s going on, and we’re all just trying to make sure we can do what we think we have to. That means none of us are focused on what leadership is looking to accomplish and we’re not exactly working toward a common goal. That’s what I think might be happening here with VWoA.

I believe bringing some structure to the process was a definite improvement. The team had a monumental task ahead of them since for the last decade or so a majority of the funding and prioritization went to sales & marketing. They needed a process to streamline and prioritize the projects in order to decide where the funding was going. However, I believe that there was too little “buy-in” or influence by the ELT in the entire process. Matulovic was not provided the strategic objectives of the company. This was apparent in the fact that they did not allocate funding toward the global supply chain initiatives that were being delegated by corporate. Even though they decided what was the priority for funding locally, they could have completely wasted there time if it was decided that the global supply chain multiyear SAP project needed to be implemented immediately, and that all local projects were on the back burner until its completion.

The new process for managing priorities at VWoA is heading in the right direction, but it needs some iteration and time to become more effective. The process is young, as time goes on it will become easier to plan from year to year and expectations will be better set around available resources. To improve the process, VWoA needs to be fully aware of projects that bleed between years. Again, time should help this problem, but VWoA could also drive more accountability back to their stakeholders making sure that the funding allocated for the year sufficiently covers the demands of the business. The SAP scenario is a good example of a reality of prioritization or a misalignment of overall priority.

Prioritization of projects is difficult on many levels, even if VWoA could create a perfect prioritization process, there would likely still be complaints. After all, prioritization is just a nice term for saying that you aren’t going to do something. In my role, I constantly need to make decisions and set expectations based on priority. It’s not always an easy conversation, but consistency and honesty are key. Over time, stakeholders take the answer of “no” less personally and understand that making the right tradeoffs is everyone’s responsibility.

The new process for managing priorities at VWoA is better but I, like many others, question the complexities in the system. So many layers, sub-teams, and separate approvals can really bog down a company’s progress. There must be a way that they can simplify the vetting process to more quickly prioritize projects that best align with the corporate strategy. I’m certain that some of the criticism is warranted but it’s important to remember that every business unit leader is going to feel that their projects are the most important. it is Matulovic’s job to ensure that the IT budget is being spent well, in my opinion that means allocated the limited dollars toward those which have the greatest/most direct positive effect on the company’s strategic goals.

One are that should be evaluated is company’s categorical system focusing on three different types of investments: Stay in business, Return on Investment, and Option-creating investment. Could those perhaps be weighted differently depending on certain variables? In the article “Measuring The Strategic Value of Information Technology Investments” we learned that ROI isn’t necessarily the end all/be all method of measurement. While initial cost-savings and productions gains might yield better short-term gains it’s in the best interest of the company, globally, to ensure that IT invests in the projects that ensure the long term success of the business. I believe the ELT and Matulovi’s efforts are attempts to move closer to this model but they still have some work to do.

The business architecture that VWoA built as a blueprint was a robust process answering some of the key questions as why, how, who, what, where and when in setting the priorties of any project. It was expected to play an important role in formalizing prioritization process as it meant to categorize organizational activity including IT projects. It was all about relating them in a logical way to company strategy and ability to execute strategy. VWoA had plenty of projects in hand but not sufficient budget to cover them all not matter how hard they tried.
In the past any proposals that are ranked, at least at a minimum would gain an approval for their most highly prioritized projects. This made some business units uncomfortable as well as they had to associate projects with enterprise goals even though if they weren’t. By associating a project with an enterprise goal, they were worried if they were weakening or strengthening their case. There were some temptations to think of ways to associate projects to make them look important to the company even though they weren’t just to increase their chance of funding. So the system wasn’t really working as intended.
Criticisms are justified as some times, a project so important to the company, that was beneficial to all was cut and not approved as it was not associated with the company strategy or goals. So this was undermining the efforts of the new process.

The managing priorities at VW of America are much better than the old process. The various groups that have be reorganized and given power of authority provide a scripted direction for the company to move forward. However, I think that the constant change and failed attempts leaves the employees with a feeling of uncertainty and with anticipation of the next change without warning because that has been the culture of the organization. I’m not sure if the previous processes were thought out as well as the final processes but, the sense of urgency was finally realized by bringing Matulovic from Germany to the US to analyze and stabilize VWoA’s organization. Through personal experience at Ford Motor Company, when Alan Mulally was appointed the CEO, to lead Ford out of its turmoil and financial disaster, there were many changes to the typical structure of “doing business.” Besides all of the down-sizing and budget allocations, the cadence for the organization for immediate actions to be taken to turn things around were communicated and executed with well thought out planning. The original plans were never scrapped to try a new approach with hopes or a turnaround as in the many attempts made by VWoA. Instead, the “One Ford” approach was carried out through the many departments within and additional steps were added, but never abandoned.

The new process is an improvement as change in managing priorities at Volkswagen of America is warranted. With any change, criticism is to be expected. Criticisms are justified if follow-up recommendations on ways processes could be improved are communicated. My assessment is that a prioritization process is necessary to launch Volkswagen into current IT practices that they neglected for so long while still making the task financially feasible. It was critical moving forward to recognize that investing in building a strong IT infrastructure needed to be aligned with the company’s strategy to maintain some competitive advantage. I would highlight that their organizational entities such as the IT steering committee and the Digital Business Council were well developed and made implementation of the new process possible (Austin, p. 5.)

Austin RD (2007) Volkswagen of America: Managing IT Priorities. Harvard Business School 9-606-003: 1-19.

The new process for managing priorities at VWoA is definitely an improvement, and if the new process is itself seen as a work in progress, to be reviewed and refined as its plusses and minuses come into focus, it is an excellent first step. Giving structure and formalization to the process seemed to be a necessary change from the prior procedure. However, this first stab at implementation of the new process was not without difficulties and criticism. Those criticisms need to be reviewed and weighed. As in any institution, some criticisms will merely be sour grapes but others will likely contain food for thought about how the new process can be improved. There is a value to the collective input of all the individuals who participated in the new process most directly, and their input as to the strengths and weaknesses they observed should be sought, not merely left to the squeaky wheels being the only ones getting heard. As more input from all the participants about the process itself is collected and improvements are implemented, I think you will have more of a “buy in” by all those affected and involved.

The new process is a vast improvement over the previous process, but it does have some drawbacks. Some of the criticisms are warranted as projects viewed as priority by the business units do not receive funding, but in some ways, those criticisms are self inflicted. In the validation of priority projects, there can be a self serving business unit goal that may not align with the enterprise goals. I was involved in a similar situation first hand. A previous employer had made a significant investment in an Oracle platform designed to give seamless distribution and service level awareness to the Global Customer Base. In the Americas, it was viewed as a means to better bill transactions and invoice customers. I participated in planning meetings that were entirely focused on billing a transaction. Meanwhile, distribution changes occurred without a bump in the road. The US CIO was leading the Americas initiative and funding was coming solely from US profits. Had there been greater involvement at the Corporate level in establishing timelines for readiness and communication inside the technology group, the result would have been better. The VW process could lend itself to the same challenges if Business Units begin to move forward with planning for projects that do not make the cut.

I think the VW’s new process is a large improvement because the it is much more clearly defined and is strongly supported by upper management. Management support helps to create a clear and solid path for employees to follow. While the new system is not perfect it is movement in a positive direction.

Dr. Matulovic would be best served by coordinating the Executive Leadership Team to establish a larger “lobbying” voice for IT and its importance for Volkswagen overall corporate strategy. Until that can be established, it seems that he will be more of a “firefighter” in his role than he will be a manager. The SAP implementation project is a good example of this. If the local groups had a better understanding of how the SAP project benefited the company globally and for the company as a whole, the underfunding might have been avoided. But, as it stands in the case, Matulovic’s only options are ones that will put him in “firefighter” role sometime later in the process. Working with options such as cutting one program to better fund another doesn’t seem like the optimal solution for an IT department – more like a temporary fix – and one that could significantly damage the company’s overall strategy due to lack of attention paid to IT needs.

If I were Matulovic I would immediately issue a statement saying that the new process will not be changed or altered and remind everyone that it was approved by the Executive Leadership Team. He needs to nip this sort of behavior in the bud immediately. The last thing I would want is people coming to me asking for favors that go outside of what was agreed upon. This sets Matulovic up to be questioned about future decisions and is not good practice.
I despise when individuals think about their own interest and put me or anyone else in a position where they are asked to bend or break rules that are in place. It puts the person being asked to bend the rules in an awkward situation. The employees and fellow executives need to respect the rules until such time that the policy and procedure change. I know it could rub people the wrong way and he may lose a friend or two, but he’s there to lookout for the best interest of the company.

I agree with the comments posted to date. Matulovic simply cannot bend to pressure for special funding of projects. Doing so undermines the credibility of his process and himself. If I were him I would try to explain to his colleagues that by establishing the process he is specifically trying to reduce subjective measures and biases in the decision making process. VW is not well-served if decisions are made on a personal, ad-hoc basis without a formal process. The process allows the company to continue regardless of the leadership that is in charge. Consistency is key here. If Matulovic is reassigned to other locations, he needs to leave behind a system that will continue smoothly — especially since many of these projects are multi-year investments. There is no room for bending the rules for special treatment.

Special treatment outside the new priority management system would likely cause the system to backfire and ultimately lead to failure. of the entire process. That said, it is human nature for those whose proposals go under funded or unfunded to petition for additional support. Dr. Matulovic needs to remain firm, standing behind the process, while still lending a compassionate ear to those whose projects are left out. Advice, could be given on how to improve chances of funding in the future. This hopefully will ultimately lead to a leaner system as only those projects that show their value will receive a share of the limited funds.

Matulovic should respond to his fellow executives who are calling to ask him for special treatment by holding the line with the new prioritization initiative. Although he must be courteous in his reply, and may even suggest that there may be upgrades to the process in future years, he will undermine the entire program by succumbing to pressure right off the bat. Regardless of what the end result was, there was bound to be disagreement from some of the executives, particularly those who are used to getting their projects pushed through. This is a critical time for Matulovic – if he believes in his system and wants it to succeed, he must abide by his own guidelines and not grant special permissions.

Matulovic needs to maintain a firm stance in regards to the new priority management system. If he allowed himself to be persuaded by the agendas of his peers, the new system would be ineffective; it will only be effective if it is implemented throughout VWoA without exception. Additionally, if word got around they he favored a fellow executive’s initiative, others would attempt to persuade him as well. The system would then be reduced to office politics. Matulovic needs to make a clear statement from the beginning that the new system pertains to all personal and no exceptions will be made. If these ground rules are established early and followed, Matulovic’s fellow executives will comply. However, if he choses to bend the rules for one, a domino effect will ensue, which will cause additional issues in the future and compromise the integrity of the system.

Like most of the other comments, I believe that Matulovic should stand firm and refuse to accept projects outside of those already agreed upon. If he does start to squeeze in other projects because of special requests, he’ll invalidate the entire planning process and the company will be back to where it started – decisions made based on haphazard rationales. That said, I think the process itself was inherently faulty – the $60 million funding cap seems extremely low compared to the actual needs, and the prioritization process only focused on VWoA’s goals instead of also looking at how those goals may be impacted or connected to the goals of the global organization. I’m not sure how Matulovic can revise the process and at the same time focus on implementing those agreed-upon projects, but I feel like that’s something that needs to be done to avoid repeating this again in the future. Perhaps, like Rich said, Matulovic should work with the leadership teams to push for a change in how IT is viewed and funded within Volkswagen’s corporate structure.

I believe Matulovic should not respond to the pressure from his peers for special treatment outside the new defined project priority management system which was developed with input from all of the respective stakeholders. Demand & Supply management is a classic problem in IT where there is always more demand than supply to deliver projects and key initiatives. The whole project priority management system was defined to ensure all of the projects were reviewed on their merits and evaluated in a objective manner to prevent “favor” from being called in. This ensures the strategic objectives of VWoA are being delivered and not one departments’s goals/objectives dominate the budget or the priorities. I think my colleagues have identified a fundamental issues in how IT is viewed as a cost center and not true business partner. IT can be a strategic transformation change agent when the business and IT partner to deliver projects and initiatives. If Matulovic listens to the demands for special treatment this time around it will be a constant barrage of requests on an ongoing basis and the transparency/collaboration of the prioritization process will be lost. In addition it will create more work for the IT department as there will be no orderly process for deciding which projects the company wants to fund and deliver.

Matulovic should not grant special treatment to fellow executives asking him to fund their projects outside the new priority management system. Ultimately, the system was established for a reason (to properly allocate limited funds based on urgency), and the system should not be circumvented. However, Matulovic should turn this into an opportunity to lobby corporate decision makers for more IT funding; by forming a coalition with these disgruntled executives, Matulovic could better influence top tier managers in the company. So, instead of acquiescing to fellow executives, Matulovic should capitalize on their concerns and enlist their help in getting more IT funding.

I think that Matulovic should respond with empathy to his fellow executives. He should listen to their concerns and understand the business implications thoroughly and even agree with him if he can see their point. With that being said, he should not make any special treatment outside of the new priority management system. There is a variety of reasons for not making changes that many other students have addressed, such as; creating precedence, undermining processes etc. Bottom line, there needs to be unified front. What I would do is embrace my fellow executives concerns and voice them to VWAG. I would utilize resources to get my voice heard and hopefully be able to set up face to face with senior leaders. Once I was able to achieve this, I would provide VWAG with incentive to act by putting together analysis that showed that under funding was counterproductive to the culture trying to be created and that strategy of growth. The analysis would provide quantifiable data and the delivery would focus on the return of investment on IT from a strategic standpoint. Hopefully this analysis and presentation would be enough to foster change and increase funding. The main thing is that Matulovic adheres to the companies policies and procedures while maintaining and ever-growing relationships with co-workers. If you stand your ground and don’t make any exceptions, yet show you are willing to go to battle for them and be there voice, they have no choice but to respect you. They may not like you but they will respect what you stand for.

Agree, Ryann. If the members of the ELT thought their projects should be prioritized more highly, they should have ensured that the goals of the projects were aligned to the strategic goals of VWoA. The idea of the project selection process isn’t to be fair to separate business units, it is to maximize the value to VWoA. The whole issue could be avoided if the project selection strategy were more firmly embedded in the company culture and CEO took an active role in its implementation.

I would not respond to special treatment requests. With the creation of the new system, every project brought forth should be dealt with the same. The system would be pointless if he addressed some projects based on preferable treatment and disregarded the rest. What if one of the projects proves useless and the one disregarded actually mattered? The new system was designed to cater to all projects based on how well they aligned with the overall strategy and the budget. Matulovic needs to align everyone’s actions and get them on board with the new system. The number of projects surpasses the allocated budget and he will need to create a plan to work with the ELT to figure out which projects are more important. At my office, we address projects that are well in line with the overall strategy of the company. We create charts and mockup plans to see how and why we should fund the project and if it will help us achieve our targets for the quarter.

I think Matulovic should inquire those calling why their projects are different and not able to get approval from the standardized process. He should document their concerns and then go back to all those projects and look at the applications. If those calling did not submit their projects to the new process, they should be asked to do so. If they have submitted, but where rejected, Matulovic needs to systematically examine these proposals to see if there are any underlining problems with the process. If the number of projects he is being asked to review is too many, he could conduct his analysis by performing random audits of the studies asking for funding.

I think the key is this – either these projects were not accepted because they do not meet company goals or they were rejected because of flaws with the system. To solve the problem, it is important to know which is the case. Regardless of the cause, it is also important that management of the system should be altered such that all rejected projects receive a detailed explanation of why their project was rejected.

I can’t add much that hasn’t already been said by my classmates, but I will echo their sentiments. Matulovic cannot bow to pressure from others in the organization nor can be grant special favors. He could never fairly dole out resources anyway, given the huge budget shortfall and the number of projects left unfunded. That will only undermine the new process and cause dissent among the ranks. The members of the ELT asking for exceptions were part of the original discussion to enact the new prioritization process and, while they can be upset that their project wasn’t selected, should not be placing Matulovic in such an awkward position. Information technology has always been a bit of an afterthought in the VW organization, so they should be pleased with the progress made to bring clarity to the process and attach a clear linkage between prioritize projects and corporate goals. Hopefully having gone through the process this year, they will know how to better position their projects for prioritization next year.

Matulovic made a difficult decision when he decided to move to a priority management system. Making any exceptions to the system would defeat the purpose of having the system implemented to begin with. I think that it would be best for all executives to voice their concerns about the gaps of the system rather than fight for their initiatives to be chosen. The process included members of the business units and required them to thoroughly vet positions based on the newly implemented matrix structure. Proposals needed to meet predefined template needs that helped prioritize initiatives by function and business need then sorted by its relation to the corporate goals. If executives have an issue with their initiatives not being selected then Matulovic should be provide insight as to why it was not selected based on the systems requirements. I think it will be very important for Matulovic to host a meeting and do a lessons learned to identify any gaps in the system.
While I understand that all business needs are important, the system did identify that there were many initiatives that we co-dependent on others and couldn’t possibly be funded without prioritizing other issues. This is where holistic systems thinking come into play because the priority management system accounted for all considerations. I will say that the budgets should have been communicated in the beginning of the process so that all executives could make more informed decisions. However, I do not think that Matulovic should make any exceptions to the process.

How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system?

Matulovic should take a standardized approach in his response to fellow executives asking for special treatment. He should not give special treatment to anyone because that would undermine the new system. I suggest that he immediately send out a companywide memo stating that everyone is subject to the rules of the new priority management system and no exceptions will be made. By doing this he is making the first move which should deter many executives from contacting him for special treatment. But for those who still contact him he should respond by explaining the reasoning for no special treatment and he should then address the executives concerns. If he makes exceptions to certain people or departments then many employees will think that some of the new policies are just guidelines and don’t have to be followed which will make this new priority management system fail.

While I agree with many of the posts already done and there are some valid concerns about underfunded projects brought out by some, I think that Matulovic needs to either stick by the budgetary funding that was already put into place, or scrap the whole system and start anew. He must not have a middle ground. If he does, I think he risks being seen as showing favoritism. I have always been told as a Manager to not do for one what you wouldn’t do for all. If he allows “special treatment” for some, he is bound to open up the floodgates of requests from others. The fact that the question uses the term “special treatment” send up red flags in itself. He needs to treat everyone fairly, not special. Because of the issues with underfunded items, he may consider scrapping the budget and starting over, but he can’t pick and choose based on other’s requests.

Matulovic would be best served by sticking to his guns and adhering to the protocols of the new priority management system. This system is there to perform just that function – assess the priority of projects. If specific projects are brought to his attention that for one reason or another the creator feels should garner “special treatment”, and these projects are indeed important, then they will gain funding if the system is functioning as desired. Matulovic should however continually evaluate the system and determine if it is functioning as desired. Any time a project is encountered that, by all appearances should have gained funding, a root cause analysis should be performed to identify the “weak link” in the system. For instance the paper gives the example of a supply flow project going unfunded when it is essential to the global supply chain management. Perhaps they need to reevaluate the necessity of this project in relation to the others. There are protocols in place with regard to funding projects that were required before others could be implemented. The supply flow project was essentially an SIB – it was mandated by the parent organization. They should analyze the weak link in the system that permitted an essential project to go unfunded and take steps to correct that within the process.
In summary this is really a strategic culture question. For reasons of employee happiness and collaboration the BPTO needs to be supported and upheld by all members of the organization. if Matulovic starts playing favorites and making special allowances, or if this process becomes political other employees and organizations will see it as unfair which could disrupt collaboration. The process should be constantly evaluated to find and correct inadequacies.

I would caution Matulovic against making any promises for special treatment. His response should be to explain to ELT members that their team members can vouch for the development of what becomes top priority because these representatives were present during the prioritizing, and they are aware of which project is given priority. With that being said, it appears that the overall budget is not sufficient to address the needs of critical path / priority projects within the organization. Therefore, there should be some latitude and flexibility to adjust and respond to unforeseen opportunities and/or threats that may develop over the course of business year. For Example, a formal review of appeals by the business units could be implemented. This review process would provide an opportunity to correct any mistakes or lack of foresight that may have occurred during the complex process of project prioritization. This should then be reviewed, assessed and escalated to the parent company for their recommendations. Getting the parent company involved would help to give the process a sense of impartiality.

How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system?

As the CIO of a large global company that’s made some rather poor decisions regarding its IT, Matulovic is definitely in a unenviable position. On the one hand, he has lead the charge to make sweeping improvements in how VWoA identifies, defines, prioritizes, and pursues its most pressing IT challenges. On the other hand, he is the person ultimately associated with the new IT project priority management system, for good or for ill. In terms of the requests that Matulovic is getting for special treatment outside the new system, I think one of the most important questions he’d have to consider is why said executive is looking for an exception in the first place.

Generally, I’d think there’d likely be one of three overall reasons for this. The first would be that there was a failure of the system as it was designed; that is, the new IT priority management process either misinterpreted or failed to take into account some critical piece of information provided by a project’s proposer, which in turn caused the project to be knocked further down the priority list than it really should have been. Second, there may have been some failure on the part of the project’s proposer that caused the project to be rated by the new process as less important, and thus not funded. Third, it could be that the project’s proposer did everything right, and there was no fundamental failure within the design or execution of the priority management process – the project simply didn’t meet the required criteria, given the size of the IT budget for the given year. In the first instance, it seems reasonable that some accommodation might be appropriate to readdress the given proposal in light of a systematic failure of the prioritization process. In the second or third instance, I don’t think that any special consideration is warranted, as neither of these represents a problem with the system, but rather, reflect problems with either the proposal or the project itself.

This is a very tricky question. As noted by the author, Matulovic is fielding calls from colleagues not subordinates so he has to tread lightly. In order to stay with the nature of the new process to find out if they are doing the “right” projects he needs to make sure any adjustments in projects will be benefiting the good of the company and not just those departments. He will need to be open about any changes and willing to back up his decision in order to squelch any unfair sentiment. If he believes in the system he created to make these decisions he should stick with the decisions but allow for discussions about changes to the system for next year. In a company with $210 million in requests and a budget of only $60 million he was put in a tight spot from the beginning.

How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system?
This is what office politics is all about! I believe Matulovic should review what each of the executives are requesting and evaluate if the prioritization needs to be adjusted or not. More importantly, he should stick to the protocol when those who are asking for favors and make sure the process is transparent. Transparency will help the executives know how close or far away their project is from making the list and it will also help Matulovice push back since others will see how the scoring works. If he adjusts a project’s priority, it will be apparent to the other executives, who would know it was done as a favor.

I facilitate quite often between marketing and IT at my company and this is a familiar problem in my organization. Many times, stakeholders will approach me or IT on an IT request that has not been budgeted for or falls outside of the overall business goals. IT will generally push back and force the stakeholder to make a business case for the request. Unfortunately politics come into play and that stakeholder may approach a corporate officer, going over IT’s heads, and gain approval for the project whether it aligns with company goals or not. I have been tasked to lead IT-related projects that I know are outside of the business scope, yet a stakeholder (higher than me) goes rogue and finds budget from other projects to fund this budget. It is can be incredibly frustrating. There is also the dependencies factor which is brought up in the case study. I ran into a situation last year when I received a project (on the down low) that unknowingly impacted another project. The lack of communication was embarrassing. I would highly recommend that Matulovic stand his ground and force the executives to follow the process as outlined by the organization. He won’t make friends and will receive resistance initially. Yet after awhile the process will be accepted as a “norm” of VW and thus he will encounter less executives looking for special treatment. That is what I found works best when I have had the opportunity to implement process. People are unhappy initially yet a few months to a year, the majority are following it without much issue.

I think the issue here is less of a budget or priority management systems, but rather a leadership issue. I imagine this scenario occurs frequently in many sectors of a business or company, given that funds are never limitless for any activity. Playing favorites would lead Matulovic down a slippery slope for. First, it would show other executives that they could circumnavigate the priority system, thus cheapening the whole experience altogether. The new system would never have a fair chance at working to begin with. Secondly, it would show Matulovic as a weak leader, not only in the sense that he is easily persuaded, but also in that he does not stand behind the very initiatives he is supposed to promote. It would be in his best interest to remain firm and place efforts into getting everyone on board and invested in the new priority system. After all, creating shared values will lead to bigger growth for the entire company than would short-term favors for a select few.

This is a very tough question as I am sure many of us have been in very similar circumstances in the past. However, I believe that Matulovic should first remind his fellow executives of the decisions that were made when the company was in ‘survival mode’ in the 1990s. He then should remind them that the new priority management systems was implemented to ensure that all projects met the company’s overall goal, allowed all business units to participate, and ensured that projects with the highest priority are funded. Matulovic should also encourage the other executive to look beyond the current situation and see the long term effects of the funded projects. He should remind them that if he were to provide special treatment for one project, other projects that may have the same level of importance would fall to the side. This is neither fair to their other colleagues nor to the company as a whole. Lastly, Matulovic should stress that the new priority management systems has various phases and involved various committees and business units. The final decision was not completely his to make nor should he override the decisions and the processes completed by their other colleagues.

This is a common issue that arises in most corporations. They’re always going to be executives who believe that the rules do not apply to them and request special treatment. Matulovic has to be careful in how he responds to other executives but must continue to treat all programs based solely on the priority management system. He cannot be faulted if he follows the priority management system. If you were to circumvent the system and play favorites this could lead to a significant diminishment of the value of the priority management system. By circumventing the system certain projects it may be undertaken may not only use resources allocated for valuable projects but also counter valuable projects.

Matulovic needs to listen to his fellow executives, to understand their concerns, and if he believes that their concerns do not justify his abandoning a strategy that will tie it to the performance of the organization, he needs to communicate why that is. A CIO needs to clearly articulate why and how IT and IM allows a firm to meet its strategic goals, and needs support of members of the ET. Matulovic needs the ET and others, including line operators, to understand that all process improvements need to be viewed in the context of architecture, and that is how priorities will be determined. Matulovic has an opportunity to exhibit strong and effective leadership skills.
My practice is too small to have a large management team, but I do have three on my management team that represent my nursing department (patient care), client services and my overall operations. I frequently have trouble getting my whole staff to understand that IM is intimately tied to our ability to meet our strategic goal, which is ultimately about excellent patient care and client communication. On a regular basis I tie IM to points I make with my management team regarding the architecture of my practice and our strategic goals. Though I hope that they share what I communicate to those my management ream supervise, I personally repeat the points I have made with individual employees and during staff meetings. I find I need to continually repeat a well-articulated message in order for my staff to “get it”. I’m not as successful as I would like, but I am making progress, and was very proud of my staff when I faced a state veterinary board inquiry about a case I managed. The board representative told me he had never seen records as complete as my staff had maintained. This is one very small aspect of IM, and though possibly insignificant to a large firm, it was very significant for The Cat Doctor.

It is a delicate situation. Matulovic must carefully balance the organization’s new policy,vision, and strategy vs. the professional relationship he has with his peers. Let’s not forget what got the IT department (or lack thereof) into this situation in the first place: an organizational strategy and culture that placed little importance on the value of an internal IT section. VWoA subsequently needed to create a modern, robust department in short order which is why IT infrastructure projects were separate from the new prioritization process and why a substantial investment was being made. If he decides to fund some of his fellow ELT member’s projects, he could very well shortchange himself for future unforeseen IT costs which can become very expensive. He would have to make the process completely transparent. Even then, doing so may still adversely affect working relationships with his peers and create a hostile environment where there are perceived favorites. All of these projects had already been weighed against NRG goals based on the company’s priorities. It may be hard for him to discern absolute requirements vs. desired, good-to-have projects. This further places Matulovic into a very difficult position because he would be the final say on project prioritization which is contradictory to the new methodology the company had adopted.

If I were in Matulovic’s position, I would recommend that he embrace the new prioritization process and encourage his peers to do the same. He stated: “If there’s one thing I’d like to turn around, it’s the idea that IT is an obstacle.” This notion won’t be dispelled if he starts including other projects into his budget. Sure, it’ll make some of the ELT members indebted to Matulovic but it won’t change their opinions of IT. The company had already sacrificed investment in IT during the 1990s to support market initiatives. I’d be willing to bet that other departments did not or would not include IT projects into their past budgets based on the fact that they thought IT usually fell short of expectations. The only way to change the culture is to enforce the new policy as well as effectively communicate that all projects went through the same selection process and were chosen on merit. Matulovic should then provide a business case for substantial IT investment to other ELT members and senior leadership that shows how IT adds value and help support the bottom line. He needs to articulate how a solid IT department increases productivity and directly affects performance across the organization. Matulovic should also encourage business units to petition through the chain of command – not directly with him – if they truly feel that their projects add enterprise value and are more important to achieving company goals. It is unfair for ELT members to place Matulovic in that position, especially since the new prioritization process contained multiple phases to determine relevance and importance.

http://www.mckinsey.com/insights/business_technology/how_cios_should_think_about_business_value

The situation described in the case study sounds quite familiar to me. I think it has some analogies to our budget season. Every year everyone has a “very important,” actually “the most important” new item to be listed in the budget. Often times these items are not trivial and actually ask for substantial resources. Nevertheless, everyone is heard and almost everything goes in the budget. However, for obvious reasons, not every request can be granted because no budget is unlimited. As a consequence of that there are always departments or divisions that will be happy, and others that will feel penalized and unhappy.
Matulovic, in my opinion, is facing a similar situation. In addition to the budget analogy, Matulovic, inherited an IT department that is inefficient, and unclearly organized. I think Matulovic has to listen to every one of his colleagues’ requests. He should not promise anything to anyone, and he should do what he thinks is best for the corporation. He should, also, be flexible in reallocating resources if he realizes his new management system fails to recognize areas that, in his opinion, are in need of more support. The process of allocating resources has to be transparent and communicated every step of the way. A good way to present the final decision is: “…the past clearly did not work well. What I am proposing might not be perfect, but this is the result of a collaborative effort among all of us that we will test and possibly adjust based on future needs…”

Matulovic is put in a unique position because he if he does give special treatment to some executives he would be loved by them but then others would feel upset thinking those executives received special treatment and it would be a vicious cycle. Matulovic needs to believe in the system and stand by the system. When asked by executives for special treatment he has to tell them once again that the projects that were chosen were chosen for a reason and that they could put their project forward again next year. There will of course be special circumstances of things that come up that may jeopardize the business if not completed. If this does happen, Matulovic should then contact his boss and discuss if the business is willing to take a financial hit of x amount of dollars in order to save business of y amount of dollars.

Matulovic was placed in a difficult position as a result of the task that was appointed to him. He should not provide special outside treatment, however, because this sets a precent for continuing of perhaps the prior cronyism system that was in place where projects were being overfunded and underachieved. Matulovic’s position is to create a system that effectively removes him for the decision process, but allows for a fair and just process to take place rather transparently, that way he creates more corporate happiness and accomplishes broader results without having to worry about individually being responsible for yes/no decisions that existed prior.

Since nearly 30% of the budget is earmarked for infrastructure spending (at his sole discretion), Matulovic should allow the members of the ELT to petition him for funding, but only if a project legitimately fits into this category. He should hold a public meeting, instead of conducting negotiations privately with members of the ELT. He should also clarify that this does not constitute ‘special treatment’ and that approval is not guaranteed. Furthermore, he should reserve the right to ‘veto’ projects approved by the DBC and replace them with more holistic projects that will further the company’s global strategic goals.

How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system?
The first concern is that if he begins making exceptions he then creates a precedent and weakens the decision to implement the new system. Matulovic needs to express, in a tactful manner, that the process to develop and implement the new priority management system is no longer being negotiated and they need to move forward. There is nothing keeping Matulovic from compiling his fellow executives’ suggestions about modification of the new system and use them as a continuous improvement tool for future analysis. The executives are members of the Executive Leadership Team and there is merit in their suggestions, but at this time it would not only be unfair to provide special treatment outside the new system it would also contribute to making system analysis more difficult.

The proposals or favors that other executives have to try to circumvent the priority management system might not fit into the priorities that the company is looking for. Matulovic should ask his colleagues to come up with the supporting documentation to back their proposals to ensure that the proposals fit into the strategies. He could take them into consideration or personally review them himself to give his colleagues the courtesy of hearing them out. But Matulovic can’t stray outside the parameters of the priority management system to establish and maintain credibility of the system.

If Matulovic gives special treatment to his fellow executives the new system is in jeopardy. There will be a breakdown in procedures which will cause executives to mistrust the new process. By keeping the priority list in order of projects achieving enterprise goals, then in theory, the projects that are selected will benefit the company as a whole. If requests are honored based on “special treatment” the system may no longer have the company-wide benefits since unit executives may only be concerned with their units.

Office politics are always tough and depending on who the request is coming from ultimately can lead to whether or not you “approve the request”. I work for a very large global company and each country has their own IT Department but we are all on the same MS-CRM system…However, because our users in China used a different IT Department we were unable to create them logins for our system and our CRO had to request this from our US IT Department (after we received a lot of initial push back).

Matulovic needs to review each of the executives who are requesting a re-evaluation of their project and clearly explain the parameters that go around his decisions process. At the end of the day people just want to be heard, and if the project isn’t the correct long-term fix then it shouldn’t be implemented. However, in order to maintain good repor with his colleagues he can try and find alternative solutions that are cohesive with other projects being rolled out in 2004. The reason these processes were put into place were not only to determine priority, but to create a road-map based on dependencies and cohesiveness between specific projects. By approving one projects could put a kink in the entire operation and roll out for that specific calendar year (and ultimately cause more harm than good).

• How should Matulovic respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system?
This is a classic question that arises in enterprise many times, how one shall a draw line between friendship and business decision. Matulovic is also under same pressure from his fellow executive leadership team from various business unit to help push for their projects making exceptions to the project prioritization criteria. As case describes, Matulovic helped implement a process to prioritize the project through its unconventional review matrix. I have had many instances where I am placed into similar situation. While management of resources within stewardship teams, I often get approached by colleagues to help fully resource their project overriding the established processes. To combat such situation and to refrain for turning friends into enemies, I have established a clear stands that the decision matrix is the ‘holy grail’ for the company. There shall not be any exceptions unless the criticality of the project jeopardizes the existence of the company. Such clarification across all the project leaders over and over again has helped me set standards across the board to prevent the requests blooming from colleagues to unfairly prioritize their process. My recommendation for Mtulovic would be to stand by the established process to ensure each BU or manager gets equal opportunity for their project across the organization. If there are issues within the decision matrix of the project selection tool then the process shall be modified; however, under no circumstances he should empower his position to push other executive leader’s projects. If he clarifies his stands up front when initially establishing the prioritizing tools, he will set equal expectations for everyone in the company sealing him from making any enemies from the executive leadership teams.

No change process comes easy without its challenges. Unfortunately these challenges are sometimes complicated by office politics as mentioned above. Matulovic should clarify that the prioritization system was developed by inputs from key members in the corresponding departments. As the CIO, Matulovic should be able to discern and make a decision that is aligned with the organizational strategy. If it is deemed critical that some modifications as the new system develops. There is often room for slight modifications and this should be done in a manner that does not compromise the prioritization model.

Matulovic’s position requires that he stand behind the process. If he doesn’t, he risks undermining the entire process and threatens his and the ELT’s credibility in the next budget cycle. He needs to take lessons from the failures of this cycle and use those to influence the process at the executive level. If he feels an NRG priority such as supply chain optimization was too lowly ranked in this cycle, perhaps he advocates more strongly for it next time around. It’s not clear to me from the article how much influence the CIO has over enterprise priorities, but he certainly has a unique vantage point to be inform his opinion, and he should share that at higher levels to improve the process while standing behind the current decisions when questioned by subordinates.

Matulovic can let the ELT members know that in a transparent process such as this, it would not be appropriate to give special treatment. This would potentially lead to significant misgivings and threaten the integrity of the project. Who is going to put the time into that whole process and go to a two day retreat the next year to prioritize projects only to find that special favors will be offered in the end anyhow? It is troubling that Matulovic has found himself in this position, though. If VW and Matulovic are attempting to create a culture change, perhaps the expectations were not properly set. Business unit managers assumed that they would at least get approval for their highly prioritized projects, which did not happen. Perhaps the ELT members should have been incentivized differently so that they were not trying to get their projects artificially aligned with an enterprise goal. They also realized that they could get projects approved by including them in an enterprise project, akin to attaching a controversial rider to a bill that is more likely to be passed in Congress.

Matulovic can explain to his fellow executives that the proposal phase of the new system was established to allow for each business unit to state why their project should be handled during that particular year. It’s up to the business unit to prepare a proper response to those questions. If the importance of the project is not well explained, then it is up to that unit to prepare a better response to be considered for next year’s projects list. Assuming that the evaluation criteria was provided prior to preparation/submission of proposals, each business unit should have been well informed on the kind of information needed to have their projects added to that year’s priority list.

When preparing a proposal for a public sector client, the client sometimes allows for firms proposing for work to dispute an award decision. That firm is then expected to prepare and submit a formal response stating reasons for the dispute and provide any additional evidence that can be used to help their claim. Matulovic can suggest that the executives have their teams submit a formal dispute response which he personally (or one of his teams) can review. If a business unit’s dispute response is credible and there’s money left in the budget for the job to begin at some point during the year, perhaps the project can be added to that year’s list of projects or moved up to the very beginning of the following year. Aside from establishing this additional phase for the process, Matulovic can simply have the executive explain why it’s so important for that unit’s project(s) to be completed that year as opposed to the next year. He should stick to this system and at the most, improve the system a little, and let the executives know that he simply cannot approve each and every project and stay within budget or on schedule. (If he gives in to one executive without a formal policy in place, he’s leaving himself open to issues with other executives.)

In my view, CEO Matulovic would lose credibility and compromise the success of the new priority management system if he were to provide special favors or treatment to certain members of the Executive Leadership Team (“ELT”) by allowing them to bypass the new priority management system. If there is a project a fellow executive feels needs to be implemented, he or she should be able to present it in a way that complies with the new priority management system. But by not following the new system, favoritism and office politics could potentially take over and the new system would likely lose any traction. As such, I would advise CEO Matulovic to explain to the other executives that the system needs their leadership and buy-in for the strategy to succeed.
That said, I think it is important to not let projects slip by just because they had not had time to proceed through the new priority management system. It may be worthwhile for CEO Matulovic to consider allowing the executives to pursue smaller projects that do not exceed a certain cost and time commitment threshold on their own and so long as the project does not impact the budgets or already-approved projects. As long as this process is implemented fairly and across all executives with no favoritism, ideally with a policy stating such and that holds the executives accountable if they exceed their budgets, I think this could benefit the company as waiting for everything to go through the priority management system could take significant time and unnecessarily cost the company money.

Jonathan I agree. The CIO must never compromise on the company wide policy that was designed and implemented transparently and with consensus. I would recommend that the CIO bring all ELT members into a meeting and explain the importance of not violating company trust by going funding initiatives secretly that go against accepted policy. He should then discuss why certain plans are not being funded and why. All future funding initiative must prove to be aligned with the enterprise goals of the company but with direct benefit to VWoA. Each executive leader can then redesign their requests to prioritize their needs in accordance with the stated funding policies. CIO Matulovic can, at the same time, work with senior management to modify existing funding policies based on companywide feedback to keep in line with the what works and what doesn’t work well with the current process.

Matulovic should respond to his fellow ELT members that he is trying to create a system of transparency. He created several organizational entities to help with the decision making process, including an IT Steering Committee, Digital Business Council, and Program Management Office(PMO) which is a part of Business Process, Technology and Organization (BPTO). These groups helped decide the allocation of appropriate funds to each project. By changing the allocation of funds that his group had already decided would be wrong and could lead to mistrust within his group about future meetings and decisions that they may have to make in the future. While I do believe teamwork is of the utmost importance in any organization. Working with other departments can create camaraderie and help improve productivity and morale. However, if the executives had come forward before the group’s meetings(which would not have been possible since the funding was decided a few days earlier) about the funds, then I think it may have been appropriate for Matulovic to discuss with the rest of the group about possibly diverting some funds to another group. In this case, I think its too late for Matulovic to make any changes since the organization has agreed on the importance of IT and the need for funding. He shouldn’t relinquish some of the funds for special treatment outside the new priority management system if he wants to create an atmosphere of trust within his group.

Matulovic should give them a nice cold can of suck it up and tell them to drink up, JK. He should however explain to them how this new process will ensure the projects most inline with the company strategy will receive funding. As well as how this will better assist everyone in the company. If they would like to receive funding in the future they should come together and create projects that are more inline with the strategy as a whole. That being said I believe Matulovic could also avoid this issue by giving the ELT members a say in the process. I am not sure how you can ask ELT members to be responsible for something they have very little say in. Maybe it would be appropriate to allow the ELT members to have a vote on the finale outcome from the DBC. If they all vote no then they can provide the DBC with notes as to why and the DBC can reorganize the list and present it again. Very similar to how congress works when generating new laws.

In order to respond to all the executives that were calling him for special treatment, Matulovic needs to remind the ELT with an email that they had endorsed and signed off on the new priority management system because it provided an orderly, rational, and structured way to link projects and the core business processes they impacted to align with VWoA corporate goals. In addition, Matulovic needs to clearly show the exact breakdown of the final list of IT projects against the capped $60 million budget to leave no doubts of any extra money or capacity that could be unaccounted. And lastly, Matulovic has to explain why it is imperative to allocate $16 million to the infrastructure projects that he approved at his discretion. His explanation must show why the infrastructure projects are initiatives that have been recognized as “stay in business” investments and the consequences of not doing those projects to VWoA. When he can make it clear to the ETL of the importance of the infrastructure projects, the speculations that the infrastructure projects were treated separately and did not go through the same priority process will dissipate.

I think the best way for Matulovic to address the issue of special favors requests is not forgetting that although the new system has been implemented and the executive leadership team supported the idea, old habits die hard and people would still try to return to the old way of doing things simply because they are used to it and most time it might feel normal. I would suggest that Matulovic address each executive’s individual request as they flow in, by first acknowledging the fact that they have a particular project that they believe is critical to their department’s operations. After acknowledging their needs, emphasis on the agreed upon importance of the newly created process that all the executive leaders agreed to abide by and find a way to reconnect the value of the process to their project and the big organization goals. Perhaps reviewing directly with the executive why their particular project was set on the back burner might reduce the need to request for special favors and encourage the executive to reevaluate their projects in relation to the organization’s goals.

This is a prime opportunity for Matulovic to stand firm and justify the corporate strategy to his fellow executives. To allow special exemptions would undermine the process and keep them in the same state as they were in the ’90s. In answering these calls, Matulovic can explain what the thought process is behind the new system and why it’s important. Not only does this get people aligned with what corporate is trying to do, but it helps them accept possible rejection of their proposals when they see how it doesn’t line up with corporate strategy. Being that they are working with a significantly smaller budget than is required for now, they will need plenty of people to understand this. I view this as an opportunity to espouse the culture VW is trying to create. If you think about what it’s like at Google, everybody there knows what they’re working towards. The majority of their time is directed toward major company goals. A small portion should be dedicated to personal or area specific ideas so as not to stifle innovation, but all in all, each group should be focused on improving things overall for the customer, not their own office.

It is noted throughout the case that since 1992 the IT function in the VWoA has been outsourced, then internalized, and changed often – to varying degrees of success or capability. It seems apparent that Matulovic’s appointment to the CIO post at VWoA is about bringing order to the chaos – not specifically about IT and/or technology. As someone coming into a role with a background of leading process development, it would not opportune for him to circumvent the new IT selection process to play favorites among the ELT and/or heads of business units. After reading the case I get the impression one of Matulovic’s goals for the new IT project selection process is to make it clear and transparent and that decisions are made based on loads of information. Now, the funding available is less than what is needed to deliver all three of the top projects. A leader wouldn’t be a leader though if he/she didn’t have to deal with underfunding. And the business unit heads are always going to fight for their projects and criticize the process if theirs isn’t selected. If a business unit goes without a funded project in 2004, then that is the outcome of the process – these project must not have been important enough to enterprise goals.

In order to be diplomatic and to establish his position as the leader of the CIO, Matulovic has to back the process and its outcomes. If the process does what it is intended to do – bring the most important projects to the forefront, then it has done the job properly. Unless their is an egregious error in the process and a project with zero value bubbles up to the top, Matulovic has to hold firm in support of the process.

As a leader he may choose to approach those who have projects not selected for funding and attempt to win their support for the other, more important projects, in a effort to establish strength within the organization for corporate-wide goals. He should also survey the participants in the process selection effort, asking for feedback on the process and seeking areas where the selection process could be improved for the next year. And he could survey the ELT for their feedback on the selection process – these ELT members are sure to bring the feedback from their business units. It will be his role to continually improve the process, to ensure that each and every year the process is doing the best job it can to select the right projects – projects that are aligned with most important enterprise initiatives and business unit goals.

I would be very direct with the members looking for preferential treatment. I would advise them that the committee will take into account all projects and weight them accordingly. In the end, they approved the new process for prioritizing the projects. The most difficult aspect of Matulovic’s endeavor will be adequately portraying and presenting the data back to the ELT members and justifying why their decisions are aligned with corporate objectives. If he can communicate it effectively, there should not be an ill will towards the final allocation of funding for projects.

Matulovic is definitely at a crossroads, but needs to hold firm on the prioritization delivered through the system. For VWoA, project prioritization is not an option, it is a necessity. As a result, there is a limited pool of resources for a vast amount of work, which means some set of work will not be done. If Matulovic tries to please everyone, the execution of the projects critical to the success of the company will suffer. He needs to be consistent and train the organization to believe in the process.

His concern that others will view IT as an obstacle is well founded. To overcome this concern, he needs to deliver on the prioritized projects and highlight their value as success stories. He also needs to continue allowing the process to drive synergies between the needs of stakeholders. More synergies between projects equals fewer projects which satisfy a larger number of stakeholders.

It is Matulovic’s job to ensure that the limited budget they have is spent on the right projects, or those which most align with the company’s strategic goals. No matter what decisions he makes more projects are going to go unfunded than those that are approved, ELT and business unit leaders are going to get upset. If he gives in and begins to do special favors, it will open the floodgates for these type of requests. Cynicism will ensue, and he is still going to have a bunch of upset people. Matulovic must stick to the system as currently defined. He should willingly take suggestions on how the process could be improved and, after this round is complete, he can reevaluate and make adjustments.

Giving in to these special requests would lead the company back to the same haphazard methods they had before. Some system is better than no system at all, at least he can put a stake in the ground and create baseline to improve from.

Like most who have commented I also think that Matulovic should stand firm and make it clear that the process developed was designed to benefit the whole company. Perhaps if he held a meeting with ELT to highlight that the proposal for 40 projects with funding totaling $120 million and a budget that was capped at $60 million something has to give. There it would be an open forum and everyone could clearly see there could be no favoritism. Matulovic is working a system that will likely be continued after his departure and it needs to be built on a strong foundation. At what point can Matulovic allow more projects to go ahead after reaching the budget, He himself in the article pondered if a project was small or just below the line of funded projects they should figure out a way to get it done. What needs to be done is to place a value on the projects with potentially slating those less important for the next round of budget monies.

I think Matulovic should respond by courteously requesting ideas to how they suggest that the new priority management system be improved. It appears as though the executives are naturally pushing for their own departments interests and focused on the project category in which they fall. Therefore, by asking them to re-assess the entire process they can acquire a more comprehensive understanding as to why their project was not seen as a priority at that time. This constructive feedback is critical especially because many refer to the process as not being practical enough. I think it is also appropriate for Matulovic to consider how to streamline the selection process and make sure it is as objective as possible to address concerns that it may be “unfair” (Austin, p. 1).

Austin RD (2007) Volkswagen of America: Managing IT Priorities. Harvard Business School 9-606-003: 1-19

Matulovic should respond to his peers with stern authority and facts. It is important that he maintains control of what projects will be funded and not steer from the plan that was created by a group of each departments peers. Keeping the project transparent and explaining how the choices were made and where each of his fellow executives projects will follow with the next few years plans may help with them understanding the choices that went behind what projects were selected. As mentioned in the VW case, some projects were consolidated with others while other projects relied on one project being complete before another one could get started. Matulovic did a great job of being company inclusive and getting feedback from each division before moving forward with the ITSC and selecting projects. While some executives may be frustrated, this is an inevitable thing, expressing what the short and long-term gains of going with one project over theirs may help them understand why thing were selected as such and how all projects directly affect the company in a positive, forward looking way. Maybe directly addressing the company as a whole before the new projects are unveiled would have curbed his fellow executives from coming to him asking him to override project decisions in favor of their projects. Our company has regular company wide meetings when unveiling new projects and allows us to ask questions to understand the methodology behind decisions that are being made.

Also I think by communicating to the employees of the projects funded and also letting the business units as why the project was not funded gives some kind of closure. He should also build a culture where each business units are encouraged to come up with a creative projects/proposals that are aligned to the company’s strategic goals and incentivize these folks if they did a good job even though they didnt get funded but atleast made it to the priority list. Encourage them rework and come back next year will be a way to go and keep the culture alive.

Communication will be key in this instance. Matulovic cannot ignore his colleagues and hope they will go away. He cannot blow them off and simply say “This is how it is.” It may be time to bring the entire group back together and, now that the decisions are made, make sure that everyone understands how and why they were made. He can and should stand his ground, but he must do so in an open and transparent way.

A critical project is left unfunded because it originates from the home office in Germany. It may not be considered a critical project to the VWoA team that is working on it. Per Matulovic’s plan, the 10 business units of VWoA were asked to prioritize IT projects. Each unit then focused on what projects would help them to be successful. The business unit working on the global supply chain project is likely in a support role. Leadership probably does not see the project as one that they own at the VWoA level. For this reason, it is simply overlooked.

What should be done? It seems clear that the project must be funded. Therefore, Matulovic must further prioritize the outstanding IT projects, or find funding elsewhere. To ensure that this does not happen again, I would recommend a sixth investment type: Global strategic initiatives. This, along with “Stay in business,” would represent the starting point for prioritizing IT projects.

The overall budget of $60 million was sliced into 3 pots of money; approximately $16 M for “stay in business initiatives”, ~ $30M for enterprise projects and the remaining ~$14M for priority business unit projects. The global supply chain management system project didn’t really fit into any of the 3 categories so it’s not surprising that it was left unfunded. This new process was specifically for the VWoA group and the global supply chain really falls under the parent VWAG group. Since this is a such a critical project that would have wiped out a significant portion of the IT budget, it should have been handled differently. A few possible suggestions are that a predetermined amount could have been earmarked in a 4th pot of money in the budget to prevent this shortfall from happening and because it is so large, perhaps the costs could have been spread out over a longer term to lessen the blow to the budget. Another suggestion is that shouldn’t be included in the VWoA IT budget if it is part of a larger VWAG initiative. Yet another could be that supply chain should be responsible for the funding rather than IT or perhaps even another funding source. Obviously, this situation was evidence that the new process had its flaws but I am sure Matulovic was able to work through like he did with tackling and overcoming all the other hurdles he encountered.

Although the purpose of the “Next Round of Growth” program at VWoA was to prepare the enterprise to be ready for the new global product strategy, the business architecture and subsequent goal mapping created by the leadership committees did not address the connection between the initiatives of VWoA and the initiatives at the global level (the reason for the creation of NRG in the first place). Because of this, projects were evaluated solely on the impact on VWoA’s business model without also taking into account how a project also correlated with global strategic initiatives. Additionally, the investment types recognized during the evaluation process (stay in business, return on investment, and option-creating investment) also focused only on the needs of the VWoA, so projects required to support VWAG, like the supply chain objectives, would not be considered because they didn’t meet the criteria projects were being judged upon. One other issue that caught my eye was that VWoA was organized around sales and marketing, vehicle distribution logistics, and after-sales service. Nowhere within those groups is any mention of the supporting infrastructure (the “Key Resources,” according to the Business Model Generation e-book also assigned this week) that enables the activities each of those areas relies upon for success.
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If time allowed, the NRG leadership committees should go back to the drawing board to revise their architecture and remap their goals so evaluation criteria aligned with the goals of the global organization along with the goals of VWoA. Then, the process would be repeated, but with alignment to global needs to prevent critical projects like the supply chain from being under-funded. Additionally, given that the supply chain project would wipe out much of the 2004 IT budget, funding for the project should be supplemented by other sources – perhaps VWAG could provide funding since the project supports a global initiative. Either way, VWoA needs to examine its structure to make sure there is sufficient funding for the key resources that support its business model.

It’s possible that a “critical” project can be unfunded when subsidiary goals are not aligned with the corporate parent. This can happen quite often in multinational corporations. Back in our global strategy course, we saw this issue with Procter and Gamble, where the country teams were more powerful and had P&L responsibility versus their product teams. It’s unclear whose P&L VWoA is responsible for in America – just their own or that of the whole VWAG? In any case, from VWoA’s perspective, it makes perfect sense that the supply flow would be the lowest goal of the five enterprise goals, since it had the lowest impact on VWoA’s business.

Moving forward, this misalignment in goals has to be tackled from both executive level strategy and HR strategy. If the supply flow optimization is mission critical for VWAG globally, they need to incentivize the VWoA leadership in some way to ensure that the optimization is prioritized highly. That could be through a different allocation of funds or simply a corporate directive. On the HR side, corporate HR has to make IT infrastructure a mission for everyone in the organization. That means changing the company culture and creating a sense of urgency surrounding IT budgets and planning.

The critical project, Global Supply Chain project, did not get funded as its does not align to the business priorities facing VWoA. VWoA has clearly business goals, deliverables and objectives with cost savings, revenue goals and other key business KPI it must delivers. The project savings from the global supply chain project while significant for VWAG are small for VWoA and with a defined budget of only $60 million, VWoA has to deliver projects which drive the most business value. In multinational firms this is the typical issue where you have a corporate parent dictating to the various subsidiaries projects which drive a lot of value for the overall enterprise however have little value for the subsidiary and funding for these projects is lacking. Typically VWoA should ask for more corporate funding to deliver the global supply chain project since the value and benefit is received and recognized by the corporate parent. Corporate initiatives need to be funded from the center to ensure focus, and project execution of key initatives likes this otherwise operating companies will always chose their own projects especially faced with limited funds. VWAG should centrally fund the project and allocate funds to each business to ensure this project gets down on time, on costs and in a systematic manner.

Ultimately, due to limited funding and the fact that this critical project was not properly prioritized, the project was not funded. The company did not place a great enough emphasis on the need for IT as a means to drive growth and expansion, and therefore did not allocate enough funds for these IT innovations. The disregard for IT as a critical resource was evident even in the early days of the company when the IT department was gutted; clearly, that part of the culture had not yet changed at VWoA. I believe in this case it falls to Matulovic to convince senior leaders that more IT investment is necessary. One of the problems at the company was a perception among employees that IT was “an expensive item that usually fell short of what they needed from it.” Matulovic needs to change this perception, by continuously improving the IT offerings within this department. Further, he should draw upon his experience as a non-IT manager and engage with senior leaders to refocus corporate strategy as it relates to IT. More funding will ultimately be required in order to facilitate the company’s continued expansion.

The lack of funding for the “critical” project (global supply chain system) was due to a disconnect between VWoA and VWAG initiatives. From a VWoA perspective the global supply chain system wasn’t a focus because it didn’t fall into the prioritization of the “Next Round of Growth”. The budget was segregated and supply chain systems didn’t meet the new categories criteria. . Additionally, the budget and prioritizations for VWoA didn’t reflect VWAG’s global strategic initiatives. Obviously, this needs to be corrected and I think it needs to be addressed at VWAG. VWAG would have numerous options to address this but I think if you are focusing on global growth, then you need to prioritize that in your culture which means putting an emphasis on IT and ensuring alignment from your subsidiaries. One way to ensure alignment is to ensure proper funding and resources to support the desired outcome. You have to be able to make VWoA see the global supply chain system as a significant value. You have to unify the vision and provide the means to do so. How can VWoA see this vision when the “critical” project was not properly represented in the prioritization of the NRG? It seems to me that there needs to be increased communication and a better strategic implementation process in place to ensure that goals and objectives are aligned with culture to drive outcomes.

I’m certainly not surprised that the SAP multiyear project for global supply chain management didn’t make the list for VWoA. For some perspective for those that don’t know SAP while certainly a fantastic system it has a track record of having long drawn out implementations that takes years to complete and almost always far exceed the budget. However, that doesn’t explain why it was not funded. When you think of projects that are going to pass the criteria for investment and limiting them to focus on their highest prioritizations there was more things that I would almost classify as low hanging fruit that they felt was much more critical at this juncture.
— Now let’s think what’s wrong with this, as the parent company felt this was a critical project and originally funded it before they started the new process they should have funded this project for the entire implementation. It doesn’t make any logical sense unless the project is going poorly to stop in the middle of a multi-year implementation. The funding should have all been done upfront and staggered the expenses. If this was done appropriately the budget for new projects would not have been the 60 million, but it would have subtracted out any prior obligations. This to me was a failure from transitioning from the old process to the new process.

The Supply Flow Project was unfunded simply because it wasn’t deemed important by VWoA. In fact, “optimize supply flow” ranked last on their list of priorities. Clearly VWAG did not communicate the significance of this project to the organization as a whole. In my opinion, Matulovic cannot take funding from other funded projects – that would cause a revolt and a complete mistrust of Matulovic and the process he’s trying to instill within the company. Since this project touches all branches of the company, it should either be classified as “Enterprise” and take a chunk of that budget or come from the funding pool of VWAG. If it’s a global project, it shouldn’t hit the local funding pool, especially not at the expense of every other project in VWoA.

If you set Exhibit 5 – The Enterprise Goal Ranking Project Prioritization– back in front of VWoA leadership and you say “supply flow” is directly related to “customer loyalty” ranking 1, and “new vehicle value“ ranking 2, then they can see it needs priority and can carve funding from those projects.

Superior customer service translates to customer loyalty which necessitates convenience, quick turnaround in repair and the transport of parts to dealers and service centers. Efficient warehouse mechanisms ensure proper/fast delivery of parts, shorter repair times, and satisfied customers. With the increased importation of new Volkswagen models, optimizing distribution is a must. New vehicle value can’t be achieved without new vehicles being efficiently transported.

The thinking at VWoA is one-sided and ties customer loyalty and new vehicle value to marketing and selling. Beyond advertising and direct customer contact, supply flow with IT improvements aids in these critical areas. That should get executive leadership to see IT is more than a support function. Of course, prevalent thinking is since supply flow is a corporate global initiative then VWAG should fund it. But the lack of funding from VWAG, should cause VWoA to think “outside the box”, re-evaluate the whole picture, and have the initiative to take on the supply flow task. I think it would bode well for VWoA to show they have considered all of VWAG’s strategies and make it successful. So the next time VWAG decides funding for projects, belief in VWoA’s executive leadership, will garner them more than 60 million in IT project funding.

Under the new approach to managing IT priorities, it is not a surprise that a global supply chain project might go unfunded. In many organizations, budgets are divided among divisions and subsidiaries, with little if any accounting for the common needs of different divisions and allocation of resources to these “joint initiatives.” For VWoA, it seems obvious that the multiyear SAP implementation is of such significantly large overall scope and impact that it requires funding from the parent VW AG. Indeed, the supply flow people in Germany complained about its need for funding, which might have actually been the goal of the DBC, in order to make the German parent company realize that funding a global supply chain initiative is THEIR responsibility. In a year in which three phases of paring and pruning resulted in a request for $210 million in IT funding versus a budget of only $60 million, VWoA needs to look for any opportunities to offload funding of its IT initiatives to other subsidiaries or the parent company, if appropriate.

Interesting, Ryann. Does your company have a PMO with oversight responsibility for the big IT project? How does the project manager keep all of the different teams engaged on the project? It’s good to hear that HR is involved – as we learned in HRM, it’s important for HR to be strategically aligned with the executive team. Does HR do that through hiring practices or through performance evaluations/feedback? It’s clear that these types of projects are critical for the success of the organization and that all the different functional areas need to be on board with the overarching goal for the project to succeed.

If I’m understanding correctly the information presented in the VW case, then the new IT project prioritization process was a VWoA creation, specifically designed to focus on and make effective decisions about IT issues of greatest importance at the VWoA importer level. Given this, it makes sense that the supply flow project was unfunded because at its core, it was a project that needed to be undertaken (and funded) by VW at the global level. Still, I wonder if the fact that this project was already underway (and mandated by VW in Germany?) should have pushed it higher on the priority list. Even so, it was stated that the full cost of the supply chain project would have consumed a significant portion of the VWoA IT budget for 2004, so I’m not really sure how to reconcile that with the project’s obvious importance to the company as a whole.

I can understand why a global initiative was missed. The members of the planning committee were comprised of only VWoA members. I think that when discussing enterprise initiatives there should be a global executive present during the process to ensure that there are no global initiatives that are not considered. The first phase required all projects with due dates to be submitted but I don’t know if that was done holistically. I think that the projects requirements should have been done on a global level to ensure there was no duplication of efforts or to identify where pre-existing projects could have been leveraged. In addition, I think it is concerning that a global initiative was not considered to be a viable project to be submitted by local IT. I understand that IT at VWoA has just recently become more recognized but I think that the structure of the IT department should be reassessed. The global IT organization created a business unit to become the single point of governance for all IT issues. How could the senior leadership of this business unit not be involved in the project? Or were they aware and just decided that it was a global initiative that didn’t apply to this VWoA enterprise wide process.

How is it possible that under this new system a “critical” project (global supply chain system) was unfunded? What should be done about that?

The enterprise goal ranking for project prioritization ranked “Optimize the Supply Flow” at the bottom of the list, which is why the global supply chain system did not get funded. The supply chain project required global integration that would provide for processes/systems improvement and result in cost savings. Perhaps it was ranked so low since such improvements are “behind the curtains,” but it is a necessary in order to accomplish the organizational “Next Round of Growth” (NRG) program that CEO Klauss made the key leadership focus. The NRG program required VWoA to support and enable the new product diversification strategy while expanding its 9 models to 22 models over a 6 year period. If the company could not provide an effective and efficient global supply chain, the NRG would fail.

Matulovic must either push for a budget increase to support the supply chain project or readjust the rankings for the enterprise goals. Since the focus is on expanding products, it seems the company would want to shift the “Pre-Owned Vehicle Business” down and raise the Supply Flow upward.

The global supply chain management project was only partially funded due to its lack of importance in the prioritization system because it lacked priority to Volkswagen of America importers. This project affected the company at a global level and therefore had less value to those analyzing the NRG. Based on the corporate architecture of Volkswagen with Volkswagen of America and the GedasUSA group the importance of a global project would be diminished. Since the NRG and PMO fall under the auspices of Volkswagen of America the rating system rated supply chain management at the bottom. On the Volkswagen corporate level this global supply chain management would have a far higher prioritization and therefore would not have been unfunded.

Going forward the funding system determination needs to be altered in order to also assess global concerns of Volkswagen. At the very least, increasing the budget would be able to allow for implementation of the five programs including the global supply chain management program.

Project proprietors apparently failed to establish a clear link between VW’s global supply chain system project and the highest “Next Round of Growth” (NRG) goals at the time of project prioritization. This critical plan provided global value to the company as a whole, but only warehouse performance in its US sector. Therefore, local decision makers discredited it for adding little worth to their operation.

I think two clear problems with the new project prioritization system surfaced via this misappropriation of funds. First, a disconnection exists between geographic interests and levels of corporate importance. To resolve this, VW must, first and foremost, consider their global interests and avoid any corporate decision gaps. Secondly, Volkswagen’s new project prioritization process overemphasizes project linkage to major corporate initiatives. Projects, such as their global supply chain system undertaking, often support current operations and lack the luster of new developments. Unless an initiative of its own, management would find it difficult to associate such a broadly reaching project with other similar ventures for the advancement of current corporate goals. Our case referred to this type of project as “behind the curtain” work. Equally as important as new developments, these projects fail to obtain the necessary consideration under the prioritization model, which stresses major initiative connection. Volkswagen can solve this problem by introducing a genre of projects for “non-initiative critical projects for performance sustainability” into their prioritization process.

The reason why that global supply chain system was not funded was because it was a large cost with not a visible local benefit. For this upcoming year as the project was left off of the list, it will have to be on hold for another year. In order to get funding for this project for the following year, there should be a budgeted charge to each local office for a portion of this projects cost. My company is going under a similar issue. We are owned by a holding company, the holding company owns give or take 20 or so companies within 5 divisions, but the problem is that each of those companies has their own financial system. Some of us have SAP, others have Peachtree, another has QuickBooks, etc. The problem is, if the holding company or even at the divisional level want any sort of financial data, they have to go to each company and get us to run a report to pull that information all of which will come in a different format. Because everyone is on a different system, at the month end we all have to report into Cognos which consolidates all of our information. This takes time and money to do. We have been asking for years for them to invest in a financial system that would allow them to get all the information that they need at a push of a button but they have not done this. The reason that they have not done this is because of the cost and we are not a financial institute, so they cannot measure the cost benefit of implementing a new system. The global supply chain system project needs support and dedication from the top that it will happen, otherwise if presented against other projects it will never get chosen.

Finding an adequate balance between finances and quality can be incredibly challenging for any business and is seen throughout many organizations. While most businesses want to carry out every “critical” project for the sake of maintaining continued success and quality, the allotted financial budget can prevent this from occurring. This is where the need for a formal process related to prioritization becomes essential. Despite these extensive efforts made by Volkswagen to validate what becomes “critical”, it is still possible that the budget is not large enough to cover every project that is ultimately determined to be crucial for business growth and continued success. The global supply chain project was not funded largely due to the high costs that would have nearly drained a substantial portion of the IT budget for Volkswagen. Also, the project’s value was recognized on a global level of the organization instead of the importer level. The project’s value also focused largely on warehouse performance benefits which did not directly relate to the high ranking NRG goals. These factors had a large effect on why the project was not deemed critical through the new prioritization process. I think Volkswagen needs to do two things. First, they should perform a reanalysis of the prioritization process and the projects that went through the current system to determine that it truly did not make the cut. This is due diligence and using inter rater reliability in my opinion. It is always good to go back and reanalyze something when it is being questioned heavily. It will also protect the corporation. In the event, it is truly deemed a non-critical project for the year, Volkswagen should track and trend and implement data driven initiatives. Volkswagen should keep a close eye on the current state of the global supply chain and document any issues that may have been corrected if the critical project was approved. Data and documentation will serve as a great tool in the event the project goes through the prioritization process again for the following year.

As stated in the case analysis and most critical to the process for decision making that was implemented, the supply flow project was ranked outside of the top-most VWoA NRG goals, because it had more global impact. This low level ranking create a rapid downstream reduction in priority that ultimately allowed the project to be missed. It must also not have been ranked in the top 3 by executive for the responsible business group as well, likely for the reason stated that there was a lot of “behind the curtain” value to the project for the US side of VW. If VWAG had valued this program so highly, or had any specific projects in addition to this one, they should have provided guidance to Matulovic so that his selection process could have been tailored to include it earlier on rather than for it to fall by the wayside. On the flip side, Matulovic as an executive should have sought more guidance before executing his new system and presenting it to VWAG.

It was possible for the new system “critical” project to not receive funding because Global Supply Chain was not ranked high enough on VWOA’s NRG prioritization project list. Reason being the SAP system implementation was linked to Volkswagen’s Global strategy rather than VWOA’s strategic objectives. Volkswagen’s Global strategy was not aligned with VWOA’s strategic objectives. Furthermore, evidently VWOG did not provide corporate specific funding to their country divisions. VWOG should have effectively identified the specifics around how the SAP implementation project would benefit VWOA and how it will assist with accomplishing their overall strategic objectives. Also, VWOG should have projected the overall cost for the project and budgeted effectively to cover the entire cost of the SAP system implementation in every division. This is an IT global supply chain system related project and should have not come out of a division’s budget in particular VWOA’s.

How is it possible that under this new system a “critical” project (global supply chain system) was unfunded? What should be done about that?

This is an issue that I face often in my role as a system implementer. In the case of the SAP implementation the project was only partially completed and the removal of funding due to the fact that the impact of the project was primarily global and the cost were being funded locally. I have seen companies take similar efforts to reduce the IT spend by aggressively outsourcing with the same outcome as Volkswagen. It was clear that the new process and company structure would prove cumbersome and difficult to ensure approval for key IT spends. In the last 20 years I have seen many companies react to the disjointedness of IT projects and lack of rigor around the management thereof to develop overarching PMO organizations. These organizations are staffed entirely with individuals skilled in the craft of project management and tasked with the role of keeping projects on time, on budget and on scope. Similar to Matulovic, these individuals are typically not technologists but have the background and training to manage complex projects with many moving parts and interdependencies. These individuals are also tasks with managing third party contracts, consultants and have budgetary responsibility for the entity.

As the supply chain project did not have the perceived as having the business value based on the very detailed and prescriptive set of core values for each project. Unfortunately, Matulovic had few options when dealing with the continuation of this project due to the need to adhere to the revised set of policies. While he acknowledged that the revised process and the focus on local initiatives had an unfavorable impact on this project, without drastic and dramatic efforts, it would be extremely difficult to obtain the required funding. My recommendation, based on seeing very similar situations in the past, would be to seek funding from the global organization which would most benefit from this change. I concur with Matulovic’s assessment, setting priorities is one of the most difficult tasks faced by a manager. That being said, managers are put in their roles due to their understanding of the business and ability and willingness to make the difficult decisions based on an agreed upon set of rules without wavering. Although this decision will likely have negative consequences, I believe that Matulovic made the correct decision. Unfortunately, at times, IT is perceived as a roadblock to moving forward with projects. Personally, I believe this is unfair to IT as they are simply carrying out a mandate from others within the corporation.

The SAP project shortfall is a direct result of the newly minted IT selection process. Because the majority of the value of this project would be recognized at a global level, VWoA did not prioritize this project with any level of urgency. Additionally, because the US impact did not correlate directly to NRG goals and was a lot of “behind the curtain stuff”, the big picture was missed. This type of outcome is the unintended consequence of a misaligned organization that is not looking at problems and solutions holistically. And because the IT and management culture is focused intently on financial return, ROI, NPV etc; the strategic value of a this particular SAP project is lost. This is the same phenomenon when evaluating smaller projects that are selected out because they don’t meet the somewhat narrow NRG objectives. Further, VWoA’s CEO Klauss seemed to understand the implications of the product diversification strategy in Germany and the explosive import growth upcoming (9-22 models). Certainly a supply chain system, while not in direct support of VWoA; would be of critical strategic importance globally in support of North American growth. Matulovic is now in a very difficult situation, with only a few options. He could certainly pull funding from other important projects, which would have its own ripple effect. He could find alternative sources of funding; which would have its challenges. The best recommendation is to first, re-open the evaluation process to determine why the selection process would select out this type of critical global program. Based upon those answers and modifications, Matulovic will then need to determine where the additional funds will come from, where they can be reallocated from or what may need to be delayed until the following year.

How is it possible that under this new system a “critical” project (global supply chain system) was unfunded? What should be done about that?
This critical project was poorly served by the new system leaving it only partially funded. The new prioritization process overlooked the supply flow project primarily because the project’s value was at the global level versus Volkswagen of America’s level. A loss of funding for this critical project would be a major setback for VWAG based globalization initiatives. The argument needs to be made that the project is critically important to the group and a lack of funding will have a negative impact on the global integration for the company as a whole, rather than just Volkswagen of America. Since the project requires full funding for global integration of the entire group and the cost was a significant part of the IT budget, then alternative funding should be coming from global headquarters rather than Volkswagen of America. The new prioritization process made it clear that the project’s value at the local level was not critical.

Because unit managers are focused on their own agendas they only partially funded the supply flow project. Because of this the multiyear SAP implementation, midway finished would not be able to stay on track. The cost of this project would have taken a signification amount of the IT budget. Also this project would be recognized at the global level of the organization, not at the VWoA importer level. The U.S. did not see the project’s value. Knwoing the importance of this project to Germany, Matulovic could have set aside the amount needed prior to setting the IT budget for projects to ensure that the supply flow project be completed as scheduled.

Probably the same way VW couldn’t read the tea leaves to see that under-investing in IT during the 1990s was a bad idea. It’s about corporate governance and having a business strategy that incorporates an understanding of the changing market (realize that the web is increasingly important to sales, realize that people want SUVs instead of small cars) and an understanding of the critical weak links in your own processes (lack of global supply chain integration may be fatal).

With the old process of funding projects being so haphazard, it’s not surprising that the executive leadership at VW were driving with their eyes closed and their hands off the wheel.

The project being unfunded is directly correlated with the new IT processes. IT is looking at each of the projects on a global scale with everything being connected at some level. VQoA did not prioritize this project For this specific project, the value can be seen on a global scale but the VWoA did not prioritize this project with any level of urgency, VWoG should have effectively identified the specifics around how the SAP implementation project would benefit VWoA. At the same time, IT is expecting a much more detailed analysis for project justification – focusing on financial return and ROI. Is IT asking too much from the departments? Is it possible to put a number on all projects?

On prioritizing of IT project funds, the business units and Audi eBusiness teams, as well as VWoA Business Counsel are instructed to rank all projects based on Enterprise goals (NRG). The global supply chain management objectives are critic for Volkswagen global initiative, but it could not be able to categorize into or associated with any of its DRG goals. Even it carries top priority in its global initiatives, but it could not be funded based on NRG by VWoA. Since the VWoA does not have enough funds, the solution is looking for alternative sources. As the project will benefit the whole company and it is associated with strategic plan of the whole company, it would make more sense to get it funded at the company level, not at regional offices.