Gearing up for the road to recovery

By Julian Rogers

Plummeting sales, mass layoffs and government bailouts have all been a by-product of the recession for a spluttering global car industry. But for a previously bankrupt General Motors the crisis is all about unearthing opportunities, suggests European CIO Alejandro Martinez.

“I think the traditional view of IT has changed; you are not aligned to the business, you are the business”
-Alejandro Martinez

When an email landed in my inbox informing me I would be interviewing GM's Alejandro Martinez, I began mentally packing my faux Ray-Bans and factor 20 sunscreen for a press junket to Spain's equivalent of Detroit. Less than 48 hours later I find myself, somewhat deflated, deep in an industrial estate in Bracknell (a commuter town 50 kilometres west of London) on a drab Friday lunchtime. There isn't a tapas bar in sight, nor the click-clack sound of castanets. As it turns out, Bracknell, which has become a hotbed for high-tech multinationals, is the headquarters of GM's European technology operations. And Martinez, who it transpires is Mexican and not Spanish, is responsible for enterprise-wide IT activities in Europe, including infrastructure and architecture, applications development, re-engineering business processes, networks and outsourcing.

The lobby of GM's communal office building is minimalist and airy, surrounded on all sides by cascading open-plan floors. An imposing glass elevator sits as the focal point of the room. A short wait ensues before a sharply dressed Martinez strides up and greets me with a warm Latin welcome - a firm handshake and a broad grin. A discreet GM pin badge adorns the left lapel of his navy blue suit. While this CIO may tick the boxes of IT boss stereotypes with his full beard and specs, albeit neatly trimmed facial hair and designer glasses, he immediately comes across as both animated and loquacious. Much to my relief, I won't have to trot out my pidgin Spanish due to his superb command of English.

When I quiz him as to why GM Europe's IT organisation has chosen a backwater like Bracknell in which to set up home Martinez is quick to play up the town's credentials. "I told my CEO only the other day that around here is the best place to be because a lot of the CIOs for the EMEA region tend to be in the London area, and even in Bracknell." This is a temporary home for Martinez; his department will be upping sticks to an undisclosed location in the near future. "We need to have a creative environment in which to work, although not on the same level as what Google has done," he laughs.

The CIO's office occupies the corner of an open-plan room stuffed with IT engineers hunched over desktop PCs. His abode is functional rather than flashy: a plain wooden desk, ubiquitous office cheese plant hugging the wall and tightly closed window blinds preventing even the tiniest shaft of light from penetrating the room. It's from this hub that IT supports the back-office side of the business and customer-facing technologies and drives innovation. Unfortunately for Martinez, the recent economic maelstrom has impacted these efforts somewhat. The past 24 months or so have been not so much a bumpy ride for the embattled auto industry, but more a white-knuckle leap across a ravine in the pitch black of night. A bankrupt GM was forced to go cap-in-hand to the US government for a US$50 billion bailout, while in Europe GM is seeking €2.7 billion in state aid from the German and other European governments. 

"Yes, there has been a down cycle but my focus is on reorganisation and preparing for the growth," Martinez explains confidently. "We're starting to look for ways where IT can improve the competitive advantage of the company," he asserts, "not just help it survive." The car industry's rocky road to recovery has forced automakers like GM, which produces the Opel Vauxhall brands in Europe, to cut their cloth accordingly. For Martinez it has meant rolling out a "major cost reduction crusade" under the watchful eyes of the boardroom bean counters. "All of my staff receive aggressive targets and we monitor these targets on a weekly basis - it is strongly governed because we have very high expectations."

In a bid to cut expenditure and create efficiencies, Martinez has orchestrated the consolidation and virtualisation of GM's data centres, the rollout of unified communications and the current overhaul of the desktop environment with the latest operating systems and tools to galvanise collaboration across the group. "We are a global company, so the traditional way to interact has changed: we now put more collaboration tools on the desktop in order to share work, share experience, to leverage and be mobile." He continues: "We have started a major crusade to refresh our mobility strategy, which is not just about devices - it is about the apps and services you are providing the users."

Around 90 percent of GM's IT is outsourced, although it is run under a standard globalised model. This means GM is expected to run IT exactly the same in far-flung places like Brazil, India, Russia and China - a complex operation when IT maturity varies greatly and vendors are not ready to deploy the global model. The standardised approach has been a tough journey since the start in 2004, says Martinez, but the trials and tribulations have been worth it in the end. "It is very difficult to run global operations under the standardised model, but I think it is worth the effort because the savings are there. You have to have a very strong governance model and engage with the suppliers because things happen like last year's crisis and everyone is trying to cut costs. So you need to hold them accountable."

Brainstorm

With GM's IT organisation being forced to do more with less, at least once a month Martinez encourages his team to come up with new ideas to drive revenue - an ideas factory that he says has produced tangible results for GM. "I have pushed the team to an area where they don't feel comfortable," he explains, "because we as the IT organisation are change agents and not just a data processing organisation. We sit on the board so our job is to drive revenue, which means we need to have very creative ideas and be innovative."

GM's IT business now has a specialist team comprised of differing ages and experience to focus solely on innovation. This diverse group has created a smorgasbord of ideas, says Martinez. "We have found it very interesting to see how people from different generations interact because both this generation and the baby boomers are coming up with very strong ideas on how to drive revenue. It has also created a lot of excitement in the business because it's a different ball game now, a different mentality because the crisis has forced us to change our business model."

Alongside forging this melting pot of creativity, the IT professionals are required to be in tune with GM's business strategies and visions. "If you are not a businessman then you cannot be a good CIO," Martinez reveals with a shrug of his shoulders. "It's important to understand the technology but first you need good business skills and you need to understand your company's strategy - you are not there to just talk about computerisation, you are there to contribute. You need tremendous business knowledge and drive and ambition to leverage technology to a greater competitive advantage. So if you don't speak the business language then you are out of the game and you cannot be seen vis-à-vis with your peers."

GM is proactive in the cross-pollination of skill sets across departments. For instance, a good manager in supply chain or finance could quite easily find himself or herself applying their skills to the IT organisation. This broad knowledge of how various facets of the business keep GM moving in the right direction certainly enriches IT and other departments, according to Martinez. "Just knowing IT in the traditional way through reading books won't make you as successful as you could be - you need to have hands-on experience and understand what it takes to build a car." Martinez himself has spent time getting his hands dirty on the production line, an opportunity he has relished. "Every time I go there I learn something new. I also develop tremendous respect for the people who build our cars and I understand how to be more proactive in providing better tools for them to perform." For Martinez, the game has altered: "I think the traditional view of IT has changed; you are not aligned to the business, you are the business."

Brand values

Martinez's department is also looking to further raise the perception of the GM brand and customer loyalty. "We have been looking at ways in which IT can improve the competitive advantage for the company because a crisis brings opportunity. In the last couple of years Opel lost a little bit of connection with the customer so we are focused on repositioning the brand through the use of social media, reinforcing our B2C activities, better CRM and reconnecting with the customer."

Part of this customer engagement is GM Web TV - an online TV channel streaming video interviews, vehicle launches and insights into car design - from the drawing board to the production line. Martinez works in collaboration with the communications department to improve GM's brand and interact with the public though the website. A community based on social sites has also been established and executives regularly update blogs. "This has created a lot of excitement and we have had some very interesting feedback from customers asking us about new car features and gadgets they would like us to consider. So this has started a completely new open forum in order to listen to the voice of the customer and leverage the power of the crowd." This interaction with the consumer better helps the company to predict and anticipate customer reaction to a new product, suggests Martinez. He says the online interaction has created a paradigm shift in the way GM talks with the public.

The real deal

The web is not just improving communications - it is also there to shift cars. In California, GM cars were sold through online auction giant eBay, which attracted 1.4 million visitors. In Brazil a scheme to sell low-spec vehicles through the internet became a resounding success - eventually racking up almost 400,000 sales in two years. "It sounds odd," says Martinez. "Can anyone really be interested in buying a car online? But when we conducted the pilot in Brazil the answer was yes." The idea caught GM's competitors in the South American country on the back foot and they were unable to claw back the automaker's online head start. Martinez says GM took advantage of a change in legislation in Brazil and took a punt on the project being a success. "That's what I love about working for GM, you get to take risks. We decided that it was right to embrace the technology and work with a different mentality."

The major upside of the deal for Brazilian consumers was getting their hands on a brand new GM vehicle with a significant saving over a showroom model. "Perhaps we were lucky [in Brazil] and all stars were aligned, because in other countries and markets you have complex franchises and regulations that don't allow it. But we are always looking for opportunities like this." Marinez is coy when it comes to spilling the beans on any other Brazil-like opportunities. "Watch this space," is all he will divulge.

Closer to home (Europe), Martinez, who was previously CIO for LAAM (Latin America, Africa and Middle East), is seeing rapidly emerging markets like Russia, Ukraine and Uzbekistan becoming significant revenue streams for the business. His LAAM experience has stood him in good stead for working with emerging markets. "The biggest thing I had to learn was how to deal with emerging markets. If you know how to deal with them you are better prepared to face new challenges than an individual who does not have global experience. One advantage to being in a multinational company like GM is you also have an opportunity to work with different cultures and work in different regions. As an executive, you grow a lot and you feel that you're better prepared to really compete in the global world."

Breaking down barriers

On the subject of a global world, Martinez has become a firm advocate of GM's 'IT without boundaries' initiative. GM used to be fully centralised at its headquarters in Detroit, but now the business adopts a federated model giving different regions more empowerment. This offers Martinez and his CIO counterparts from other regions the flexibility to adapt to specific regional GM needs. "If one market is pushing toward reducing CO2 emissions then we have the flexibility to engage with the central software factories and respond very quickly to market conditions." IT without boundaries also means collaborating with other regions when the need arises. "Africa and the Middle East are not part of my territory but if someone in Africa has a major problem and our peers in China, who are responsible for this region, are not available because they are on a different time zone then I jump in to help fix it." It's all about having the right mentality to muck in and help, according to Martinez. "We are not bureaucrats here saying 'Please send me the bill and then I will help you; No, we have a winning mentality and a real sense of urgency because having a system down can cost us lost sales and lost productivity."

This sense of unity and urgency is what GM is relying on to get the business back on track. After all, the car market is a fiercely competitive environment where size, speed and cost play a key role. It appears GM's renewed focus in the wake of the worst recession in living memory seems to be something Martinez is relishing. "This has been a tremendous shift in priorities for us, although it is not just about cutting costs. You can easily just cut costs but if you don't drive revenue then your model is broken." He also puts his faith in GM's people completing this U-turn in the automaker's fortunes. "The amount of talent, experience and next generation of leaders we have here gives me tremendous confidence that the team will be able to turn this company around and we'll come back very strong."