The Volkswagen Group has lofty goals of doubling sales worldwide by 2018. To help its global parent succeed, Volkswagen Group of America had to adopt standard yet flexible IT platforms, processes and architectures so it can build new capabilities just as VW builds multiple brands of cars from standard platforms.
To that end, Volkswagen Group of America CIO Warren Ritchie launched an EA practice to gather, in a systematic and rigorous way, information about the processes and technology critical to VW’s U.S. sales and marketing arm. He proved EA’s worth by successfully managing the move to a new outside IT service provider, achieving more than 100% ROI in risk mitigation alone and using EA to implement new projects faster and at a lesser cost.
In a keynote presentation at the Troux Worldwide User Conference in March, Ritchie described the business and technology architecture initiative he launched in 2009 to improve VWoA’s IT efficiency and business agility.
He first recounted how in his years as a corporate strategist, he saw many change efforts fail not because of the lack of a vision, but because the organization “doesn’t have enough of a description of the `as-is’ world” to know what it needs to change to meet its goal. “If you can’t describe yourself, then you’re going to have a tough time managing yourself as a corporation,” says Ritchie. “Enterprise architecture is, in my mind, is a very structured approach to resource description inside an organization.” He compares EA to a blueprint that, by identifying the location of wiring or plumbing in a house, makes it easier, faster and less expensive to make renovations.
With that in mind, Ritchie first used EA on the “can’t fail” project of replacing a legacy IT services provider. “We didn’t own our processes, our systems, or our data and the legacy provider hadn’t done a great job at documenting it,” he says. The EA initiative gathered “knowledge that was lost deep inside the supplier, tacit knowledge in the heads of the individuals performing the work. We had to make it explicit, put it in a repository and start to use that knowledge to educate the new provider.” Through the use of EA, the transition is now 100 percent complete and means, he says, that “We’re no longer supplier dependent.”
Moving forward, EA is helping VW change from a “multinational” that adapts the operations of each country or regional unit for local needs to a “global” firm with standardized, modular and horizontally integrated technologies and processes.
He compares the standardization in sales and marketing processes to the standardization that lets VW build more types of vehicles more profitably. It now builds multiple brands of vehicles on the same assembly line from similar “platforms,” which he described as “sets of relationships” among components such as engine, transmission, and suspension. While each platform can be tweaked (for example, to provide a different ride) the basic platform can be used worldwide to reduce costs and time to market.
Since we know what’s connected to what inside the sales company, from business functions through to the data, we are faster at strategy implementation and that costs us less,” he says. “And there’s a huge adaptability and capability advantage.
“EA more than paid for itself by assuring that critical business systems remained in operation during the transition to a vendor. But VW is seeing even greater, ongoing benefits through the faster development of new systems and processes because “we now know where things are and what things are linked to,” says Ritchie. The knowledge in the EA repository translates directly into “speed to change or speed to understand” how VW of America needs to adjust to changes in VW’s global strategy.”
For VW of America, EA has forged the missing link between strategy formulation and implementation that so often hobbles corporate change efforts.
Watch Warren Ritchie as he describes his vision for EA:
