How a Global IT Revamp Is Fueling Ford’s Turnaround
Ford’s revamped IT department provides global shared services and is deploying consumer tech in new vehicles to cut costs, attract customers and restore profit.
Mon, August 30, 2010
CIO — When Ford (F) unveiled its re-engineered Explorer in July, the buzz focused on its new options—an engine promising 30 percent better fuel economy, a touch-screen multimedia system, intelligent four-wheel drive, in-vehicle Wi-Fi and inflatable seat belts.
But what’s missing may make all the difference to the automaker’s survival. Two years ago, a shopper could purchase Ford’s full-size SUV in any one of 76,000 configurations. This year, Ford will offer just 1,500. It’s not exactly Model T simplicity. (“Any customer can have a car painted any color that he wants so long as it is black,” founder Henry Ford once wrote of the Tin Lizzie.) But it is a step back to basics for the 107-year-old company and—according to its senior leadership—the key to its future.
When CEO Alan Mulally took over Ford in the midst of a turnaround four years ago, he brought a singular focus to its Dearborn, Mich., headquarters: creating one Ford worldwide. For a company in which each brand, each region, each business unit ran independently for decades, Mulally’s “One Ford” plan is an extreme makeover. Even more challenging, the company has had to retool itself amid an auto industry depression and a broad economic meltdown.
“All the car companies dug themselves into such a hole that they face a humongous challenge,” says John Kotter, chief research officer with consultancy Kotter International and author of the bestselling book Leading Change. “But Ford is doing more smart things than the other American car manufacturers, and that seems to coincide with their new leadership.”
Since 2005, Ford has cut costs by more than $10 billion and shed nearly half its brands; it offers 45 models this year compared to 97 in 2006. By 2012, the company plans to center its manufacturing efforts on 15 vehicle platforms, down from 27 three years ago. The goal: design cars globally for global consumption.
IT is at the heart of the corporate U-turn. Nick Smither, who became Ford’s CIO five months before Mulally arrived, has mirrored the CEO’s strategy with a plan for “One IT.” To cut operational costs by more than 30 percent, IT eradicated duplicate applications, eliminated excess infrastructure capacity, united autonomous IT shops and trimmed its staff. The slimmed-down team of 3,400 is reinvesting that savings, plus more, in new technology—such as collaboration tools for designing and building its revamped fleet, and in-vehicle IT that attracts buyers and generates revenue.
The importance of technology to Ford’s 180 is reflected in IT’s elevated profile. Smither reports to the CEO and is part of the executive team that meets weekly to lead the transformation. And senior IT leaders are integrated into every new global function at the company.