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.

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“We have to have a strong focus on IT integration to support that new global product,” says Smither. Ford employees will be able to build, sell and support the same Ford Focus in the same way despite remaining differences in plants, people and equipment around the world, due in large part to new common IT systems, processes and data.

As the company’s manufacturing hubs in Dearborn and Cologne, Germany, prepare to assemble the car, Ford employees are logging in to a global commodity hub, which allows engineers and designers to share information with the company’s purchasing agents. Before this hub existed, each region used unique, sometimes ad-hoc, databases. Processes and systems for soliciting quotes and preparing purchase orders from suppliers once varied by part, region, vehicle, even buyer in some cases. Now the WebQuote system connects every corner of the company with its 1,600 suppliers using standard procedures.

Meanwhile, IT is rolling out a suite of 20 order-to-delivery applications that track a car order from the sale at the dealership through production to shipping and delivery to the customer. The suite incorporates the best features from applications used by different regions. It will be used first in India to introduce the newest Figo, a top-selling subcompact on the subcontinent that Ford thinks could succeed elsewhere in Asia and in Africa.

IT has also unveiled a suite of Digital Worker tools to improve employee communication and collaboration across continents. These include unified communications, WebEx videoconferencing and SharePoint-based social networking. The company is expanding access to e-mail on personal devices and experimenting with emerging social media tools such as the microblogging service Yammer.

Top-Line tech

One day soon, we’ll approach car shopping the way we do choosing a new cell phone, says Gartner’s Koslowski. The decision won’t be based solely on the product’s core functionality—making calls or getting us from point A to point B—but also on the high-tech bells and whistles baked into it.

At Ford, the key to developing those IT-based features is having a high-level technology executive located with every business and functional unit of the company. “The idea of placing senior IT executives in the business isn’t new,” Koslowski says. “But Ford demonstrated how successful this strategy can be if you prove that IT is a credible resource and make it clear to the business how they can benefit from it.”

For example, in product development, IT is contributing directly to the top line. Smither’s In-Vehicle Systems team is performing advanced proof-of-concept work with product-development engineers on the next generation of IT for Ford drivers.

The highest profile project to come out of this IT-business collaboration is Sync, Ford’s award-winning in-car communications and entertainment system. Introduced in 2007, Sync enables drivers to control stereos, smartphones, seat controls and much more with a voice command-operated system. The company is now developing Sync application programming interfaces for Google Maps, Stitcher smart radio and the Twitter client OpenBeak.

After three years—and two million Sync systems—Ford says car buyers are more likely to purchase a Ford with Sync. And they have paid a $400 premium for it. In a 2010 Ford survey, 80 percent of potential customers said Sync improves their overall image of Ford, 70 percent said it makes them more likely to purchase a Ford, Lincoln or Mercury, and 88 percent would recommend others purchase a Sync-equipped vehicle. The technology has, “for the first time, created a new value proposition for an automotive company beyond the transportation benefit of an automobile,” Koslowski says. “It’s a competitive differentiator.”

Back to the Future

If financial results are any indication, the One Ford strategy is moving the company in the right direction. Despite continued economic uncertainty, Ford predicts, and analysts agree, it will be solidly profitable in 2010—a year earlier than anticipated.

If all goes as planned, Ford will be able to build each of its cars for several thousand dollars less than its international competitors, says Cole, a reversal of fortune that will enable it to offer features and amenities others can’t.

Ford needs all the profit margin it can get. The billions it borrowed in 2006 enabled it to avoid bankruptcy and a federal bailout, but it still has a mountain of debt to pay down.

Although Smither says Ford’s IT department revamp is “well progressed,” full global integration will take another two to three years. Beyond that, IT has truckloads to do. Global collaboration has, for one thing, doubled network traffic and strained Ford’s consolidated infrastructure. “We need to make big investments in ensuring our network is resilient and improve capabilities in our hosting environment,” says Smither. Savings from data center consolidation must be reinvested in infrastructure improvements, like re-architecting Ford’s WAN. New consumer technologies will demand more from IT as well. “In terms of areas where technology is rapidly advancing—mobility, social networking internally and externally—we’re just in the infancy of that,” says Smither.

Accordingly, IT will need professionals with emerging technology experience—a skill set in high demand. Cole says employers are already experiencing shortages of workers with critical skills, and if Ford waits too long to staff up, it could have a hard time finding professionals with the right knowledge. Ford’s Nissen says IT staffing is under constant evaluation, and that Ford has deals with third-party IT service providers capable of staffing up when necessary.

There’s also the question of whether the changes Ford is making will stick. “Your strategic planning or your product portfolio or your leadership—if any of that derails, then your whole attempt to change the organization and to change IT can get derailed,” says Koslowski. Ford faced similar challenges during the auto recession of the 1980s—losing billions, squandering market share. Corporate leaders avoided bankruptcy through cost cutting, a focus on quality and introduction of the best-selling Taurus. The changes didn’t last; after a few years, Ford returned its roots.

“The forces of tradition are like 500-mile-per-hour headwinds,” says Kotter. “Often what happens is a new CEO comes in and makes what seems to be a huge change in a gigantic company over four or five years,” says Kotter. “But if it hasn’t been made to stick, guess what? Everyone starts slipping back into the old ways of doing business and the great turnaround doesn’t last.”

Cole, however, believes Ford is unlikely to backtrack this time. “It’s like surviving a near-death experience. It’s focused them on what they should do,” he says.

Smither isn’t worried. “I think staying focused on the One Ford plan, and taking decisive action to make sure we matched capacity with demand while leveraging our global scale, is what allowed us to survive,” says Smither. “And the same is true for IT. At this point we continue to be laser focused not just on integrating Ford but figuring out how we can continue to grow profitably in the future.”

The restructuring process, he says, has been invigorating. “I have always told people that a career in IT is a career in change management. But no one—no one—could have anticipated this level of change,” he says.

“I know people massively fear change, and it’s been challenging. But I also think it’s been motivating and constructive, and I think my team would view it the same way. You always see it differently coming out than you do going in.”

Copyright © 2010 IDG Communications, Inc.

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