by Abbie Lundberg

Things Change

Sep 01, 20082 mins

CIOs need to position IT for both action and reaction

When private-equity firm Cerberus Capital Management bought a majority stake in Chrysler a little over a year ago, it knew it had to make some radical changes-that’s what private-equity firms do. Its plans called for the automaker to be back to profitability by 2009.

Then things changed, and as Senior Editor Stephanie Overby writes in “Saving Chrysler,” “Cerberus and Chrysler executives have since abandoned” the idea that the company will be profitable by 2009.

Chrysler’s challenge was daunting. A primarily domestic, relatively low-tech company in a global, high-tech world, executives knew they had to shrink the business in order to free up enough capital to realign it to new market realities. “At the heart of Chrysler’s transformation,” Overby writes, “is its information technology organization, which itself must not only shrink in size and get fiscally focused, but support the more agile and global Chrysler of the future.”

Shrinking means outsourcing, and Chrysler has entered into a couple of major deals. On the inside, IT must restructure to support the outsourced environment and align more closely with the business, says Jan Bertsch, senior vice president, treasurer and CIO at Chrysler. “To move from order taker to innovation partner…requires a change in thinking, a shift in focus and, in some cases, skills.”

The company was able to rip the Band-Aid off quickly in moving the infrastructure work out to outsourcer CSC, but application work is taking longer to transition, and that’s having an impact on morale. “I knew we had to consider a lot of options as we decided how to react to this challenge and transform our company and the IT organization,” says Bertsch.

But this summer’s slump-with $4-a-gallon gas just one of many factors affecting both consumer behavior and the price of production-has slowed momentum on the transformation.

Chrysler’s June sales fell 36 percent from where they had been a year before. And slowed momentum once a company is well into a major transition is not a good thing.

CIO Bertsch says she wants IT “to drive-not just react to-business growth.” Now that Chrysler is facing unexpected business contraction, this goal is more pressing than ever.

“We’re living in times of unprecedented change, and my personality is pretty well-suited to change,” she says. That’s a good thing for Chrysler, where the ability to both maintain focus and respond quickly to changing conditions will be essential to saving the company.