Open Standards Play Big In Motown

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NEW YORK -- The auto industry is not often thought of as a hotbed of high-tech but General Motors CTO Tony Scott told attendees at Wednesday's Internet World keynote address that Detroit is helping drive technology standards.

Scott told internetnews.com that he sees a silver-lining in the current economic malaise: the software industry is more amenable to standards in an era of tight IT budgets.

"The environment has changed some," he said. "The battles of the past occurred in a period of growth that was unparalleled and ultimately unsustainable. There was no penalty to coming up with something proprietary."

However, with more scrutiny paid to all technology choices, Scott said CTOs now hold a distinct advantage in driving industry leaders to agree on standards that operate more efficiently.

And for its part, GM would use its influence in standards bodies like the Liberty Alliance, as well as with its huge supplier and vendor networks, to push this goal, he explained.

The biggest leverage Scott employs is GM's sheer size: 9 million vehicles produced last year, 365,000 employees, and a $3 billion annual IT budget. With those kinds of resources, Scott said GM has earmarked open standards as a priority for the company, in a shift from the traditional proprietary approach taken by the both the auto and tech industries.

"Ours is an industry where each of us tries to get proprietary advantage by coming out with the next big thing," Scott said. "We're going to have to go to industry standards, not just across our industry."

Yet, despite its $3 billion IT budget, GM is constrained to spending only 20 to 40 percent of it on new development, Scott explained, with the rest going to maintenance and upgrades of current systems.

Internally, Scott said GM pinned high hopes on Web services helping the company continue to reduce its IT costs by eliminating inefficiencies and redundancies.

"We've been on a journey since 1996 to take out costs and reduce the complexities of GM systems," he explained. Since then, GM has cut the total cost of its IT budget by $1 billion, through taking systems out.

Now, with the advent of Web services, Scott said the company has turned its attention to linking up the company's IT systems.

This year, GM has begun pilot projects to use Web services in its major groups. Next year, Scott said Web services projects would become more widespread.

As an example, GM has implemented Web services in its GMAC commercial mortgage group, which has investors holding a portfolio of investments in various real estate properties. However, many different companies managing the properties, Scott said capturing all the information for investors was difficult, time consuming and expensive. GM has used Web services to link together the various systems to gather the information seamlessly.

Scott said he was encouraged by the possibilities the approach holds for GM's larger tech challenges, such as tracking the vehicle identification number (VIN) of cars through the manufacturing, distribution and financing processes. With a Web service created around the VIN, Scott said the company could do away with the problems created when a business rule that governs the distribution of the VIN changes.

Despite the optimism, Scott said Web services were still a few years off from delivering on their great promise, simply due to budget constraints.

"You only get a certain amount of new development dollars a year," he said. "Even if you converted it all to Web services, it would take five years or more."

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