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.”