Volkswagen vehicles, first released in Germany in 1930, were intended to use modest amounts of fuel and remain within budget for people. By late 1940, company’s signature platform the “Beetle” became internationally popular with its rounded styling, reliable air-cooled engine and most importantly boosted worldwide vehicle sales past a million in 1955.
After successful 20 years, North American subsidiary of Volkswagen (VWoA) started seeing decline in sales. To propel sales, the company introduced the “Rabbit” and “Jetta” – both prompted short-lived recovery before plummeting sales to a lowest point again. Since senior executives perceived next round of new models as a remedy to mitigate sales issues, to break this cyclical pattern, VWoA introduced new platforms of “Golf”, “Jetta”, “Passat” and “Beetle”, which skyrocketed sales into the 21st century, established new brand positioning and allowed the company to compete with more upscale brands.
In the early 2000s, senior executives came to realization that organization’s focus was on small cars, however, mid-sized, Sports Utility and special purpose vehicles were undervalued, which resulted in need of portfolio diversification and shift of focus from traditionally produces segments to matching the global demand for vehicles.
Major IT issues:
1. Undervalued IT knowledge and long term outsourcing of IT functions
2. Lack of support and synergy in automotive sales and marketing business units
3. Issues with IT project prioritization and lack of attention to importance of the Supply Flow project
Undervalued IT knowledge and long term outsourcing of IT functions
With primary focus on marketing and selling activities, in order to reduce short-term costs, VWoA had outsourced and signed a 10 year contract with Perot Systems, an IT services provider. With this move, internal IT staff was condensed to less than 10 people and IT knowledge was dramatically reduced within the company. Later it became apparent that the company was understaffed with IT expertise and could not even manage outsourced contracts. VWoA was in dire need to hire staff to its internal IT department resulting in nearly 28 new employees.
A few years later, a new Volkswagen AG (VWAG) group created a US subsidiary called gedasUSA Inc. – “the consolidator of IT operations within the global Volkswagen group of companies”. The purpose was to take over all IT operations, upon expiration of the contract with Perot Systems in 2002, as well as development project work for VWoA using a formal contracting process. Therefore, all 28 employees of the American branch were transferred and the company was left again with no knowledge despite the move within VW group.
Lack of support and synergy in automotive sales and marketing business units
Gradually, emerging entities within VWoA also influenced the IT environment and created “eBusiness teams” which quickly adapted the Internet in order to boost sales, marketing activities and to begin...