Information Technology in the Automotive, Transportation, and Industrial Sectors

The agenda for IT has been anything but ordinary in the automotive, transportation, and industrial (ATI) sectors. The new business environment is marked by a weakening of the domestic agenda, expansion in the emerging markets, and ever persistent margin pressures. The marching orders for IT are challenging, but clear: Advance top-line growth and product innovation while adhering to the budget realities of the times.

This new world stage begs important questions from existing IT strategies, including:

What services should be out-sourced/in-sourced and how do we drive value out of these supplier arrangements?
How do we serve the needs of joint ventures and new geographies that represent the emerging business agenda?
Which systems and technologies should we invest in to foster innovation and growth?
How do we deliver critical capabilities with a best-in-class IT cost structure?

The challenges of a 21st century IT organization are significant, but notwithstanding rewards. At Booz & Company, we have worked with leading automotive, transportation, and industrial firms to help transform their IT organizations to higher levels of performance and capability, helping them address their most pressing strategic problems. We bring global expertise, deep content knowledge, and an unbiased perspective to drive results for our clients.

Service Offerings

The 1% IT Organization
Booz & Company has helped a number of leading clients build value-added capabilities while streamlining their IT cost structure to best-in-class levels, approaching 1% of revenue. Our approach rests on three main levers—strategic sourcing, demand management, and thin model IT organizational design—that can cut spend by 30% or more. Concurrently, we help our ATI clients define and build the capabilities needed to support a flexible business environment. At the end of the effort, our clients can:

Reduce costs for ‘running the business’ and free up funds for innovation
Leverage the strengths of the IT market to deliver non-core services
Retain core value-added capabilities to enable new business growth

Process Fitness
Our experience with ATI clients finds that process changes—with appropriate support from technology and solutions—can result in cost savings of up to 30 to 50% of the cost base. We find that companies too quickly jump to an organizational or technology solution, while ignoring other value levers that can contribute up to 70% of the business case. We look to:

Focus on all benefit levers to generate most returns to the organization
Get cash back quickly to the business to demonstrate the value of the program
Strike the right balance of standardization and customization, assessing tradeoffs of efficiency vs. competitive differentiation

Program Value Realization
Many large systems programs (especially ERP) have failed to deliver on their promises. The causes for underperformance are numerous (integrators with conflicting motivations, poorly defined business cases, and weak program management structures to name a few). Booz & Company has helped ATI clients get their programs right—acting as an honest broker with vendor-neutral, fact-based advice. We help client programs succeed by:

Managing the program, led by independent assessments of risk and performance
Staying true to the business case, and ensuring project cost/benefit tradeoffs are made in the right context
“Trust but verify”—ensuring that systems integrators make choices that are consistent with program goals

IT Outsourcing
Too often, IT organizations in ATI companies that outsource struggle to find value beyond initial price concessions. We often find that the processes and capabilities are lacking in the internal IT organization to manage the environment, driving up transaction costs. Moreover, the appropriate motivators are not in place for the service provider to drive continuous improvement. We provide:

A “contract profiler” assessment, to quickly analyze how your current agreement is advantaged/disadvantaged relative to industry best practices
End to end outsourcing support, from building the business case to ensuring transformation objectives are achieved
Support on building the key retained capabilities and talent needed to manage an multi-sourced environment

Contact
For more information about ATI service offerings in IT, contact Mike Cooke at mike.cooke@booz.com.

Additional Information

Information Technology in the Automotive, Transportation, and Industrial Sectors