Volkswagen in America: Managing IT Priorities

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Topic: Business & Economics
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Background

At a time when the business trends are increasingly becoming reliant on the global market dynamism which is driven by an ever-changing consumerism patterns, Information Technology (IT) remains the most critical aspect that can guarantee success. This is due to its ability to creatively generate an enabling environment where organization management problems are provided with a clear platform for solutions while establishing effective niches and strategies for success.

According to Applegate, Austin, and Soule (2009), Volkswagen Company of America has embarked on major transitions that have seen it introduce a new process for managing its business priorities, conduct restructuring and change managementa to fit in the highly dynamic market. These steps of actions have been given utmost priority by the management of the company bearing in mind that the market competition for the automobile industry has been growing tense over the years.

For these considerations to take place, Information Technology has been very central in effecting and perfecting harmony in all its sections both locally and internationally. However, in its development and growth, it is apparent that numerous criticisms befell the company making it cumbersome for the management to formulate as well as implement sound and practical policies.

Aláez-Aller and Longás-García (2010) are quite categorical that these were to be executed through managing priorities. It is against this backdrop that this paper seeks to evaluate the new process for managing priorities at Volkswagen of America and determine whether it will result into improved performance as part and parcel of change management..

What is your assessment of the new process for managing priorities at Volkswagen of America?

Managing change is the most important factor in determining the ability of an organization to redesign its management structures, harmonize its culture, and raise productivity. It is worth noting that in any business entity, the levels of profitability that can be achieved are dependent on the nature of strategies that it assimilates and their relevance to the particular business entity. Change management is effected in an organization to aid in raising productivity, improving or creating value, and managing to operate profitably either internally or externally.

The decision by Volkswagen to cultivate, establish and prioritize IT has been considered by many analysts to be of critical importance to the company’s growth. In my assessment, the new process Volkswagen of America has adopted of managing IT priorities reflects the role played by change in the operation of a business, a consideration which makes its prioritization one of the core determinants of its success which it will achieve in its main operations.

However, introducing a new process in an organization is a step bound to get vast internal and eternal resistance that determines its overall ability to achieve the expected results. It is worth noting from the criticisms below that human nature is generally resistant to changes in their major applications.

While the move to prioritize IT has been lauded as a shift that has progressed Volkswagen of America in the right direction, it is without doubt that it has elicited sharp criticisms. Chung, Mitchell and Yeung (2003) argue that though the new process for managing IT priorities that the management at Volkswagen of America is well planned, it appears to overlook certain key aspects among them the budget constraints.

The company has for many years been unable to have enough funds to cater for its new projects. Anner (2007) highlights that a properly articulated IT prioritization plan must be fashioned in such a way that it does not impact negatively on the budget of other projects. Critics who are in agreement with Anner (2007) pillory that the management in this company must have rushed into handling proposals without first taking into consideration the budget necessary for the project.

On the same note, while opponents of the above critics argue that a budget must not be so elaborate and complete to meet prioritizing IT and other financial goals, the main issue regarding budgeting rests on flexibility for adaptation and underestimation. Jenkinson (2006) argues that even though a new process of IT prioritization may earn Volkswagen America a substantial return, without accessibility to enough funding, the goal might not be realized.

It is clear from credible sources that there is lack of flexibility in terms of funds for this new initiative, a consideration that makes the new process for managing priorities at Volkswagen of America and its potential to yield high returns for whichever investment it has been set for elusive. In his publication, George (2007) posits that Volkswagen of America has not been so effective it implementing its projects in the sense that some of its projects fail to get enough funding. One such project is the multi-year SAP implementation.

The new process of managing IT priorities has been regarded as a move that will jeopardize the ability of Volkswagen America to effectively distribute and market its products. Chen (2010) argues that this is because the process requires funds which are limited land cannot be shared optimally with other projects.

This new process will impact on talent-sharing initiatives and make other projects that have been largely under funded to be prioritized. Needless to say, management of IT at the company should be approached with extra caution bearing in mind that it is the only channel through which the company is capable of reaching out its wider clientele base.

In addition, one important factor that has been associated with the new process has been massive tensions by stakeholders and different business unit representatives who have cast doubts on the modes of its implementation. Fink et al (2005) point out that one such cause of tension to spring from dropping off of certain initiatives when a project is at the funneling process. This has been attributed to Volkswagen of America project prioritization measures it has under its enterprise goal ranking. Its prioritizations have not only been considered ineffective, but have also done a huge disservice to production though means such as optimizing the supply flow.

Are the criticisms justified?

The criticisms are indeed reflecting the major problem that the company faces in managing IT priorities, a consideration which justifies them. It is true that business and IT have become inextricably linked in generating value to an organisation. However, as critics have pointed out, prioritizing IT at the expense of other important projects is a disservice to other units of the company such as the production unit.

Thus, there is need to set up an effective budget which is flexible and allows for adaptation. This according to Aláez-Aller and Longás-García (2010) will ensure that all projects, new and old collaborate closely, share approaches and reinforce each other. Allocation of limited resources as a way of bridging the gap between business and IT is not enough in ensuring optimisation of business and IT alignment.

While the Information Technology plays an integral role in any other organisation and hence cannot be ignored, it is worth noting that an automobile company like Volkswagen should not over-prioritize IT solutions in its production portfolio bearing in mind that its main mandate is the manufacture of vehicles

The management at Volkswagen of America undeniably needs to completely integrate IT in its operations since by effectively leveraging and using it in its operations, the business will not only enjoy unstinted returns, but will also ensure value maximisation. However, dropping off certain important initiatives of projects at the funneling process simply because of giving IT top priority is a demonstration of loss of control by the Volkswagen of America management in making decisions concerning IT issues, a factor that has received a considerable opposition.

Applegate, Austin and Soule (2009) point out that even though prioritizing IT could be the best option in today’s competitive market environment, without creating a balance that is strongly supported by an effective and flexible budget, a company’s projects solely or jointly owned may fail to realize their full potential.

Many management experts on information technology do not perceive business managers as individuals with requisite skills or expertise in making decisions to the best interest of IT systems in a company. To a large extent this might be a true reflection of the problem facing Volkswagen of America as there is some validity about this concern.

In spite of the booming importance of prioritizing in businesses, many managers of big businesses have been considered to have an on the surface understanding of the concepts of information technology.

Without doubt, Jenkinson (2006) argues that prioritizing information technology in Volkswagen of America without working out effective budget allocations for other projects reflects how knowledge and skills concerning IT have not become fully embedded thus raising the need for change. There is need for Volkswagen of America’s management to be strategic in their approaches in prioritizing its projects a well as in formulating and executing the information technology strategic plans.

Alignment of business and IT is important thus needs to be carried out throughout the entire IT life cycle and in the development and implementation of business and strategic plans. Information technology provides crucial input to business and strategic plans as assessment of risks and dependencies are all associated with it.

Visibility from business managers across the entire information technology investment portfolio is crucial as it assures that the investments are in alignment with the strategic objectives of a business and are perceived in context with other organisational investments and priorities.

Prioritizing information technology management and its alignment with other business units involves engaging people, communication, collaboration, formation of partnership and all these are focused towards achieving desirable behaviours. In achieving all these, a clear definition and assignment of responsibilities and accountabilities, together with adequate understanding of organisational culture, supported by sufficient training and consensus building, are essential.

However, as noted in the criticisms, finding all these in Volkswagen of America is difficult as by prioritizing IT management, its managers are facing an uphill task in ensuring the availability of all these concepts. George (2007) points out that lack of adequate funds, lack of creation of a balance between IT priorities and other activities in different business units and IT knowledge can be attributed as the causal factor of difficulties experienced in achieving a high level of alignment of IT and business.

Is it an improvement over the old process?

Even with immense criticisms on the issue of prioritizing information technology at Volkswagen of America, it is clear that it is a great improvement from the old process. In his theory of organization change, Kurt Lewin pointed out that there is a need to establish the necessary supportive structures that cultivate the need for change demands.

The theory points out that that organizations’ leadership has a role in the provision of the necessary goodwill that brings down the management to the worker’s levels (Chen, 2010). The new process has been noted to have introduced massive changes in budgeting. The practice of budget disbursement, which was handled solely by one person, is now carried out through a democratic process. This has played a crucial role in limiting practices such as offering bribes and favoritisms.

It is worth noting that over the years, the need for change in Volkswagen of America has risen at different instances especially with the rising levels of competition and fast-changing technology (Applegate, Austin & Soule, 2009). Therefore, it became clear to the management of the company that disturbances will always call for major and minor changes that directly or indirectly impact the company.

It is in this respect that the company assimilated its technology strategy that calls for long term critical thinking as a basis for management decision making at all times. Compared to its former method of conducting operations, the new method has made carrying out business communication and production operations faster, effective, and efficient.

Devising and managing IT prioritization strategies that improve the overall performance of an organization and its successful participation in the global market has become one of the most burning ambitions that managers in companies that intend to increase customer preference, profitability and sustain competitive advantage have assumed.

The extent at which Volkswagen of America has been effective today has been determined by a myriad of factors including the prioritization of IT services. The running of Volkswagen of America and achieving its purposes has in recent years been enabled through knowledge application and management of information technology.

Studies point out that as a business in the local and international market is becoming more diverse and competition increasingly intense, formulating an effective business strategy has turned out to be one of the effective ways a business can exist and compete favorably. In their publication, Chung, Mitchell, and Yeung (2003) point out that competency related to prioritizing information technology in Volkswagen of America has seen it sustain the consistent provision of superior value and high-quality products and services to customers locally and internationally.

Indeed, and in concurrence with Chung, Mitchell, and Yeung (2003), through prioritization of information technology, Volkswagen of America has been successful and has maintained customer satisfaction, achieved overall strategic goals and increased their production processes through advanced technologies. Additionally, its capabilities have been witnessed in the manner in which it has combined organizational knowledge, integrated technology, and coordinated production skills.

References

Aláez-Aller, R., & Longás-García, J. C. (2010). Dynamic supplier management in the automotive industry. International Journal of Operations & Production Management, 30(3), 312-335.

Anner, M. (2007). Forging new labor activism in global commodity chains in latin America. International Labor and Working Class History, 72(1), 18-41.

Applegate, L.M, Austin, D.R. & Soule, D. (2009). Corporate Information Strategy and Management. Boston: McGraw Hill.

Chen, S. S. (2010). A general TCE model of international business institutions: Market failure and reciprocity. Journal of International Business Studies, 41(6), 935-959.

Chung, W., Mitchell, W. & Yeung, B. (2003). Foreign direct investment and host country productivity: The American automotive component industry in the 1980s. Journal of International Business Studies, 34(2), 199-199.

Fink, A., Marr, B., Siebe, A., & Kuhle, J. (2005). The future scorecard: Combining external and internal scenarios to create strategic foresight. Management Decision, 43(3), 360-381.

George, P. (2007). IS strategic planning for operational efficiency. Information Systems Management, 24(3), 247-264.

Jenkinson, A. (2006). Planning and evaluating communications in an integrated organization. Journal of Targeting, Measurement and Analysis for Marketing, 15(1), 47-64.