Volkswagen America Case Study

Volkswagen of America's (VWoA) management had devised a new IT prioritization process that would decide on the projects to fund for 2004. This was a change with a global reach leading to the implementation of projects with the enterprise level objectives over the individual departments' in VWoA. CEO, Klaus instituted an organizational readiness program called "Next Round of Growth"(NRG) (Austin, Volkswagen of America, managing IT priorities, 2007), to make VWoA a prominent player with substantial offerings in the North American region, an important strategy to transform the "small car" image of VW. NRG' aim was to define the goal, function and organizational changes required at VWoA to support and enable the new global product diversification strategy (Austin, 2007), for which the funding and robust development of Supply Chain Management (SCM) was imperative. The IT prioritization process worked on the basis of consensus among the Executive Leadership Team (ELT), comprising top executives from various business units. While it is an ideal process with vast improvements over the old process, the rank list created is not a panacea of all issues, exemplified by the partial funding of SCM project as it does not show great importance to the VWoA, thereby undermining the major NRG goals of "building brand customer loyalty" and "improve vehicle value" (Austin, 2007). This creates a conflict of interest between VWoA and VWAG. CIO, Matulovic is handicapped with the lack of choice, as a result of new process. However, Matulovic has brought together executives from various BUs to make decisions for their units in tune with the overall global strategy of the company. Criticisms are justified since there was no strategy to encourage employees of unfunded business units, to instill the sense of company first over business unit etc. The validity of projects strategic claims was difficult to substantiate via the new process.

VWoA viewed IT funding as a source of unnecessary and unpredictable overhead for the US market, the reduced funding by VWAG was insufficient and did not account for "behind the curtain" programs which were beyond the scope of VWoA (Austin, 2007, p. 5). The new prioritization process aimed to streamline the funds to high priority projects. The IT budgets were allocated by the new process involving several business units establishing their priorities. The specific entities are the Executive Leadership Team, The IT Screening Committee, the Project Management Office and the Digital Business Council. The ELT managed the implementation of NRG goals containing IT as a part (Austin, 2007). ITSC consisting of IT managers helped in the prioritization of projects, while the PMO approved and administered the proposals (Austin, 2007). The DBC filtered to see which projects were in line with the general business strategy of the company (Austin, 2007). The new process of multiple entities