Home Business Tech Markets Entrepreneurs Leadership Personal Finance ForbesLife Lists Opinions Video Blogs E-mail Newsletters People Tracker Portfolio Tracker Special Reports Commerce Energy Health Care Logistics Manufacturing Services Technology Washington CIO Network Digital Media Enterprise Tech Infoimaging Intelligent Infrastructure Internet Personal Tech Sciences Security Wireless Bonds Commodities Currencies Economy Emerging Markets Equities Options Finance Human Resources Law & Taxation Sales & Marketing Management Technology Careers Compensation Corporate Citizenship Corporate Governance Managing Innovation CEO Network Reference ETFs Guru Insights Investing Ideas Investor Education Mutual Funds Philanthropy Retirement & College Taxes & Estates Collecting Health Real Estate Sports Travel Vehicles Wine & Food 100 Top Celebrities 400 Richest Americans Largest Private Cos World's Richest People All Forbes Lists Business Opinions Investing Technology Opinions Washington & The World Companies People Reference Technology Companies Events People Reference Companies People Companies Events People Reference Companies Events People Reference
E-Mail   |   Print   |   Comments   |   Request Reprints   |   E-Mail Newsletters   |   RSS

McKinsey Quarterly
VW: Driving Reorganization
Detlev Hoch and Jürgen Laartz 10.23.06, 3:35 PM ET

At a time when many chief information officers find themselves increasingly distanced from the executive suite, Volkswagen's CIO Klaus-Hardy Mühleck sits on the executive board and has responsibility for defining business processes throughout the company. In that capacity, he has championed a new organizational information technology structure to use resources more efficiently and effectively.

Process integration officers work across business units to simplify the capabilities of entire business domains--for example, a public information officer in the order-to-delivery unit evaluates processes from the customer order back through sales, manufacturing and design. Throughout Mühleck's career, he has promoted the use of IT to simplify processes, gain a competitive advantage and create value. Detlev Hoch and Jürgen Laartz, directors in McKinsey's Düsseldorf and Berlin offices, respectively, recently spoke with him about how and why he has reorganized the IT function and the results that Volkswagen expects from the effort.

The Quarterly: You've helped lead Volkswagen through a transformation over the past few years--from a company whose IT function just supported the business to one where IT leads change and works hand-in-hand with the other functional leaders to innovate. Can you tell us about that transformation?

Klaus-Hardy Mühleck: In many companies and in a lot of industries, you will find that IT isn't a core competency. It's more or less a historical discipline--running data centers, preparing and servicing different clients. And management views it as a cost center.

But over the past ten years at Volkswagen, we've begun to talk about the role of the CIOs and how to focus their skills on business enablement. This is not a hard leap to make for executives in some younger industries, like mobile communications. But in more established industries, like automotive or energy, it takes a little more work, since explaining to senior managers in other functions how IT can help play this leading role is a real paradigm shift. So if we discuss finance and control with finance leaders, we tell them how we work with SAP (nyse: SAP - news - people ) to prepare standard processes for accounting and controlling work. From there, we have to agree that to map out new processes, we must work collaboratively, bringing together the IT and business knowledge to design what's possible. We call this "concurrent engineering."

And, of course, the same is true in automotive design. It's no longer possible to talk about designing automobiles or manufacturing facilities without IT's input, because the vehicles and the factories are all digital--all based on digital models. In fact, the biggest challenge in the product part of our business is to accelerate product development and manage the complexity of different products and versions. In a company like ours, this complexity is intensified by the high degree of interaction we need between the R&D; departments of our various brands and of our external engineering partners. It's no longer enough just to involve IT; innovation must be driven by IT.

Detlev Hoch is a director in McKinsey's Düsseldorf office and Jürgen Laartz is a director in the Berlin office.

For the complete article, click here:


More On This Topic
Companies: SAP

Article Controls

E-Mail   |   Print   |   Comments   |   Request Reprints   |   E-Mail Newsletters

del.icio.us   |   Digg It! Digg It!   |   My Yahoo!   |   RSS

Related Sections
Home > Business

News Headlines | More From Forbes.com | Special Reports    
Subscriptions >

Free Trial Issue of Forbes Forbes Gift Subscription
Subscribe To Newsletters Subscriber Customer Service

Trading Center
Brought to you by the sponsors below

CEO Book Club more >
Book Review
Jazz Mecca Still Swings
Book Review
Jazz Mecca Still Swings
Tom Van Riper
At 84, Lorraine Gordon keeps the Village Vanguard humming.

Search Books

Advanced Search
New & Notable