He Volkswagen of America: Managing IT Priorities case study describes the efforts of the US subsidiary of Volkswagen AG (VWAG) – Volkswagen of America (VWoA) – to arrive at a new process for setting IT funding priorities and deciding on what projects to fund. Dr. Uwe Matulovic, the new Chief Information Officer (CIO) of VWoA, has a dilemma in that peers from the Executive Leadership Team (ELT) have been openly hostile and critical of the new prioritization process, particularly in regards to the lack of funding for high priorities for their areas of the company, and have pressurized him “to insert an unfunded project (or two) into the IT department’s work plans” (p. 1). Dr.
Matulovic position is particularly challenging as more than 40 projects have been proposed for IT, with funding requirements totaling $240m, when a budget of only $60mhas been approved by VWAG. The new prioritization process that was implemented is complex. It includes the involvement of several cross-functional teams or “several organizational entities” (p. 5) that review project proposals during three separate Phases before final approval.
For instance, during Phase I the DBC (Digital Business Council) reduced the initial $210 million project proposals to $170 million (p. 6) by way of identifying dependencies among projects. That is, removing those projects from the budget that required other projects to be completed before they could start. Ultimately the PMO (Project Management Office) subsection of the BPTO (Business Process, Technology and Organization), which Matulovic established as a new internal IT department upon his arrival, approves projects prioritized by the IT Steering Committee (ITSC).
In conclusion, it became apparent to Dr. Matulovic that the Supply Flow Project, which is viewed as critical to the company’s global supply chain management objectives, was poorly served by the new prioritization process in that it was left only partially funded. The process overlooked this project primarily because much of its value was felt at the global level, and not at the VWoA importer level. Dr. Matulovic found himself in a quandary and struggled with related decision-making as he understood that the loss of funding for this project would constitute a major setback for globalization initiatives based in Germany.