General Motors Co. (GM) said it will spend $100 million to build a data center in Michigan as part of its overhaul of information technology operations
The new facility in Milford, Michigan, northwest of GM’s Detroit headquarters, follows a $130 million facility in Warren, another Detroit suburb, that opened last year, GM said today in a statement. Construction on the second center begins this year with plans for it to open in July 2014.
“Today every single length of the automotive value chain is wired and connected and that means from design to the showroom floor,” Chief Executive Officer Dan Akerson said today during a speech at the Warren facility. “You have to have a core competency in IT. You have to own it and you have to control it.”
The centers are part of a reorganization of GM’s IT work. GM had done about 10 percent of its IT work internally. Chief Information Officer Randy Mott plans to boost that to 90 percent as Akerson pushes to update GM’s computer and financial reporting systems. The automaker started with about 1,500 in-house IT workers and ultimately wants to have about 9,000, Mott said in January.
GM’s competitors hired outside companies to perform as much as 35 percent of their IT work, Mott told reporters today.
“When we started this journey we were the most outsourced and I think we’ll end on the side of being the least outsourced when we get to the 90 percent in-sourced,” Mott said.
The two new Michigan facilities will replace a network of 23 data centers operated by GM and three information technology suppliers, according to the statement. The Warren facility has 48 work stations and a 955-square-foot (89-square-meter) video wall.
GM will build the second data center at its Milford Proving Ground test track, the company said. About $158 million worth of equipment will be installed, according to the statement. Milford is about 40 miles (64 kilometers) from Detroit. The company is spending $546 million on the two facilities and the equipment for each, Mott said.
GM plans to add about 7,500 information technology workers over as many as five years as it shifts such work in-house instead of using outside contractors such as Palo Alto, California-based Hewlett-Packard Co. (HPQ)
The automaker has also announced so-called innovation centers in Warren, suburban Atlanta, suburban Phoenix and Austin, Texas. GM said it will absorb 3,000 Hewlett-Packard workers who had been performing duties for the autoworker.
GM fell 1.3 percent to $31 at the close in New York. The shares have gained 7.5 percent this year, compared with a 15 percent climb for the Standard & Poor’s 500 Index.
Akerson is pushing GM toward several mid-decade goals, including boosting North America operating margin to 10 percent, stemming loses in Europe and increasing sales in China to 5 million from 2.84 million last year.
He pushed to upgrade the company’s IT efforts and financial reporting systems as part of a broader effort to reorganize the automaker around global brands and away from regional authorities. In October, Akerson named Bob Ferguson to a newly created position overseeing Cadillac globally.
A global Chevrolet leader will be named soon, Akerson told reporters today after his speech.
“I think we’ve made great progress,” the CEO said of the company’s efforts. “I don’t know if we’ll ever stop evolving, almost by definition, we should never stop. Quite frankly, I think some of that was lacking in the years leading up to” GM’s 2009 government-backed bankruptcy.
As part of its efforts to refresh its product line, GM is bringing about 20 new or refreshed vehicles to the U.S. this year. GM reached an 88-year-low in U.S. market share in 2012.
Over the next three years, GM will invest more than $16 billion in North America “to refresh our product at twice the rate we have in the prior three years,” Akerson said during his speech.
[Courtesy of Bloomberg Online]