Special treatment for prioritization of projects in funding amounts to a critical dilemma that Matulovic needs to solve before making any response to the phone calls from his ELT peers.
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Concerns were high that the newly unveiled prioritization criteria was error prone, something that forced the people working for the ELT members challenge the “ the supposed categorization mistakes that penalized their business units” (Rose, 2007, P.18).
Every penalty on any unit had substantial repercussions to the core object of the business of Volkswagen of America (VWoA). On the other hand the requests were more informal than formal which reflects, less treatment of preliminary evaluations of the proposed projects so as to examine their feasibility and if possible predict any foreseeable challenges before the implementation of the plans.
The scenario proved rather more complicated by the fact that the finances at disposal were limited to $60 million against the cost of the proposed 40 project plans amounting to cost of $210 million.
Furthermore, trade-offs between the process of prioritization of the new projects and the core of the business was to be brought into picture. Before giving a direction Matulovic, needed conviction that, the decision he would have made was the right one for VWoA business.
Even though Matulovic seemed fully aware of the challenges at hand, he focused on organization of systems that addressed the goals of his company. On the other hand, his peer executes proved predominantly occupied in making of IT related prioritization decisions.
The executives calling him had the company’s mandate to support the core business goals of the company. If they adequately held the believe that the company’s goals both within VWoA and VW AG made no imperative sense in comparison to their demands, they should have channeled their aggrieved concerns to other prioritization process team members such as PMO, DBC, ITSC and ELT but not Matulovic.
On his part, Matulovic should have made a proposal for the funding to come from VWAG, since the supply flow project was shrouded within global strategies whose decisions did not lie squarely within his reach.
The other unit executives should have realized the importance of aligning the IT projects resource allocation with the business objectives bearing in mind the fact resources are limited I supply and there the most requisite choice needs to be made. The choice made should be for better performance of the business but not oversee its demise.
Unfunded Supply Flow project
The SCM project absence of any paramount value at the level of VWoA, in comparison to high ranking projects such as NRG goals which included items such as ‘improve vehicle value’ saw it not receive funding.
Stopping the project would pose a stalemate to the initiative geared towards enhancement of globalization at VWoA level. Consequently, conflicts between VWoA and the Volkswagen parent company in Germany could have emerged.
VW AG’s strategies to permit diversification of product lines inform of new models both in Canada and US markets escalated the challenge as it “emphasized on the need for effective and sophisticated supply chain management” (Austin, 2007, p.451). What should Matulovic have done with unfunded Supply Flow project?
In the light of all the challenges, at one point Matulovic should have considered reopening the new prioritization process. However, this deems being not the most appropriate option given the risks that are not worthy in taking, strategic fitness and the financial status of the business attractiveness.
“The SCM project doesn’t show sufficient enterprise value and reopening the process could challenge the merit of the new prioritization process” (Tallon, 2007, p.80). Total cost in implementing SCM process would be anticipated to eat off a substantial portion of $ 60 million set aside for 2004 IT budget.
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The option would also see Matulovic face stiff resistance accompanied by unnecessary resistance from his fellow business executives both in Volkswagen group in Germany (VWAG) and VWoA. In his myriad of other options, Matulovic, would firstly, choose to look out for funding the yet unfunded SCM from alternatively other projects that were funded and neglect reopening the prioritization process.
Secondly, he could have left “the funding problem to the supply flow area to work out what to do about the SCM projects” (Rose, 2007, P.18). Alternatively, he could have sought for a process of exceptional handling. This way, immense aid on how to seek funding for SCM projects could have gone to the executives belonging to the supply flow unit.
The latter option is the most appropriate since it takes into consideration the risks that are not worthy in taking, strategic fitness and the financial status of the business attractiveness.
Most crucial, consultation stood out as essential in as much resistance from respective business units was to remains at bay. Attempts to avoid potentially evident stalemate between VWAG and VWoA due placing impediments to the VWAG’s globalization initiatives through non-completion of SCM are catered for by the option.
The option therefore consistently blends itself well with the prioritization process governing IT projects.Essential to point out is that “SCM, project is critical to the global objectives of VW in Germany and shows a high value at the level of Volkswagen” (Austin, 2007, p.452).
SCM is of paramount importance to the entire Volkswagen Company and whole umbrella of cooperate strategies. The idea of aligning corporate strategies with the goals of a company forms a major boom to enhancement of critical governance strategies.
The option fails to specify the amount of money that requires to be raised from alternative sources and thus posing no significant threat to IT budget of $60 million for 2004 fiscal year.
However, involving Klaus (a key person in the supply flow projects), would have facilitated solicitation of more funding from both within VWoA and the parent company: VWAG in Germany. Being leading manager, “…he is entitled to take part in the leadership and the responsibility of making key challenging IT decisions” (Austin, 2007, p.462).
On conviction, Klaus could have facilitated negotiations for additional funding right from the Germany’s IT department in an attempt of trying to raise more fun ding within VWoA.
Matulovic could have chosen not to fund SCM project and therefore heralding it. Unfortunately, the anticipated conflicts with the parent company make it not a thing to go by.
Nevertheless, he could have chosen “to reopen the prioritization process with a consequence of cutting other projects funds” (Austin, 2007, p.444). However, two options rejection is evident due to “the fact that other projects which are important to VWoA strategic goals would be neglected” (Rose, 2007, P.18). The solution would be to revert to a methodology, which implies a mechanism of exceptional handling.
Austin, D. (2007). Volkswagen of America: Managing IT Priorities. Harvard Business School Case 3-2, 2(3), pp.449-455.
Rose, T. (2000). Prescriptions for Managing IT Priority Pressure, Information Strategy: The Executive’s Journal, 17(1), p.18.
Tallon, P. (2007). Does it pay to focus? An analysis of IT business Value under single and multi- focuses business strategies. Journal of strategic Information systems, 16(3), pp.57-105.