Michael Gorriz, 50, has been chief information officer at Daimler AG and manager of information technology management (ITM) since January 1, 2008. In this role, he is responsible for the strategy, planning and development of all IT systems as well as for the operation of all Daimler AG’s research centers and communication networks. Gorriz began his career at the German aerospace company Messerschmitt BÃ¶lkow Blohm GmbH. Starting in 1994, Gorriz, a trained physicist, managed Daimler-Benz Aerospace in Mexico, and was recently a business area manager at Nortel DASA. In early 2000, Gorriz moved to Daimler IT management as vice president for IT business systems and was additionally named CIO of Mercedes-Benz Cars and Vans. In this role, he is responsible for all global IT systems within Daimler AG’s Mercedes-Benz cars and vans divisions. In 2009, he was named CIO of the year in the large-company category. Gorriz spoke with automotiveIT’s Ralf Bretting and Hilmar Dunker early in 2010 about budget cuts, change projects and the shortage of skilled staff.
Mr. Gorriz, in 2009, Daimler had to live with substantial declines in its car and commercial vehicle business. What effects did that have on projects in information technology management. Â And what demands were made on you as a result?
We naturally had to tighten our belts ”“ like every other area in the company.
Can you be more specific?
We cut our budget by about 20 percent compared to original planning. But we prepared for three scenarios in advance: The first assumed the best possible course of business. Then we had our “Safeguard the future” scenario, in which we figured on a more or less neutral cash flow and we wanted Â to only execute projects that were vital for safeguarding profitability long-term. The third scenario implied a negative trend, if we were going to lose revenue and income”¦
”¦which was the case in the end, wasn’t it?
Yes, so we called the third scenario “Keep the lights on.” There we really just accommodated the things that were associated directly with the operating environment and could not be turned off. Everything did actually seem relatively grim in the first half of the year. But in the third and fourth quarter of 2009, we had a business upturn or least a stabilization at a low level. That resulted in a stable basis for planning with which we could head into the future.
What effect did the scenario that that you mentioned specifically have on individual IT projects? What effect is it still having?
We didn’t have to eliminate any projects that were critical to the company. Â In the future, however, projects will have to demonstrate their added value more than ever with a positive business case.
Your CEO, Dieter Zetsche, has once again intensified his cost-cutting plan for 2010. Its potential is supposed to come to a full 5 million euros. What’s in store for you?
On the run side, meaning the delivery of current services, increased operating expenses have to be offset by cuts in other places. In the changes, we keep an eye on current trends: We will certainly invest in IT in those areas where we can support technical fields on a sustained basis in the improvement of their processes. I am absolutely convinced that it would have drastic consequences for the competitiveness of the company if we were to tighten the cost screws too much.
Can you give us an example of change so we can better understand it?
Change always brings a transformation in the system landscape. Fairly small adjustments in SAP are part of it, for example. But so is our major introduction of a new system for the after-sales area. A large change project that we are now carrying out involves the transformation of the system landscape in replacement parts supply, where we are converting the existing landscape to SAP. It had been strongly marked by individualized programming until now.
We have heard that you want to replace Lotus Notes with Microsoft Outlook company-wide. Would that be a relatively large change project?
If we were to do that, it would be a fairly major change program in any case. Today we are a company that works very intensively with Lotus Notes. We not only use it to for our email communication and our appointment scheduling, but also for workflow applications with somewhat high relevance to the business. The question we are now asking ourselves is, what would be a robust approach for the next five years? Due to the multiple points of integration that now exist between workflow, office products and the operating system, Microsoft Outlook definitely represents an interesting option for Daimler.
The RFID theme is still hotly debated. But it’s impossible to detect any real progress in the industry. You rather get the impression that two fronts are colliding with one another. A large car manufacturer in Northern Germany apparently favors its own standard, while Daimler tends to use an existing standard from the industry. Where do things now stand?
I firmly believe that the consumer world will move this RFID standard forward, since it has many more goods in circulation than we do. That’s why I determined relatively early that we would support the EPCglobal Standard and benefit from the technical insights being developed by Walmart, Metro and other companies. I don’t have to re-invent the wheel.
Your colleagues in the North see things differently”¦
In this regard, you have to realistically assess your size and capabilities. We are a top premium automaker. But volumes that we move are not as great as those of the retail companies or even the high-volume vehicle manufacturers. I definitely want to use the knowledge that already exists in the market.
How far have you come in consolidating the multiplicity of systems at Daimler?
We are still sticking to our goal of cleaning up the landscape, as much as 40 percent of the existing systems. It remains to be seen whether all the measures will be executed in 2012. But we already can show some successes.
Where are the challenges?
If we wanted to unify our logistics system, for example, it is extremely important to keep on an eye on the business uses. I believe that we have found a more than feasible path. Rastatt and its sister factory KecskemÃ©t in Hungary are a good example of how we are re-positioning our production-related logistics with IT support. Here we are putting the system technology on a sustainable, uniform basis.
In the overall SAP environment, we are familiar with templates that can be rolled out practically anywhere in the world”¦
That is precisely the point. We have made it clear in the course of the facility decision-making that both the Rastatt factory and its sister factory in KecskemÃ©t are being equipped with an SAP automotive standard, which will cover all areas of logistics.
How much standardization is possible here, and how much customization is necessary?
We were one of the first companies to bring SAP into the automotive environment. At the outset, the share of individual customization was still quite large, but in the meantime, we are establishing 80 percent standardization. You can see our hand in SAP’s automotive solutions.
Cross-functional process integration is an important issue for you.Can you explain what objective you are pursuing with it?
When you look at a company like Daimler, you realize that it has a great many technical specialists but just a few enterprise strategists or architects that have the entire process flow in view...
”¦from the beginning to the end?
Or from one end to another end.And that is why we have set the goal of being involved in a supporting role here. We have set up a special training program incorporating and modeling these end-to-end processes and advising the technical areas accordingly. We call the people implementing it business consultants. In the meantime, 160 employees have been trained in this.
That leads us directly to our next question: How does the pipeline for IT specialists at Daimler look, especially here in Germany?
That is a problem to be taken seriously. We realize that we aren’t successfully filling all the open positions, either quantitatively or qualitatively. Despite the crisis, we have had more than 30 open positions and, to this point, haven’t had the capacity to fill all the positions appropriately for our requirements.
Will this worsen in the middle-term?
In five years, according to a current Europe-wide study by the Empirica Institute, we will have somewhere between a few tens of thousands and a few hundreds of thousands too few technical specialists in five years. This relates to both the supply and the demand sectors. The fact is, Germany as an economic center will lose jobs without enough IT specialists. IT is the key to productive and efficient jobs in Europe. In the future, it won’t be possible, either in administration or in production, to hold onto jobs here if we don’t have massive IT support.
Should this be seen as a criticism of educational policy here in Germany?
I am not one of those who curse the political world.We have made our mistakes together. Â The general public simply isn’t familiar with the image of the IT manager as a profession. Many people still believe that we just maintain printers and PCs.
Which you certainly can do”¦
But not for my job (laughs). I can definitely imagine a CIO who has little concept of a PC. That’s really not the decisive factor. IT is a young discipline, and the professional image of the IT manager frequently is still diffuse and too little known. This certainly relates to the fact that there are various attributes within the group as well.
What is Daimler doing to solve this problem?
On one side, students must be specially nurtured, and, on the other, the companies themselves must be involved. For example, Daimler has launched a program with universities that are important to us. Â Starting in 2010, we want a presence right on campus, with our department heads and directors, so we can press ahead with the acquisition of young talent.
What does the job of the future look like at Daimler? Let’s think for a moment about instant messaging or the IPhone ”“ new demands are heading your way in this area ...
It’s in fact true that “Generation Y” has grown up totally differently with IT and its methods. So chats, blogs, wikis, Skype ”“ today that is just part of everyday experience. We have to state clearly that modern communication methods make the way we cooperate today possible in the first place. I can’t fly an employee from Asia to Germany to discuss a presentation. For that, we naturally use web conferences. We will do even more in this area in the future, to press ahead with company networking by technical means. But naturally, without losing sight of the issues of security and data integrity in the process.
How is Business IT handling the issue of Car ICT? Are you in close contact with research and development chief Thomas Weber?
We have hit upon a defined division of labor. The development area looks after and is responsible for everything that takes place in the car.The exception is “car2go” ”“ in this case we were strongly involved in an advisory capacity. And: the floor infrastructure and control system came from us.We work together very closely on issues relating to workshop diagnosis in the after-sales area, for example. The responsibility for IT within the vehicle continues to lie with the development department, however.
Whereas you are certainly more likely to have experience with software updates?
Five years ago, we launched a major project with the goal of putting software development cycles and development methods and processes in the electric/electronics area on a new basis. This plan has made good progress, and today we are on the brink of introducing Version 1.0. All our experience with a variety of software development processes has flowed into it.
On another point: Daimler has announced it is moving C-Class production from Sindelfingen to Bremen and to the U.S. What IT tasks will be associated with this?
When Bremen and Tuscaloosa produce the C-Class, the specifics of this model line on the system side must be available. Â But that’s nothing new for us. In the past, we expanded the concept of Tuscaloosa’s Â system landscape again and again. As its sister factory for the C-Class, Bremen will serve as a good model.
Are you sticking with the idea of administering Â and supporting production-related systems yourself or can you imagine turning over these tasks increasingly to an external service provider in the future?
We are already doing that. In information technology management, we will continue to strongly focus on strategic management tasks. We have just bundled 70 applications in the vehicle area and awarded the support and supervision to one main provider. Previously, nearly 40 companies were involved in this environment.
You were recently selected as “Chief Information Officer of 2009.” On one hand, this is a personal honor for you, but on the other, Daimler IT must be doing somewhat better than the competition, is it not?
That is for others to judge. As for me, I strictly assure that our projects and plans always stand on a broad foundation. The goals I set for myself are anchored in the entire team. We don’t have hierarchical processes here. Instead, we have intensive discussions at all levels. In recent months, we were able to continually assure good work results, simply because we integrated the entire team. Daimler’s IT organization employs 4,500 highly qualified people, whom we keep actively encouraging to think and reflect critically. We won’t change that in 2010.