Klaus Hardy Mühleck is Volkswagen Group’s CIO. He spoke recently with automotiveIT about the role of corporate IT, technology hype and cloud computing.

Mr. Mühleck, what is the importance of corporate IT to Volkswagen.

Without IT, it would be impossible today to develop a car, control manufacturing or service a customer. Volkswagen is networked with 26,000 suppliers as well as 20,000 importers, dealers and service partners around the clock.This global networking makes us a company that never rests. Thus, IT competency is one of the Volkswagen Group’s core competencies.

Volkswagen wants to become the top automaker worldwide. What challenges do you face in this regard?

The job of corporate IT is to support and advance the growth strategy of the company with innovations and improvements in efficiency. At the same time, we want to keep our cost position stable. Compared to the competition, we are very efficient: Only 1 percent of revenue flows into corporate IT every year. That is the pole position as a benchmark in the auto industry.

What areas are you approaching specifically?

We achieve the greatest possible effect at the least expense on the basis of standardized technologies and processes. We continually gear our overall infrastructure for efficiency ”“ starting with computing centers, through business IT with workplace systems such as laptops and PCs, all the way to global printer consolidation. And we have established worldwide partner models with specialized IT service providers for application management in our corporate systems. These core tasks of business IT are just one side of the Volkswagen Group. On the other side, we increasingly take on the role of a technology innovator and support, for example, new mobility services for our customers’ vehicles. In this way, the navigation systems use Google Maps in the new Phaeton and Google Earth in the new Audi A8. Corporate IT makes access to these and other online services available at the back end.

Is your team at all able to cope technically with this expanded range of tasks?

Definitely. The car IT field is nothing new to us. We have already been supporting our dealer and service partners worldwide with online services for some time. There we have gone so far as to integrate individualized vehicle data into after-sales services. We have likewise built a smart vehicle theft protection system: We load very car leaving our factories with secure cryptographic software encryption. This is maintained in a central IT location -- for all vehicles and all brands in every country. Last, but not least: We contribute the technology needed for the growing array of infotainment in vehicles. In doing so, we are supported by proven providers and content partners.

Let’s stay with IT in the vehicle: Where exactly does the responsibility of your colleagues in development end and where does IT begin?

Volkswagen technical development works on IT in the vehicle, meaning the embedded systems such as engine management and integrated infotainment. With its systems, corporate IT safeguards the connection with the vehicle ”“ in production, retail or the Internet. All our projects are characterized by a clear division of tasks and close cooperation. Technical specifications come from technical development. In this regard, we are internal service providers and carry out the specifications operationally.

This is managed in the same way for all brands?

Naturally.

So, if we understand you correctly, none of your CIO colleagues in the Volkswagen Group can just step out of line into the fast lane on an innovative theme?

For our joint success, it is crucial that every brand represent its IT requests openly and with a healthy self-confidence. But, in every case, we must manage to jointly define the mandatory processes that we live by in projects and support with technical standards. I consider it obvious that the brand CIOs ”“ for example at Audi or Bentley ”“ should give their IT an independent profile. But I also expect them to use our back-end systems and carry out our computing center strategy. It’s not just in vehicle technology that Volkswagen is taking advantage of its edge in modular longitudinal and transverse building block systems. Our IT functions like this, too. The CIOs of all the Group brands recognized this early on.

Mr. Mühleck, where do you currently stand with your plan to introduce company-wide product data management, in order to drastically shorten the substantial lead times for new vehicle models?

We place great value on open interfaces. This especially applies to applications that we use in product data management (PDM) and Product Lifecycle Management (PLM).It’s only in this way that data can be exchanged simply and securely. From long experience and observation, I remain skeptical about an integrated linkage of the CAD and PDM worlds. We aren’t chasing integration hype. As I see it, no provider has succeeded in mapping the complexity of a global company like Volkswagen into a centralized solution.

How are you tackling the issue of continual data feeds?

Our independent PDM strategy stands. In recent years, we have introduced uniform parts lists for all brands and all models company-wide, along with uniform change management. We are undertaking a uniform CATIA strategy and uniform supplier integration across our corporate network system. The next expansion step at Volkswagen will be a continuous PLM pipeline spanning our company. In the future, we will use it to exploit Technical Development’s engineering data from product development, all the way to digital marketing.

How do you use these engineering data in the company?

For example, as building blocks for commercials on the Internet. We did that very successfully in the run-up to the introduction of the Tiguan. Another important point is consistency in the data exchange between Technical Development and the “digital factory.” This consistency is already assuring us a competitive advantage in vehicle design: No other manufacturer can proceed as precisely with geometries and contours in tool-making as we can.

The total annual IT budget in the Volkswagen Group approaches 1 billion euros. That is a lot of money. Where does it go?

We spend 55 percent of our resources on IT services and application maintenance, 45 percent for programs and projects ”“ in my view, that is a nearly balanced and healthy ratio.In past years, through bundling and standardization, we have drastically reduced our costs. We put the resources that are freed up into new projects as additional investments.

For example?

In the desktop area yet this year, we are launching the roll-out of the new operating system Windows 7 and the new Office 2010 software. We are making this platform available to more than 150,000 clients.

Is Volkswagen betting on the cloud?

Yes, we are continuing to expand ”“ all the hype aside  ”“ our own Volkswagen cloud. Our goal is to establish cloud computing processes in the entire company. So we will offer Volkswagen employees significantly more online services in the future. The models are the roughly 20,000 retail and service operations that are already accessing selected after-sales applications online.In our new computing centers, we are undertaking new cloud services with the help of our strategic partners

In your new factories in Russia and India ”“ and currently in China and the U.S. ”“ are you using a kind of blueprint to throw up your IT on site?

For four years, we have been using a very efficient factory template strategy for establishing IT at new locations. We have already implemented our UNIT standard template at 20 locations.  UNIT covers all logistics and purchasing processes, production planning and control, as well as traditional non-core processes, such as finance, human resources, maintenance and quality assurance.

We regard Volkswagen more as a traditional company, less as an innovator”¦

Innovations are a Volkswagen tradition: TDI, TSI, double airbags, DSG, touch screen navigation, Park Assist, as well as BlueMotion. International studies, from the Center of Automotive Management, for example, have come to the conclusion that “Volkswagen is the strongestinnovator among the auto companies.” And look where the Volkswagen Group is now, one year after the greatest financial and economic crisis. New production capacity can’t seem to be developed fast enough to meet the huge demand. Everywhere in the world, cars are literally being ripped from our hands. And why? Because the Volkswagen Group is offering and selectively expanding a wide-ranging model line-up of new, environmentally friendly vehicles. VW is extremely open to innovation and brings new technology onto the road at affordable prices and in a tried-and-tested way.Of course, we always check very carefully to see what the benefits are to the consumer and to the company.The newest isn’t always the best, even if many a strategist promises otherwise.

Is it hard to get young talent excited about the automaker in Wolfsburg?

No, not at all. University graduates see our company as very attractive, given its nine company brands and 61 assembly facilities worldwide. There is hardly another employer that offers such varied and international opportunities for assignments. Brands such as Audi and Volkswagen are quite high on the popularity scale for many young engineers. Applicants are aware of the value of our company’s great stability and sustainability. That also applies to corporate IT.

Interview by Ralf Bretting and Hilmar Dunker