Volkswagen of America: Managing It Priorities

...

VWAG, the parent company, set the budget. The ELT team along with the CIO should be responsible for the budget allocation. With the goals established by the ELT, the governance team should enforce the business units to use a standard methodology for applying for funding for the projects and then prioritize those projects. ELT meets the needs of the company by applying an enterprise wide approach. There should be a separate budget for the IT department, along with a structured, unbiased, formalized and auditable process of distribution of that budget. There is obviously some room for improvement that could eliminate steps that are of no importance, which would decrease the time of the overall process, at the same time ensure the necessary and proper projects are funded. Each business unit always believes its projects are important and need funding. Allocating a separate budget, would allow them to obtain results acceptable to the organization. Companies need to update their Information Systems to maintain a competitive advantage that would minimize costs and maximize profit.

As for the special requests, Matulovic should only consider them after a formal review of appeals by the business units. He should respond to fellow executives by highlighting positive effects of the selection process and take the time to remind each of them how they all got there, and what was expected of them as leaders. With funding for less than 1/3rd of the projects, the organization needed to set priorities. He should also remind them the process as designed was fair, open and transparent. Also, only the ELT should have the authority to make the final decisions and while following the new process, there shouldn’t be any exceptions. However, the CIO should have some flexibility to adjust and respond to certain unforeseen circumstances and threats that might arise in the future. If it is seen that the overall budget is not sufficient for a highly critical project then, it should be reviewed and escalated to the parent company, which is responsible for the budget allocation and finding alternatives.

Matulovic should continue his plans to establish the supply chain management and at the same time consider what needs to be done in order to get funding. He should assess current project costs and budget to determine if any costs could be eliminated or reduced and determine overall requirements to complete project. To get the necessary funding, he should involve the higher management and make them aware about the criticality of the ongoing projects and also request for an increase in the budget.

...