E-Commerce Driving GMAC Streamlining Effort

FRAMINGHAM (04/20/2000) - General Motors Acceptance Corp. (GMAC), the financial services arm of the world's largest automaker, is in the midst of some major housecleaning.

Gone is the hodgepodge of 62 internal and external Web sites that the financial services company maintained just 18 months ago. Gone are a number of legacy systems and paper-based business processes.

Gone, too, are many of the internal information technology staff members, who have been replaced by contractors.

Like the rest of General Motors Corp., Detroit-based GMAC is moving headlong into the world of e-commerce.

GM's initiatives include equipping its cars with satellite and cellular communication systems and building business-to-business exchanges with rivals Ford Motor Co. and DaimlerChrysler AG.

"The beauty of e-commerce is that it allows us to move faster while changing our legacy environment," said Linda Taggart, CIO at GMAC. "A lot of our systems were older, and historically, they grew up as art, not science."

Taggart hires experienced individuals for senior IT roles but uses contract staff elsewhere. These streamlining efforts are part of the company's plan to hone its IT endeavors while it launches new Web-based initiatives whenever it makes sense to do so.

In one such initiative, GMAC is piloting SmartAuction, a Web auction site for selling formerly leased vehicles to dealers. Taggart said that project could save GM $500 million by cutting the cost of physically transferring vehicles and reducing purchase cycle times.

GMAC does more than provide financing to dealers on vehicle loans and leases.

It's also the largest commercial mortgage banker in the U.S. The company is expanding its real-estate services portfolio and recently acquired an online mortgage company, Ditech.com in Costa Mesa, California.

GMAC posted net income of $1.5 billion on revenue of $20 billion last year.

Those results represent significant pieces of GM's $156 billion in revenue and $4.5 billion in profit.

Hiro Mori, an analyst at Automotive Consulting Group Inc. in Ann Arbor, Michigan, said GMAC is important to GM, and any efficiencies gained via e-commerce will significantly affect the parent company.

"The majority of [GM's] revenue comes from sales of automobiles," Mori said.

"But the profit does not come from selling automobiles; it comes from financial services."

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