Harvard Business Review Article - Volkswagen Case Analysis Essay

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1) What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process?
The new process that was instituted to prioritize IT projects at Volkswagen of America is very well organized. It takes an IT project and looks at it from multiple aspects, from business to IT. It also allows for several departmental entities to play a more active role in tying in business objectives with stated benefits of the IT project. As stated in Applegate, “IT governance is the effort to devise an overarching and integrated approach, addressing broad themes such as operating performance, strategic control, risk management, and values alignment.” (Applegate, 403) In
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The old system caused IT projects to be viewed as a cost to the company rather than impact to profits. The new system shifted this focus and made IT and business more inline. “Increasing evidence points to the fact that organizations with effective IT governance consistently generate better returns for their shareholders than equivalent organizations with ineffective IT governance." (Applegate, 412) As Applegate puts it, the change in the IT governance at Volkswagen has allowed them to shift the focus of IT from a cost to a revenue driving function. They are able to cut costs by forgoing IT projects that don’t align with the overall business plans. As well as putting the focus on IT projects that provide the most impact to the bottom line.

2) Who controls the budgets from which IT projects are funded at Volkswagen of America? Who should control these budgets? Should the IT department have its own budget?
The budget for the IT projects was set to $60 million; this budget was capped by the parent Volkswagen group in Germany. There clearly is not enough in the budget to accommodate for every project that IT comes across. In that sense they
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