Where Web Services Meets the Road
Just three years ago, executives of the Big Three carmakers were crowing about the Internet and all the ways it would revolutionize their business. If everything worked according to plan, consumers would one day stop in at a dealership, sit at an Internet kiosk, and key in the specs for their dream car. The online order would go straight to auto factories and the suppliers that feed them. Very quickly, everything needed to make that custom car -- the right seat fabric, the chosen stereo, the paint -- would flow to the plant. The vehicle would be built and delivered -- in a week or so.
The plan was supposed to save the industry billions. If the plants and their suppliers knew exactly what to build, they wouldn't have to stockpile parts to make big fleets of vehicles with every possible combination of options. Dealers wouldn't have to stuff lots with hundreds of cars and finance them until they were sold. Some analysts said that would whack $2,000 in costs off each vehicle -- extra profit for dealers, suppliers, and carmakers.
This grand concept hasn't come close to panning out. Yet it has prompted General Motors (GM ) to dabble with the Internet -- and now the No. 1 auto maker could be on the way to finding profitable uses for Web-services technologies -- intermediaries that allow computer systems to talk to one another using Internet technology
Right now, GM's Web-services initiative is mostly about cutting costs. It's using Web services to save having to constantly upgrade software among its 3,000 different systems, some of which are brand new, while others have been around for years. Rather than ditch the old ones, GM is using a Web-services platform to act as a translator between the old and the new. If an old software package works, there's no real reason to replace it, says Tony Scott, chief technology officer for GM's information systems unit.
The idea is similar to GM's current effort to repurpose auto parts. If the the alternator in the current Chevrolet Impala has been reliable, GM figures, its engineers don't need to waste time and money drawing up a new one for the next-generation Impala.
It's all paying off. GM used to spend $4 billion a year on new software and support -- a figure it has cut by $1 billion a year. Scott concedes that Web services is just a small contributor to those savings at this point. But its value is growing, he says. It has kept GM from having to replace some of its data-tracking systems, he adds. And at its assembly plants, GM now uses Web services to monitor information on quality, productivity, and inventory of cars and parts. Even older plants with aging software can speak to company headquarters without trouble. "The biggest contribution is the quality and reliability of software," says Scott.
Eventually, the auto giant hopes to use the Web to download new software to the computers that help cars operate -- and to communicate with owners of its vehicles. That won't save GM billions a year, but Web services can help manage its day-to-day business a little better. "Sometimes these things take a different path than you thought when you started," says Scott.
Longer term, he notes that GM would like to use the Web to manage parts and inventory with its suppliers. But security concerns are still an issue. Few companies use Web services to send data and information to other outfits, says Dave Hollander, chief technology officer with Contivo, a Mountain View (Calif.) concern that helps companies manage information and data. Before GM transmits vital information about its parts and new-vehicle specifications to suppliers via the Net, it wants to be sure that the information won't get stolen.
"NOT A SECURE PLACE."
Many businesses feel the same way, says Hugo Haas, the Web-services activity leader for W3C, a worldwide consortium dedicated to helping the Web achieve its full potential. "There's a standardization process ongoing for encryption," says Haas, who adds: "The Internet is not a secure place."
Pending the day when the Net is secure, GM has some other ideas for Web services. Cars are being built with more and more software on board. So every time GM wants to change software for a new model year, a Web-services system could download the new programming directly to the assembly plant. Once there, it would be downloaded into cars on the assembly line. That would be a big improvement from the current method, in which changing software requires changing the hardware, too.
None of this matches the sweeping designs for Web services that GM and other carmakers had a few years ago. But just getting GM's varied software and computer systems connected is an accomplishment. Scott likens the job to "herding kittens" -- a frustrating task, but one that's worth the effort when millions in savings are at stake.
By David Welch in Detroit
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.