First question

What is your assessment of the new processes for managing priorities at Volkswagen of
America?
Volkswagen of America has always shown the instability in the market. After a series of brand reforms, an
unprecedented increase in products offering has been generated. In order to prepare for this, a series changes
began. Managing change is the most important factor in determining the ability of an organization to
redesign its management structures, harmonize its culture, and raise productivity.
In my assessment, this new way of prioritization management charged by new department is undoubtedly
better than the old one. The biggest feature of this new processes is that it makes prioritization one of the
core determinants of its success. This new system of prioritizing IT project can help management make
better fund allocation decisions. It can be an efficient allocation of resources.
Besides, involving all the parts who will be affected by the decision and aligning IT funding priorities with
company strategy are also the strength of the process. However, it’s worth noting that just because of the
lowest rank in the list, the simply dropping the entire goal portfolios by the decision-making department
could be a fatal flaw in the system.

Are the criticisms justified?

From my own opinion, these criticisms are undoubtedly justified. Since they are indeed mentioning the
major problem that the system may face in managing IT priorities.
The goal of the new system was to find a way to allocate limited resources to the projects that were most
effective for the organization and aligned with the strategic plan. Unfortunately, even when the plan value
was narrowed down to $170 million but the total budget was only about $60 million, many activities
naturally couldn’t be pursuable.
The limited budget makes the new system have to abandon all activities that are not very important and
allocate resources to more important departments. But this has very big drawbacks. Abandoning a project
will temporarily bring benefits to the company, but in terms of the long-term development of the company,
this is likely to be a huge hidden danger.

Is it an improvement over old process?

Although this project is facing the huge criticism mentioned above, there is no denying that it is a huge
improvement on previous process.
In this new determining process, Matulovic let the managers of various departments participate in the
decision-making together. Involve almost all priority-influenced managers in decision-making while
maintaining the company's leadership team's strategic goals. This improvement is also the success of this
system. It can greatly reduce the probability of negative behaviours that can occur due to dictatorship.
Therefore, we can draw the conclusion that through the IT priority, the enterprise goals of VWoA, such as
customer loyalty, new vehicle value and so on, could have been successfully achieved. Compared to the
original system, this is certainly a major improvement.

Second question
Who controls the budget from which the IT projects are funded?
We can learn from the case introduction that the total budget decision is controlled by their parent company
(VWAG). Besides, the control of the budgets also includes the involvement of some cross-functional teams.
This way is clearly a Top-Down estimation of the budget. In addition, we can also learn that the project
budget given by the parent company is far from the actual proposal of the project. So, maybe the VWAG
management failed to understand the project requirements of VWoA.
Who should control these budgets?
From my perspective, the parent company still should be the best choice to control this. However, they
should ask the VWoA for the rough budget estimation and planned activities for reference when they are
making budget decisions. From this behaviour, the parent company can also benefit from a more reasonable
money distribution.
This can help them have a better understanding of the entire project rather than just relying solely on
intuition to make decisions. This method can effectively avoid project managers ending up with unrealistic
project budgets, which will have negatively impacted the successful completion of scopes.

Third question
How should Matulovic respond to his fellow executives who are calling him to ask for
special treatment outside the new priority management system?
I think it's very important to let other executives know where he's at right now. Making them think in his
shoes as much as possible may be a solution to this dilemma.
The new priority management system was developed by ELT members and the senior management group.
With this system, Matulovic himself doesn't have that much power to decide which projects can be treated
specially. Also, he needs to maintain a positive working relationship with ELT of VWoA in order to better
promote the project. Unfortunately, the budget given by VWAG is so much lower than the proposal.
Therefore, some projects aren’t pursuable. Any special treatment can cause injustice. This could be such a
dilemma for him to deal with.
A report about the current situation to all participants should be helpful. By writing the determination and
assessment of the enterprise goal, the function and purpose of the new system, the huge gap between the
proposal and budget down, Matulovic can gain their understanding more easily.