IntroductionVolkswagen is a German automobile manufacturer based in Saxony, Germany. Under the leadership of Dr. Uwe Matulovic, the Chief Information Officer (CIO), who was previously the leader of process development at VWAG, decided to create a new internal IT department, which he called Business Process Technology and Organization (BPTO) . It authorized a nascent program management office to take over management of all IT projects and also required that all projects have a qualified project manager to meet project management standards. Previously, in 1992, when the funding priorities were IT marketing and sales, it was considered an overhead cost and therefore Volkswagen signed a 10-year agreement with Perot Systems. Over the years Volkswagen realized the need for IT in the organization, as there was not enough knowledge in the organization, and this led to the formation of GedasUSA. Gedas and Perot worked for four years between 1999 and 2002 to rebuild the IT infrastructure to contribute to the fast-growing Volkswagen Group and its sub-brands such as Audi. Volkswagen not only tried to understand the need for IT but also understood the need to diversify. and under the leadership of President Dr. Bernd Pischetsrieder. He devised a strategy of diversifying the product offering, which would help consolidate the brand as it would cater to the global demand for different vehicles such as sports utilities, etc. Key Strengths and Challenges Volkswagen while in the mid-1960s had a crisis in which sales fell sharply until 1977 when the rabbit was introduced, however the company reached a further low point in the 1990s when it saw that sales would increase with the launch of a new model, but would ultimately decline until the next model was introduced. The different products......middle of paper......ve in the future have given way to more projects. Challenges to IT Alignment At Volkswagen, the current biggest challenge to alignment is to make the company understand the need for IT fusion and the future needs of IT as companies around the world have adapted IT as integral part of the business. At Volkswagen the current approach is also largely correct, but ELTs need to be brought on the same page and there is also a huge need for more vision and funding for IT. The key to success here is getting every individual in the organization to rethink IT as a technology-enabled innovation, where people must be competent not only in business but also in information technology. References1. http://busi620dc02.wikispaces.com/VolkswagenCase2. Volkswagen of America: Managing IT Priorities - Harvard business school; ROBERT D. Austin