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Jack Welch may be gone, retired as CEO, but the hard-charging management style that earned him the title Neutron Jack lives on at General Electric Co. Only now, rather than just focusing on improving the employee gene pool by lopping off the 10 percent of workers with the lowest performance appraisals—Welchs success formula—the management mantra is to transform GE into an e-business by digitizing as many business processes as possible. A typical step: GE Global Exchange Services recently banned pen and paper in its few remaining nonvirtual meetings in favor of laptops with wireless LAN cards.
The “do this or else” nature of the edict is pure Welch. Its also part of a much larger e-business drive at GE that includes digitizing as much as possible the information that flows through all of GEs key business processes. That means moving to electronic transactions for everything from finance and human resources processes to sales invoicing and reconciling. GE even imposed a Nov. 1 deadline for all invoices and payments between internal purchasing agents and suppliers to be made via digital channels. Its also moved travel requests to an online travel center, where travel approval is built into the workflow. That initiative alone is expected to save GE $200 million this year in improved efficiencies and reduced travel.
Altogether, according to executives, all GE digitization initiatives will shave off about $1.6 billion in costs for this year and up to $10 billion in coming years. Its that kind of commitment to e-business, in spite of the economic slowdown, that earned GE, based in Fairfield, Conn., the No. 1 slot on eWeeks yearly FastTrack 500 list of technology innovators.
Its little wonder, with savings in the billions on the horizon, that GE is rethinking neither its e-business strategy nor its IT spending levels, economic downturn or no economic downturn. The company is on track to increase IT spending 12 percent, to $3 billion, this year. “Weve been doing it when times are good and when times are bad, and we believe in it,” said Gary Reiner, senior vice president and CIO, in Fairfield.
GEs focus on technical innovation shines in countless ways across its 20 divisions. One sell-side example is a precision fulfillment initiative in GEs consumer appliance business, a program introduced last year in conjunction with retailer The Home Depot Inc., of Atlanta (No. 440 on the FastTrack 500). The program allows customers to walk into a Home Depot store, buy an appliance online at a kiosk, and select a delivery date and time. Web-based systems at GE warehouses help coordinate fulfillment and promise deliveries within 15 minutes of customers specifications.
Going Once, Twice, Sold
Going Once, Twice, Sold
GEs e-business achievements certainly arent limited to internal or sell-side processes. On the buy side, GE has conducted a massive push to embrace online auctions. GE will conduct about $14 billion in auctions companywide this year, and it anticipates $600 million in savings mainly by deflating prices.
GE has taken a leading role in pushing suppliers and internal purchasing agents to embrace online B2B processes. Starting Nov. 1, they all had to be ready to invoice and receive payments electronically, lest they forgo doing business with GE at all. According to Kurt Kemmerer, CIO of finance for GE, the company is well on its way to hitting the milestone of 100 percent electronic invoice processing, with well over 90 percent of invoices traveling via the Web, electronic data interchange or direct file transfer as of the beginning of September.
Migrating these processes to electronic routing scores multiple wins for GE: It makes it easier for the company to get up-to-date data, it means fewer errors from purchase orders being set up incorrectly, and it makes for quicker turnaround reconciling bills—instantaneously, as opposed to weeks, Kemmerer said.
But its not just the e-business technologies and processes a company embraces that define an eWeek FastTrack winner; knowing when to keep IT dollars in corporate pockets is also a key competitive advantage. GEs shrugged-shoulder attitude toward wireless computing is an example. GE limits its use of wireless to a few select applications, such as equipping field engineers with wireless personal digital assistants.
Such measured use of wireless technology is increasingly common as companies demand sure payback on e-business initiatives, experts say. “At the end of the day, a lot of deployments people are looking at really dont give you a good payback,” said Jack Gold, an analyst at Meta Group Inc., in Westboro, Mass. GEs wireless deployments are the kind that do give payback, Gold said, including applications that require immediacy of data.
And GE is always thinking about how to get IT spending to pay off, Reiner said. Its usually satisfied. The majority of small projects see payback in 12 months; big projects are expected to pay off in 24. That seems like a quick turnaround, but thats why we call this the FastTrack. Or, as Reiner put it, “Were trying to live on the Web, here.”
Jack Welch would be proud.