GE: Lighting the Way to E-Commerce

Business partner integration secret to digital success.

General Electric, a diversified conglomerate with more than 300,000 employees around the globe, has become one of the most spectacular online success stories, a unique accomplishment, company officials say, given that they launched the drive to fully develop the electronic mediums less than three years ago.

At the time, like many corporate players, GE made little use of the Internet and private networks for marketing, sales and internal corporate activities. Most of its communications were done on paper. But unlike many, once the company embraced e-commerce, it did not look back.

What GE brought to its e-commerce drive was long-term relationships with suppliers and buyers, which served as the foundation for its launch of online integration with its many business partners.

The interactive initiatives at GE have proved so successful that the company has integrated e-commerce into almost all aspects of its operations worldwide as its principal method of doing business.

Diana Sousa, a spokeswoman for GE, says the corporations online activities will produce $13 billion in revenue by the end of this year, and predicts that number will increase to $19 billion by the end of 2002.

GEs Global eXchange Services (GXS) alone has more than 100,000 trading partners and completes more than a billion business transactions per year online.

Sousa says that what were once digital initiatives have become ingrained in everything that GE does. She says the company no longer coordinates its online business plan from corporate headquarters, but allows the management of each division to direct its own interactive expansion.

GXS, which oversees massive numbers of interactive supplier transactions and partnerships between GE and other businesses, has emerged as the companys business unit leader for online activity. GXS President and CEO Harvey Seegers is in demand as a speaker at forums on conducting business online.

GE traces its history to Thomas Edison and his Edison Electric Co. — among the first corporations listed in the Dow Jones Industrial Average index in 1896 and the only one of those that remains in the index today.

While the company still builds toasters, refrigerators and other consumer appliances, it also leases aircraft, builds more than half of all diesel freight locomotives in the U.S., owns NBC and its many media affiliates, and controls major lending institutions, insurance companies, aircraft engine manufacturers.

The company has paid quarterly dividends without interruption for the past 101 years. And despite the recent economic downturn, it continues to generate double-digit growth: Third-quarter results reported in October were slightly ahead of the companys third-quarter performance a year earlier. GE has a market capitalization of roughly $386 billion, and its net earnings in 2000 totaled $12.7 billion on revenue of $129.9 billion.

GE undertook online initiatives in 1999 when the company recognized it could save costs by handling many of its internal transactions without putting them on paper. It divided its e-commerce activities into three areas — what the company calls its "make, buy and sell" interactive models.

While some GE business units had Web sites in 1999 with which they communicated with customers, few had the capability to sell products directly online. In 2000, the company pushed to create transactional capabilities at all of its nearly two dozen divisions.

On the sales side, GE has worked to migrate customers to e-commerce from other types of transactions, to draw new customers with additional offerings on the Web and to help customers become more profitable by sharing platforms with them to make their own businesses more efficient.

The company has even used the Web and its own intranet to develop e-learning for employees.

Last year was pivotal, GE officials say, in committing the company to using the Internet and intranets to communicate faster and with more people, both inside and outside the company. That included communications between members of the board of directors and management, they say.

Jonathan Hurd, vice president for commerce and content practices of Boston communications consultant Adventis, says GE is widely seen now as among the top corporations in business-to-business interactivity.

"I think in B2B, General Electric absolutely is setting a standard, and that is both in terms of their internal procurement as well as their GXS platform, which is the marketplace they have created to support other industries," Hurd says.