Feature

Lights shine brightly at General Electric

General Electric is a company whose history reaches back to the dawn of the 'electricity age'. David Bicknell reports on how they are now seeing business in a new light

So, you reckon your company gets the Internet? Have you got 20 year olds mentoring your top managers on the Net? How about providing 40 hours of Internet training for every single one of your employees? And how many of your employees have re-engineered their jobs to take advantage of the Web?

Don't be too alarmed if your organisation cannot put it's hand up to any of the above. There aren't too many companies that can walk the walk of e-business, and prove that they have re-engineered the company around it.

One of the the world's leading exponents of business-to-business e-commerce is relatively unknown in the UK, although it has been around since 1879 and its products are used in almost every living room.

General Electric is the company, and unlike others that have been successful in adopting e-business - for example technology giants Dell and Cisco - it stands out because it really is an old bricks-and-mortar company, whose business includes light and heavy manufacturing and transportation.

In the space of a year and a half, since adopting "e-business" as one of its corporate mantras in January 1999, GE has ensured that every employee "gets" the Internet.

"We have a culture in GE that ties us together," says Craig Arnold, president and chairman of GE Lighting in Kingston, Surrey. "E-Business is changing the lives of every employee within the organisation, and the way we fundamentally run the company."

GE actually strarted working on E-Business before 1997, when divisions such as GE Plastics had already begun moving a number of their transactions with small and medium-sized businesses online.

Other pieces of the company then started doing various things until the company's legendary chief executive Jack Welch adopted e-business as one of its key goals.

"In the early days it was all about participating and experimenting, taking a look around the corporation and forming an idea of best. Try a few things here and there and see what works, and ultimately it crystallises into an approach that you can then implement across the company," adds Arnold, who also heads up GE's European E-Business Council, a sort of brains trust of best practice from around the corporation.

Despite this approach, gradual is not a description Arnold would apply to GE's e-business activities.

"Learning and making mistakes is a fair way of describing it, but we have not been gradual - that word doesn't really exist in the GE vocabulary. It's about being as fast and pervasive as you can."

GE's complete adoption of this e-business culture is what is responsible for the company's rapid progress. Staff don't have to think about how e-business will change their job, they just do it.

Arnold admits that for any large corporation, the adoption rate will vary by function, by business and by individual. Some get it, some don't. "The real challenge at the beginning was not so much people intellectually not accepting it, but asking themselves, 'What does it mean for me and my job?'"

Getting that buy-in from staff has involved a number of mentoring and education ventures, from the most senior down to the most junior. According to Arnold, for people to really understand the way the Net can impact their lives, first of all they have to understand the technology. Staff training may include an exercise where they have to find ten types of Web site, for example a site selling old Nike sports shoes. The winner gets an award, such as dinner for two.

"You have to get in there and understand the Web, play around with it. Everyone has to go through 40 hours of Web training. That follows on from the reverse-mentoring of the most senior leaders. Now, today, we've even started mentoring our customers.

"On top of the training, we've set very aggressive goals around really working smarter, more efficiently, and taking significant costs - between 30%-50 % - out of the organisation by leveraging this new technology. You look at the processes within the organisation today, and assign people as champions and functional leaders for these things, and say, Why can't this particular thing be digitised? What prevents you from taking this transaction and leveraging the Web, do it on the Internet?"

According to Arnold, when you've done something the same way for a number of years within a large corporation, it's tough to switch overnight and rethink the way you do things. It means starting with some early wins and building the momentum that ultimately takes over the company. As for GE's customers, Arnold says that although they all recognise that they have to do something, there is a variation around acceptance of e-business.

"In general, we are ahead of our customers in this, so we think we have significant value that we can bring to the table. For those that want to play in this space, we talk about a matrix of customer sophistication from low to high, and the value that we can bring. We bring the most value to those that aren't really sophisticated, because we can bring them a turnkey solution.

"But if you're a big customer like a B&Q, maybe we'll just bring content that sits on your Web site, and we deliver the content for the lighting category. But if you're a smaller or medium-size customer, and you know that this Web thing is out there and is enormously complex and frightening, then we can bring a turnkey solution. Turn it over to us and we'll manage it for you. We'll develop the content, we'll do the hosting, and we'll basically give you a one-stop-shop for Web-enabling your business."

Many companies struggle to create the right teams to implement online projects.

GE Lighting's IT Director, Sid Deloatch, says that GE wants a mix of IT and "business" people who understand each other's roles. "We want IT people that are business savvy, and business people who are IT savvy.

"We're seeing a blending of skillsets between the IT and business teams that's helping to make these teams so successful. We work from an e-business "cookbook" - an online process that defines the process in which we want to develop projects.

"It's a template-driven approach - point-and-click - and we find ways to deliver in days rather than months. We prototype in hours, deliver in days."

Delotach cites an example where GE Lighting put up an employees online store in seven days, enabling staff to order lightbulbs from its distribution centre and receive delivery in 24 to 48 hours, right to their doorstep.

The key difference, he suggests, is in the mindset and the tool selection.

"In the Cobol days, things had to be centred around those that had the skillsets. Now, what you're able to do is bring in excellent, process-focused project management people, and you couple that with new toolsets, such as Lotus Domino and Java. Because of the nature of the tools - they are a lot easier to use, the cycle time for learning them is shorter and the number of people learning them is much bigger - you have these Net savvy individuals who can define the front end and also test it."

According to Charlie Coode, who is GE's e-commerce operations leader, the business-IT hybrid teams are "100% dedicated to the execution of their projects, and are measured and focused upon it.

"Before, you had a marketing department where one of their many responsibilities was to deliver a Web site, and it got lost within a lot of "noise" in the workplace."

GE's business-to-business e-commerce activities are broken down into three areas: Buy, Make, and Sell.

Buy refers to electronic procurement. Make means using the Net to cut workflow costs, while Sell is all about giving more information on GE's products - in this case, GE Lighting and its light, bulbs, lamps solutions - for the customer's benefit, perhaps through GE's customers such as B&Q.

Digitising GE's buying

GE's goal is to Web-enable the entire purchasing cycle, with suppliers being able to track purchase orders, submit shipment notices and invoices and check account balances, all over the Web. That gives suppliers "self-service" while GE in turn can track supplier performance. Both GE and its suppliers have the ability to

  • drill down on supplier deliveries and quality

  • automate penalties for poor perfomance

  • send proactive notifications for delayed material, and

  • get a detailed variance analysis

    GE's partner for its electronic procurement activities is Oracle - the system is currently in development and will be rolled out in the fourth quarter - using its e-procurement systems to manage the "sourcing to ordering" purchasing cycle, and "get visibility across the whole organisation of 100% of what we buy".

    GE hopes to generate savings of almost $2m by getting control of the buying side, while digitising many activities today now done manually. The system is already up and running in five other GE businesses including plastics and aircraft, enabling the company to collectively drive efficiencies across the organisation.

    "We have the ability to see a practice or something that's going on within an aircraft engine business and say, "This is great - let me get this idea and implement it in my business. Then we can move faster up the learning curve. This is the power of GE - we can learn from other GE businesses' mistakes too," says Arnold.

    Arnold adds that the new system offers the promise of a completely different relationship with suppliers.

    "Now, not only do we have visibility into supplier performance, enabling us to track and measure, suppliers also have access to the same information. We are giving our suppliers the ability to come into our system to look into their own performance in terms of on-time delivery, and we now have the ability to put automatic penalties in to suppliers if they create issues in our factory by missing a delivery."

    That does not mean, however, that all suppliers are necessarily ready. "We'll help them get to the Internet, and we'll be patient with them but they are all going to have to get there eventually, because this is the way we are going to do business. We learned in the early days that the way you drive this initiative is that you really have to kill the parallel path. If you leave the old way of doing it there, and you have the new way, you never kill the old process."

    Digitising what GE makes

    GE plans to use the power of the Internet to digitise all of its internal business processes, from pricing and packaging through to human resources. GE's view of human resources, for example, is that most of what the department does is pass information around about benefits, so why can't you take that information and post it on the Internet?

    "The mindset that we're trying to develop throughout the organisation is, if there is work being done by people today, why can't you digitise it and deliver greater value for a fraction of the cost," says Arnold.

    According to Deloatch, packaging is a good example of the savings that can be made. "We used to have a very cumbersome packaging function for all of our lighting products. We used outside agencies, but each step along the way had to be approved - finance, product management, manufacturing - all very paper-based processes. We put that on a Lotus workflow package, and literally it was about ten days in development. Now you have a workflow process that is electronic, driven through e-mail. You can track it, and all of the work itself is stored on the Lotus Domino toolset. All of that has been driven electronically, making $350,000 annual savings for about ten days of work all through functional resources."

    Another key area is GE's Customer Web Centre, a development designed to ensure that GE gets all the knowledge it needs from its many interactions with its customers. With up to nine separate locations talking to customers, such as operations, pricing and customer service, there is a risk of a "disconnected" customer experience suggesting GE departments do not talk to each other.

    To avoid that, GE has set out to harness the knowledge of all departments for their customers, concluding that customer needs are the "pulse" of the organisation, though for once in GE's e-business developments, it admits to being only at stage one.

    Digitising what GE sells

    GELighting.com is GE Lighting's initiative to attract "eyeballs" for the industry sectors that it serves. It offers unrestricted access to a range of users, including:

  • consumers

  • commercial and industrial users

  • OEMs, and

  • Utilities

    "We really try and set this site up to target today's specific audiences, and their specific needs," says Arnold. "We have lighting for the home, lighting for businesses, we sell through OEMs, we have some information about the Lighting Institute, and also some catalogues. There are also wizards to help you find the right lighting solution- incandescent, halogen, fluorescent - for your individual needs."

    Different GE customers will have different needs. A highly sophisticated customer like B&Q will host its own Web site, but filter in GE's content. A smaller company will promote GE's Web page.

    GE is also considering putting kiosks into retail shops so that people can play around in the shop with different lighting solutions. It is also thinking of putting GE.com on the light bulbs themselves.

    GE Facts and Figures

  • Founded: 1878 by Thomas Edison, who set up Edison Light Company. Merger with Thomson Houston Company in 1892 created GE.

  • Business: technology and manufacturing including - aviation, financial services, lighting, medical systems, plastics, industrial systems, and transportation.

  • GE operates in over 100 countries and employs nearly 340,000 people worldwide, including 197,000 in the United States. "Jack" Welch has been Chairman and Chief Executive of GE since 1981.

  • 1999 turnover $111bn

  • 1999 profits $10.7bn

  • Market capitalisation $523.7bn

  • Named America's Most Admired Company - Fortune (1998, 1999, 2000)


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    This was first published in September 2000

     

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