Jim Fowler, CIO of GE, has a challenge. The company’s CEO, Jeff Immelt is very tech savvy. “Jeff is one of the most intelligent men I have ever met,” says Fowler. He doesn’t forget anything.”
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GE is a 120-year-old company, and has survived, according to Fowler, because it has had great leaders, like Immelt, who can see around the corner.
They are able to catch a new wave of innovation and transform the business internally before external forces disrupt GE’s business.
In many ways, Immelt is the company’s chief digital officer. “Our role here is to help,” says Fowler.
When he joined the company 16 years ago, Fowler says the focus for IT was on cost: “How do we make IT costs go down? The role of the CIO was just to run IT as cheaply as possible.”
In the past, large organisations outsourced vast chunks of IT, because it was not considered core to the business. GE was no exception. It previously outsourced 70% of its IT to an offshore preferred provider.
But at the same time, he says, outsourcing was risky, both to the IT function and the business itself. Specifically, outsourcing made IT ill-prepared for the transformation that was about to occur with digitisation.
“We caused ourselves to be commoditised and we were not able to see a future where all of the data and information came together, or how it was connected to drive the next level of industrial revolution,” says Fowler.
Computer Weekly met with Fowler in San Francisco, during the company’s Minds + Machine conference. Today, under Immelt’s leadership, Fowler sees his role as very different.
Turning an industrial giant into a software company
Immelt’s vision is to turn the industrial giant into a top-10 software company, and IT is a key asset the company will use to drive data efficiencies, both internally and externally. The software the company creates then evolves into the products and services GE provides to its customers.
In Fowler’s opinion, the role of CIO today bears very little similarity to the role is was when IT was outsourced. He says the modern CIO must also be a fully fledged business leader. “This means signing up for things that matter, such as revenue, variable cost productivity, cash generation and inventory turnover, and not talking about obsolescence or performance and availability.”
As head of the company’s IT function, he says his own role is about change. He aims “to change the mentality of IT”, so it moves away from being a backroom operation and makes data a strategic company asset.
“I have to be at the table, helping my business partners to understand how to disrupt,” he says.
Bring IT back in-house
Fowler argues that obsolescence, performance and availability are “givens” that any CIO should be able to execute as part of the job.
When he became CIO 18 months ago, 75% of GE’s IT work was outsourced. “I would dial into a bridge call during an outage, and would hear 20 people on the call yelling at one person – who, by the way, was not a GE employee – to try to figure out what was going on and why our business process was broken,” he says.
Significantly, the call was not about the technology. Rather, the internal team was taking the outsourcer to task over a broken GE business process.
“We had given up the fundamental knowledge of how our business runs, and given away that knowledge capital,” he says. The company took a decision to insource, to get back this know-how.
“The idea of having legacy IT teams has gone. IT is not about spending two hours every morning changing tapes”
Jim Fowler, GE
The formation of GE Digital, headed by Bill Ruh, shifted the mindset of internal IT. “We used to think about IT as project work,” says Fowler. “We have a generation of people who manage projects. But ultimately, we needed to think of IT as a product.
“One of the revelations we had in the past year was that internal IT at GE should be no different to a software company. We just so happen to be doing it inside the company.”
By organising around products and product lines, he says GE’s IT team can focus on the business in a more tangible way. IT people take long-term ownership of the products they develop.
Addressing the legacy argument
Fowler says many of his peers ask about legacy IT.
He recalls a recent meeting, where he asked people in the room what they understood by the term “legacy”. “I got everything from ‘the person who maintains the IT systems at the plant’ to ‘the person who changes the backup tapes’.
“The idea of having legacy IT teams has gone. IT is not about spending two hours every morning changing tapes,” says Fowler.
“None of my datacentres have any tapes. As for the plant, the person is not just working in your individual plant. They are the PhD leader who owns the product line for the manufacturing system that runs across 50 plants.”
Jim Fowler, GE
He says people still look at what IT meant 20 years ago and do not appreciate that it has evolved. But he admits GE has 9,000 legacy applications.
“A large percentage of these are not strategic,” says Fowler. “Each of my businesses has an application portfolio plan, which designates which applications are core and which ones should go away. We starve the funding on the ones that should go away and we are putting all the funding into the applications that are strategic.”
Fowler wants to demonstrate the saving to the business of removing legacy software. “When we complete an application portfolio plan, we can show each of our business partners what every individual application costs to run.”
When they are paying hundreds of thousands of dollars for applications used by only one or two individuals, says Fowler, it helps IT convince the business leaders that legacy software is not just an IT problem, but a business problem the company must solve.
A case for efficient nuts and bolts
Predix is GE Digital’s flagship platform for the industrial internet. It can glue together machine, engineering and sourcing data. This has enabled internal IT to write software to analyse things in a different way. During his presentation at Minds + Machines, Fowler described one such application.
The IT team developed an application to connect systems across the company to find overlaps. The application was developed to solve a seemingly simple problem: how to identify which fasteners (such as nuts, bolts, screws and washers) were being used across all of GE’s businesses.
“We spend $250m on fasteners, and we wanted to look at addressing duplication,” says Fowler.
The application compares 3D models across every GE business to identify parts that are similar or the same, but which GE pays different prices for. The potential benefits of solving this duplicate order problem have huge potential across all of GE’s businesses.
“If I can do that with bolts, nuts, screws and washers, then suddenly I start doing this for other parts too, such as fan blades, parts coming out of castings or rotating parts, across businesses where there is a lot of similarity,” he says.
Read more about GE’s digital strategy
- GE’s stated policy is to become a top-10 software company by 2020. The company set out its action plan at its Minds + Machines conference in San Francisco.
- Global manufacturer GE has established a partner programme for its Predix platform to drive the value of analytics across the industrial internet.
Furthermore, he says this is not just a benefit for sourcing, but it can feed back into engineering to help the company design products faster. “Engineers will be able to pull in products that meet needs from other parts of the business,” says Fowler.
It is a precursor to GE’s big plans for the future, dubbed the digital thread.
For Fowler, the digital thread is about applying the productivity GE can achieve internally through initiatives such as the application for deduplicating fastener orders to create commercial products that it can sell externally.
The head of GE manufacturing, for example, is reaching into the manufacturing software systems supported by Fowler’s IT teams to build products that can be commercialised.
Similarly, the recent ServiceMax acquisition will take advantage of the software Fowler’s IT department has built, which supports services to develop externally facing ones. “It is not only about eating our own dog food, but helping to create the next great set of applications to run our customers’ companies,” he adds.
The systems Fowler’s IT team are now building are designed to work horizontally across GE. “We had to build the applications in a way that could run across multiple businesses in GE,” he said.
This means application coding, architecture and structure could work equally well externally, in a customer’s business.
Fowler works for a CEO who is globally renowned for understanding IT’s potential to disrupt business. The company began this journey with Predix a few years ago. Now, the internal business process Fowler’s team has decided to make more efficient – that of centralising fastener orders in a bid to reduce duplication – has the potential to lead to the next killer app at GE.